What happens: Political instability regularly weighs currencies around the world, and the violence incited by President Donald Trump is unlikely to strengthen confidence in the US dollar in a moment of weakness.
“In some ways, resilience is encouraging,” he told me. “However, we can not necessarily take it for granted.”
Eurasia Group, the political risk advisory firm, cites a divided United States as the biggest risk for 2021. Domestic political dynamics, coupled with the country’s mismanagement of the pandemic, will make it difficult for Elected President Joe Biden to make America’s global reaffirm leadership role. despite his best efforts, according to Ian Bremmer, the group’s president.
“The United States is by far the most dysfunctional and divided politically of all the world’s advanced industrial democracies,” Bremmer tweeted last Thursday.
Investor insight: Since the rise in the unrest in March last year, the dollar has fallen by more than 12% against a basket of other major currencies. The consensus on Wall Street is that it still has room to fall.
“The stars look very good for dollar weakness,” Rumpeltin said.
The expectation that central banks will maintain an extremely easy monetary policy while contributing to the recovery of the recovery effort also contributed. Thus, he believes that a Biden presidency will usher in a period of greater predictability, which will reduce the demand for safe haven.
The big question, however, is whether political chaos will promote a prolonged erosion of faith in the US dollar, the world’s leading reserve currency. For now, the risk seems limited, in part due to the large amount of trading in dollar-denominated assets.
But as Eurasia Group has pointed out, America’s global dominance is facing real headwinds. One proof: Europe has just finalized an investment agreement with China, which aims to balance its trade relationship with the world’s second largest economy, despite US concerns.
“Biden’s term opens the era of the presidency of the asterisk, a time when the occupant of the Oval Office is considered illegal by about half of the country,” the group said in 2021. “Such a political reality has never occurred in another G7 country, but it is the reality of the world’s most powerful democracy today.”
How bad was 2020 for much of Corporate America?
A handful of technology ventures flourished during the pandemic. But for most businesses, it’s been a sad year – and as the earnings season begins, we’re going to learn the extent of the damage.
The stream of companies sharing the results for the period October to December is increasing this week. A number will also reveal the full annual figures.
On the docket: Delta Air Lines, Citigroup, JPMorgan Chase and Wells Fargo.
Investors paid close attention to bank earnings, given what they could tell us about the state of the economy. As the United States shrugged off 140,000 jobs in December, far worse than economists predicted, there will be many questions about the quality of the loan and whether executives have confidence in current levels of reserves.
However, much of the focus will fall on the future. The KBW Bank Index, which tracks the best US bank shares, has risen almost 40% since the beginning of November.
This is because Wall Street is looking forward to the economic recovery that he says will be in the summer. The fortunes of banks are now linked to how the economy is doing. The prospect of higher interest rates, which could increase how much money banks earn from loans, also helps.
“There will still need to be a relative increase of 10 to 15% in bank shares and possibly more than the economic recovery will take a few years (before the next downturn),” Deutsche Bank analysts said in a recent note to clients .
Following
Monday: CES, the consumer electronics show, is about to start
Wednesday: US inflation data
Thursday: Initial U.S. Unemployment Claims; Jerome Powell speech; Earnings from Tesco, BlackRock, Charles Schwab and Delta Air Lines
Friday: U.S. retail sales and industrial production; Citigroup, JPMorgan Chase, PNC and Wells Fargo earnings