U.S. equities could rebound to record highs, but uneven global economic growth lies ahead
Wells Fargo Investment Institute (WFII) today released its â€œ 2021 Outlook: Forging a Path Forward ,” which examines how the markets could react to COVID-19 vaccines and therapeutics, how economic priorities may change under new leadership in Washington, D.C., and how a strengthening economic recovery helps Main Street catch up to Wall Street.
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WFII 2021 Outlook: Forging a Path Forward (Graphic: Wells Fargo)
â€œThis year has challenged investors’ fortitude and left them feeling a little exhausted,” said Darrell Cronk , president of WFII and chief investment officer of Wells Fargo Wealth & Investment Management. â€œAs we turn the calendar into 2021 and simultaneously exhale (albeit through our masks), serious questions call for clarity and resolution.”
The report outlines each of the asset classes and risks to the outlook:
- Global equities: We expect the economic recovery to continue in 2021, which should support an earnings rebound, sending equity prices to record highs.
- Global fixed income: Low rates are likely to persist. While we may see some modest upward pressure on longer-term rates, we expect that any sell-off in rates will be contained.
- Global real assets: We expect that a 2021 rebound in demand and a delayed supply response will support a continued bounce in commodities. We remain favorable.
- Global alternative investments: Investors should gravitate toward hedge fund and private capital portfolios that are more focused on themes arising out of the COVID-19 crisis.
â€œPatience and perseverance have a magical way of encouraging progress. Almost always, economic recoveries have arisen from dark points in our history, and investors know well that some of the best investment opportunities often present themselves from nonconsensus ideas. These patterns are developing again,” Cronk said.
The outlook also provides five portfolio ideas for 2021:
- Hold the right amount of cash.
- Selectively increase risk.
- Consider exposure to higher-quality, growth-oriented sectors.
- Diversify income sources.
- Be proactive not reactive.
Join the WFII Outlook 2021 conference call on Wednesday, Dec. 9, from 4:15 â€“ 5:00 p.m. Eastern Time. The U.S. number is 855-458-0619 and international is 574-990-1270.
About the Wells Fargo Investment Institute
Wells Fargo Investment Institute is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company, providing investment research, strategy, manager research, and thought leadership within the Wealth and Investment Management division, with the goal of supplying world-class advice to the company’s financial and wealth advisers. Wells Fargo Wealth and Investment Management, a division within the Wells Fargo & Company enterprise, provides financial products and services through bank and brokerage affiliates of Wells Fargo & Company.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified, community-based financial services company with $1.92 trillion in assets. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment, and mortgage products and services, as well as consumer and commercial finance, through 7,200 locations, more than 13,000 ATMs, the internet (wellsfargo.com), and mobile banking, and has offices in 31 countries and territories to support customers who conduct business in the global economy. Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 30 on Fortune’s 2020 rankings of America’s largest corporations. News, insights, and perspectives from Wells Fargo are also available at Wells Fargo Stories .
News Release Category: WF-ERS
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Allison Chin-Leong, 212-214-6674