Although the perspectives of the main analysis houses are positive, experts indicate that the road to recovery will be long and tortuous
The expectations generated by vaccines have brought joy back to the markets. The rally experienced by the Stock Exchanges in the final stretch of 2020 has its extension in the first weeks of 2021, a behavior that has been accelerated by the rotation of portfolios from defensive stocks to those of a more cyclical cut.
Although the perspectives of the main analysis houses are positive, experts remember that the road to recovery will continue to be long and tortuous.
Experts Identify Up To 10 Black Swans That Could End Positive Projections
It all depends on the vaccines
From IG they trust that as the vaccination process advances, doubts will be cleared, which would contribute to prolonging the upward current. The firm’s experts grant a potential of 13.4%, up to 9475. However, before reaching this peak, it would have to exceed 8,786 points.
Despite the prospects are positive, the experts of the analysis firm identify up to 10 black swans that could ruin the projections, something that already happened in 2020 when the expansion of the pandemic caused the paralysis of the economies, a scenario that nobody contemplated in the projections and which caused a strong shake in the markets.
The black swans with whom IG experts work are very varied and of diverse typology.
Experts recall that the road to recovery will continue to be long and tortuous
What are black swans?
By black swan is meant that are those unpredictable events that are beyond what is normally expected of a situation and has potentially serious consequences.
1) The death of Joe Biden: It would not be the first time that the United States has faced such a scenario. A hypothetical death of the president-elect and future inhabitant of the White House seems far-fetched, but the recent tensions experienced in the country could be an indication of a revolt in the world’s leading economy. If produced, the Blosas would collapse and the gold, an active refuge, would soar.
2) That China prohibits its companies from doing business in the US: large technology and other consumer firms would suffer shortage problems and the stock markets would experience a great collapse.
3) That there are greater social unrest in Africa due to hunger: a situation similar to that experienced during the Arab Spring could be repeated this year in which weather conditions cause an increase in the cost of essential pots. This would lead to social unrest in the midst of a pandemic climate and with an impact on all the economies of the world, which would make the long-awaited recovery even more difficult.
4) Doubts about the safety of vaccines: Vaccines outside of regulated settings and traded on the black market could have severe side effects on the population. The news would generate a lot of reluctance among citizens to continue injecting the vaccines approved by the regulatory bodies. This could be the germ of a new crisis and the advance of the virus.
5) That the Fed turn off the tap: Of all the options on the table, this would be the most dangerous as much of the recovery experienced by Wall Street in the last 10 months has come from the hand of aid from the Federal Reserve. A change in strategy would cause the collapse of markets ultra-dependent on central banks and would lead investors to take refuge in buying dollars.
6) That other countries follow in the footsteps of the United Kingdom and decide to leave the EU: the more populist governments of Poland and Hungary could decide to leave the EU. Its economic impact would not be comparable to that of Brexit, but it would mark the beginning of the end of the European project.
7) A price war in OPEC +: the differences between OPEC members are well known. Tired of discussing the cartel countries, they could choose to compete in the market and lower crude prices, something that if it occurred would lead to the bankruptcy of private companies in the United States and Russia.
8) Bursting of the technology bubble: Joe Biden’s position on monopolies is known to everyone. If the Biden administration push for greater antitrust regulation this could lead to a sell-off in tech companies with FAANGs being the worst hit.
9) Tesla passes its balance to bitcoins: As already suggested on Twitter, Elson Musk decides to put his company’s accounts in bitcoins. That is, one bubble (Tesla’s) would solpate with another (cryptocurrencies.
10) Tensions with North Korea: After the understanding reached between Donald Trump and Kim Jong Un, the arrival of Biden could lead to new tensions in which China and the United States were also involved, which could lead to a new conflict on a global scale.