DOG - 2021 Global Market Outlook: The Old Normal

• With the world in the early post-recession recovery phase of the business cycle, our medium-term outlook for economies and corporate earnings is positive. We believe that 2021 will feature an extended period of low-inflation, low-interest rate growth that favors equities over bonds.
• There are some near-term risks, however, such as investor sentiment, which has become overly optimistic following recent vaccine announcements. This makes markets more vulnerable to negative news.
• In Europe, the second wave of virus infections has reversed the third-quarter V-shaped recovery. The new lockdowns are working, however, and we believe that Europe is poised for a strong post-vaccine recovery.
• Once a vaccine is widely available and lockdowns have been eased, we believe that normal early-cycle recovery dynamics should resume, with a rotation toward relatively cheaper value and non-U.S. stocks that are likely to benefit from a return to more normal economic activity.

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