- Following the mild pullback in October, global equities rallied after the U.S. November elections that largely resulted in ‘gridlock,’ lowering prospects of major legislative and regulatory initiatives.
- Global stocks, as represented by the MSCI All-Country World Index (ACWI), rose 12.3%. MSCI Europe rose 17% followed by MSCI Japan (up 12.5%).
- Much of the early advance was led by the ‘deflationary’ trade of premium technology growth stocks and long maturity Treasuries.
- However, following leaked human trial data on a COVID-19 vaccine being developed by Pfizer showing 90%+ efficacy, there was a massive rotation into ‘global reflation’ consisting of value stocks, traditional and beaten-up cyclicals, and industrial commodities.
- The damage resulting from the pandemic shutdowns will likely prolong the stratification of the global economy as the ‘healing’ to close the gaps may take longer than in prior economic recoveries.
For further details see:
November 2020 market Commentary: A K-Shaped Recovery