MarketCycle Wealth Management

The following is a synopsis of what the larger professional institutions and their research departments are expecting for 2021; their opinions do not necessarily coincide with MarketCycle’s stance or predictions.  The following is our highly condensed version extracted from literally hundreds of pages and dozens of videos and podcasts.  I do this at the start of each year; this year I find that there is more consensus than is normally seen.  There was no consensus in 2020 and yet everyone somehow ended up being wrong.  I do have to egotistically admit that MarketCycle’s extensive predictions that were at the end of last year’s prediction posting were very close to being 100% correct.  What we got wrong was that we thought that the USDollar would weaken and drift sideways and instead, it drifted slightly down.  I also did not see the pandemic coming, although I did write that risk was substantially rising starting about 30 days before the market dropped in March.  This year, I’ve been sending so many of my thoughts in private client emails that I will leave MarketCycle’s predictions out of this year’s posting.  It is also safer that way.  lol

Some of the newsletters from which this information is extracted are quite expensive and often unavailable to the retail investor.

Please note that a “growth stock” is one that is stronger than the general market and a “value stock” is one that is underpriced relative to the general market.

There is a theme running through the predictions, if you can see it.  There is certainly a lot of bullish enthusiasm for stocks and bonds and commodities and gold/silver and non-US currencies.  Strength is switching from just the United States to “global.”

And here are the institutional predictions…

GOLDMAN SACHS:

1. Stocks up, but not as strong as in 2020
2. Emerging Market stocks up, especially China
3. Weakness in Europe and the U.K.
4. Pound Sterling (GDP) strong in 2021
5. USDollar weak
6. Commodities slowly strengthen

CHARLES SCHWAB:

1. Dip early in 2021, then strong
2. Global economy improves
3. Small-caps and Developed Market stocks finally show improvement
4. Value stocks stronger than growth stocks
5. Cyclical stocks stronger than defensive stocks
6. Bond yields rise, so bonds weaken
7. Inflation may slightly rise, helping TIPs (Treasuries that are inflation protected)
8. Buy extended-duration Treasury-bonds (TIPs) over shorter-duration bonds

EVERCORE (Ed Hyman, voted #1 Economist for the past 40 straight years via Institutional Investor’s Annual Survey):

1. The economy was in a big hole with high unemployment, but we have now reduced layoffs and increased job openings (up 75% since March)… we have come back a lot
2. Corporate profits are way up showing a broad based recovery
3. Record monetary stimulus and vaccines = economic growth in 2021
4. Monetary stimulus pushes up stock values and home prices, adding to the wealth effect
5. During 2020 there were 645 stimulus initiatives across the globe including a gigantic stimulus in Europe and this will kick in during 2021 because of the normal 9 month delayed response
6. So, 2021 may be a hugely profitable year for stocks
7. Another $1-Trillion stimulus is likely in the U.S. in 2021, further adding to potential late year gains
8. 2021 will likely have less political uncertainty
9. USDollar likely down 10% and this will increase corporate earnings
10. Low wage gains will keep inflation lower than normally would be the case
11. Add some value stocks to one’s portfolio
12. A golden age of housing just began that will last 15 years
13. BUY STOCKS!

FIDELITY:

1. The Federal Reserve is unlikely to raise interest rates in 2021; all Central Banks will want their economies to run hotter than normal
2. Weaker USDollar
3. Commodities finally pick up steam; they help to diversify away some risk in stock heavy portfolios
4. Emerging Markets strengthen
5. Volatility reduces in 2021
6. Value stocks and small-cap stocks finally pick up
7. Dividend stocks remain strong
8. REITs strong
9. High-yield, convertible bonds and preferred shares all profitable

BANK of AMERICA:

1. Tech stocks will, once again, lead the market higher
2. Inflation will pick up causing an uptick in commodities
3. If volatility picks up, then buy on any dip of 5% or greater

CAPITAL WEALTH PLANNING:

1. Strong economy
2. Pullback early in 2021 and then record highs
3. Years left to this stock bull market, so just buy more on any pullbacks

BLACKROCK:

1. Stocks grind much higher after some weakness in early 2021
2. Technology stocks, Quality stocks, US stocks and high-yield bonds all higher
3. Japan, value and Europe all down in 2021
4. Interest rates remain range bound but inflation rises
5. High-yield bonds go higher
6. Emerging Markets stronger
7. Commodities strengthen in price

NEUBERGER BERMAN:

1. Low inflation, so bonds remain strong
2. Growth stocks over value stocks
3. Emerging Markets higher, especially China
4. Small-caps finally strengthen
5. Technology, health care, industrials and commodities lead

FUNDSTRAT:

1. Strong year for stocks with the S&P-500 ending at 4300 by end of year

INVESCO:

1. Global recovery
2. Own stocks over bonds
3. Weak USDollar
4. Commodities higher in price

WISDOM TREE (via their senior strategist Jeremy Siegel of Warton School of Finance):

1. Stocks are not overpriced and the bull market will continue in 2021
2. Online buying beats retail stores
3. With REITS, stick with non-commercial
4. Inflation builds to up to 5% over the next three years but the Federal Reserve will remain at 0% rates
5. Treasury bonds will still protect during down-drafts
6. But, the 40 year bond bull market is now officially over
7. Weaker USDollar helps Emerging Markets
8. Value will outperform over growth
9. Real estate goes higher in price

BTIG:

1. Too much bullish euphoria in the near term, so expect a pullback
2. A lot of stimulus and money still remains on the sidelines, so stocks to do well in 2021
3. Financial stocks lead all other sectors
4. S&P-500 to 4000 by the end of 2021

FIRST TRUST:

1. The Federal Reserve has borrowed from the future to hold up spending and markets today
2. Too much money chasing too few goods = inflation
3. Federal Reserve will keep rates at 0% in 2021
4. Very long term, interest rates drift ever higher
5. Real estate keeps getting pricier

FRANKLIN TEMPLETON:

1. Emerging Market stocks higher
2. Small-cap stocks higher
3. Technology stocks lead market higher
4. REITS strong

JP MORGAN:

1. Global recovery
2. Emerging Markets higher
3. S&P-500 to 4400 by year end
4. Consumer discretionary, financials, technology and commodities lead the market higher
5. REITs higher

LEUTHOLD GROUP:

1. No recession in 2021 with the S&P-500 reaching 4100 by year end

UBS:

1. Global economy picks up
2. Mid-cap stocks excel
3. Financials, consumer discretionary, health care and commodities to lead higher
4. USDollar weak
5. Emerging Markets higher

MERRILL LYNCH:

1. Positive outlook with some volatility
2. Investors should diversify into different asset classes as well as geographically
3. Lots of stimulus but inflation to remain low in 2021
4. Stocks over bonds, but bonds still do okay
5. Emphasize Quality stocks (strong balance sheets and good cash flow)

RUSSELL INVESTMENTS:

1. The world is in the early post-recession phase of the business cycle [Remember the 40% market drop in March of 2020 which proved to be a recessionary bear market?] so stocks should remain strong
2. Too much euphoria in the near-term may produce a temporary pullback
3. Emerging Markets strong, especially China
4. Japan weak
5. Canada strong because of the increasing strength of commodities (Canada produces commodities)
6. Europe stronger than in 2020 and possibly stronger than the United States
7. USDollar weak and commodity currencies strong (Canada, Australia), plus EURO and British Sterling strong

DOUBLELINE:

1. Federal Reserve to purchase long-dated Treasuries so prices remain stable
2. Inflation increases, but not much
3. The economy is living off of government support
4. Weak USDollar
5. Emerging Markets to excel

LPL RESEARCH:

1. U.S. to remain the leader in relative strength
2. Japan strong
3. Emerging Markets strong

RIVERFRONT:

1. New cyclical bull market began in April of 2020, so stocks up 10% or more in 2021
2. U.S. will lead in relative strength
3. Favor a mix of growth and value stocks
4. Corporate bonds and high-yield bonds remain strong
5. USDollar weak
6. Emerging Markets higher

RICHARD BERNSTEIN:

1. Buy:  small-caps, value, cyclical sectors, lower quality stocks, Emerging Markets and also high-yield bonds

PAUL TUDOR JONES (hedge fund titan)

1. “I think the stock market is high on a combination of fiscal and monetary pulse that we’ve never seen before in history, nothing like this.”
2. Bonds down, commodities up
3. “Now that the general election is in the rear-view mirror, I expect a fresh wave of investment cash to be unlocked as the uncertainty dissipates.”

COMMONWEALTH FINANCIAL NETWORK:

1. The economy is healing and adapting
2. Stocks higher in 2021, but some headwinds remain
3. Inflation remains low in 2021
4. Interest rates remain low and bonds perform okay
5. U.S. leads in relative strength over other areas of the globe

KKR PRIVATE EQUITY:

1. Strong U.S. stock market
2. Going forward, there will be increasing pressure for interest rates to go up, not down
3. Governments will just keep printing money
4. Consumer spending to increase as vaccine is trotted out
5. Federal Reserve will keep rates at 0% in 2021
6. Inflation will not pick up substantially until 2024
7. Emerging Markets strong, especially Asia and specifically China
8. Europe stronger than in 2020
9. U.S large-cap exporter corporations strong
10. Growth over value
11. REITs and gold outperform over the longer-term
12. Weaker USDollar because the Federal Reserve will be the last Central Bank to raise rates
13. Best stock sectors:  health care, technology, consumer discretionary, financials and industrials
14. High-yield bonds strong
15. REITs up
16. Commodities up

CITI GROUP:

1. Second half of 2021 is better than the first half
2. S&P-500 to 3800 by end of 2021
3. Value stocks over growth stocks
4. Industrial and financial sectors lead in relative strength
5. REITs and health care also higher
6. Emerging Markets strong

STANCHART (Standard Chartered Bank):

1. U.S. stocks higher
2. Yellen to talk down the USDollar, causing it to fall 15%
3. Industrial metals and gold/silver up; oil down
4. Emerging Markets weaker than generally predicted because of EM bond defaults

BMO:

1. U.S. stocks higher and they lead in relative strength
2. S&P-500 to 4400 by end of year
3. Financials, consumer discretionary, industrials lead in relative strength
4. Hold all cap sizes and both growth and value
5. Next 10 years will be a stock and asset pickers environment, so hiring an investment advisor will be critical

CANACCORD GENUITY:

1. 1st quarter of 2021 weak while stocks consolidate and excess euphoria is worked off, then a very good year
2. Monetary stimulus, fiscal stimulus, money waiting on the sidelines, low interest rates which allow for tax savings, and the growth of corporations = strong stock market
3. “It would take a major mistake by the Federal Reserve to cause weakness in 2021, so expect strong record highs by the end of the year.”

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2021 CHARITY:  Each year, MarketCycle Wealth Management gives a chunk of our profits to a charity.  This year it goes to The Wild Animal Initiative.

1. Four years ago, we gave to (the non-political) Nature Conservancy that offers to buy and then protect ecologically important land/water areas that are being offered for sale by private landowners across the globe.
2. Three years ago, we gave to the Natural Resources Defense Council that works to ensure the rights of all people to clean air, clean water and healthy communities.
3. Two years ago (and also 5 years ago) our donation went to KaBOOM! that provides playground equipment for children in underprivileged communities.
4. Last year, we gave to (the non-political) Ocean Conservancy whose purpose is to clean up plastic and trash in the ocean and on the world’s beaches.

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