As the NCAA basketball tournament begins, we wanted to share our Final Four with all of you. Okay, okay, so we might have a different final four in the halls of Quartz than you might be thinking about. Our Final Four is related to 4 key factors that may help push 2021 to championship levels—economically speaking, of course.
Factor #1: Vaccines
The distribution of COVID-19 vaccines is bringing us closer to a fully reopened economy and may perhaps be the most important factor in economic growth for 2021. Thanks in large part to the efficacy of the vaccines, we expect the economy to move closer to a full reopening over the next several months as the end of the pandemic approaches.
Factor #2: Policy
The additional $1.9 trillion of fiscal stimulus just passed should help boost economic growth. The Federal Reserve looks fully committed to remaining strongly supportive. Markets generally cheer stimulus, at least in the short term.
Factor #3: Profits
S&P 500 index earnings may grow more than 25% this year and enable stocks to grow into their lofty valuations. Strong economic recovery sets the stage for this substantial revenue and profit growth and is a key part of the bull case for stocks, given valuations are elevated.
Factor #4: Rates
Long-term interest rates are rising as the economic outlook improves. More important than the level of interest rates is how quickly we get there. If interest rates move higher too quickly, that could be detrimental to the economy and stocks. Given that scenario, the Fed could intervene to ensure rising rates aren’t disruptive to equity markets.
While this FINAL FOUR may not be the prediction you were expecting, hopefully you still appreciate our attempt to quickly grab your attention on what is most important in our world right now. And on the basketball front? Pick Texas in the FINAL FOUR - that’s a sure thing*!
* Final Four 'basketball' opinion expressed is solely David Rust's opinion and does not reflect the opinion of Quartz Financial or affiliates.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.