In their just published mid-year outlook for 2021, JP Morgan notes that “The global healing process has progressed into a genuine recovery. Equity markets are near all-time highs, earnings are surging and bond yields are on the rise. However, divergences are emerging that investors must navigate. The economies of China and the United States have effectively fully recovered, while Europe and emerging markets lag. Growth momentum is likely peaking—and some worry that this is as good as it gets.” Needless to say, JP Morgan thinks that a few more quarters of equity growth are due, at least in the US. However, it’s the divergence in outcomes and trajectories noted by the bank that is interesting.
In much of the US population’s mind – and in their daily routines – the pandemic is over. Masks are off and flights are full – along with restaurants, hotels, bars and ballgames. Even business travel is starting to pick up. The rest of the world, however, is a quite a bit behind. Of the major economies, only the UK and Israel have greater vaccination rates than the US. Significant economies like India and Malaysia are fighting outbreaks and struggling to vaccinate their populace. Even China is resorting again to mass lockdowns and testing programs, for example in Guangzhou, a major industrial city, where practically its entire population of 18.7 Million was subject to mandatory testing between Sunday and Tuesday of last week (June 6 – 8th ).
So, as usual, there are worse places to be than the USA. Congratulations to all fellow global zip-code lottery winners. One thing to bear in mind is that a global economy is unlikely to flourish for long without active global participants. In that sense, the welfare of countries half-way around the world is a real concern of ours. It’s therefore heartening to see vaccine donations from rich countries to others. Science, technology, economic freedom. All great things, the fruits of which, all the world should enjoy – especially now. And that is the scoop for this week.
