Are we in the early stages of a bull market? With vaccines, rising profits and low interest rates, all the signs are there...

Comment: As one broker declares we’re in for a “multi-year bull run”, the conditions are looking ripe for a buoyant 2021
The Wolf of Wall Street 
Helen Maybanks
Jim Armitage @ArmitageJim2 December 2020
WEST END FINAL

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It was in early October that the Evening Standard started getting optimistic about share prices.

Admittedly, our reasoning was partly wrong: we were banking on a $1 trillion-plus stimulus in the US which still hasn’t materialised.

But we were mainly expecting the first half of next year to bring good news on Covid vaccines, strong rebounds in corporate profits, and a backdrop of low global interest rates.  

We were far from alone in our predictions. Many funds had taken the same stance. 

While the FTSE 100 fell amid US election chaos, they were rewarded as it soon shot up. 

November saw one of the strongest rallies in history.

Wonderfully, it turned out we weren’t optimistic enough on the timing. 

Rather than positive trial results emerging in the New Year, Pfizer/BioNTech’s good stuff will be in pensioners’ arms next week.

All the ingredients are there for a heady cocktail for shares.

The question now is, how long will that last, and how high will they go? 

Liberum brokers today called a “multi-year” bull market.  

They may be right, but caution pays in the thin air of the high alps. 

Those same causes of equities’ surge could see inflation creep back and push central banks to tighten again. 

Bonds have sold off on these concerns.

It’s not likely, though.

 The Fed and co won’t do much for a year or so; economies are too scarred. 

They’ll wait until company profits are firmly back on track.  

Which heralds the long term prospect of strong economies with interest rates returning to the healthy levels we haven’t seen since before the global financial crisis.

Do we dare to dream?

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