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Global X 2021 Outlook

The Blue Water Team

Positive changes in the fight against the COVID-19 pandemic, as well as political shifts, have set the stage for likely growth in 2021, according to a report from Global X. 

Uncertain Global Economic Recovery

Economic growth is expected this year, due to a number of factors, including the following: 

  • Onset of COVID-19 vaccinations 
  • Implementation of stimulus efforts
  • Support of growth-driving factors by the Biden administration 

However, economic growth is not certain, making the above factors critical in ensuring a positive 2021 from an economic standpoint. 

Necessary Economic Support

The United States economy is in desperate need of more stimulus support in the following areas: 

Consumers

Middle and low income consumers are susceptible to the impacts of COVID-19 and require support to encourage their economic participation. 

Small Businesses

Small businesses, who employ more than 47% of private employees, have had to switch to digital means of selling their goods and services during the pandemic. In the second wave of pandemic-related shutdowns, it is small businesses who are facing bankruptcy. 

Federal Economic Support

Thanks to support from the Fed, including the support of corporate debt and the slashing of interest rates, the market was able to bounce back from the initial, pandemic-fueled recession. 

Promising Future for U.S. Equities

2021 looks good for U.S. equities, which stand to benefit from expanding vaccine distribution, ESG-friendly members of the Biden administration, and support of major disruptive trends by the Biden administration. 

Disruptive Trends to Continue

Thanks to the pandemic, thematic trends were accelerated in 2020, including cloud computing, e-commerce, and video games. The changes caused by these trends are likely to become ingrained in the new normal 

New Income Need

Efforts by the Fed to obtain income securities and keep the economy afloat had positive effects in 2020 but left income-seeking investors, such as retirees, needing more income in 2021. 

These changes mean income-seeking investors need to pay attention to the following elements of their portfolios: 

  • Covered Calls
  • Preferreds
  • EM Bonds
  • MLPs

Appeal of International Investments

With the U.S. dollar forecasted to weaken this year, international investments are looking more appealing to investors. The specific areas that provide the best results for investors will depend upon factors such as vaccine distribution as the year progresses. 

Chinese Leadership in Asian Growth

By rapidly getting the virus under control, China positioned itself to lead economic growth in Asia in 2021. 

Greater Asian Growth Ahead

In 2021, however, developed areas of Asia, such as Japan and Southeast Asia, should demonstrate impressive GDP growth, thanks to promising pandemic numbers and regional trends. 

European Recovery Ahead

Continental Europe also shows signs of recovery in 2021, particularly in Germany, where growth factors have outpaced similar factors in other parts of Europe. European emerging markets are also showing signs of recovery in 2021. 

Emerging Market Comeback

Finally, emerging markets may recover in 2021, presenting a promising investment opportunity for enterprising investors. Commodity exporters are particularly likely to benefit, as demand for commodities increases alongside economic recoveries around the world. 

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