Market Outlook

Q4, 2020: Feast or Famine


Growth, Inflation & Policy


  • The global economy is gradually emerging from the severe recession it entered earlier in the year. Growth has been stabilized but underlying economic and market trends expose an extremely uneven recovery – parts of the global economy remain in depression while some sectors are booming.
  • U.S. real GDP growth is expected to have dropped 4.4% year-over-year in Q3 but is expected to bounce back in 2021.


  • U.S. headline and core inflation rose modestly during the quarter. While current inflation is low, long-term inflation expectations as measured by the 10-year treasury-implied or breakeven inflation rate trended higher over the quarter, ending September at 1.6% (up from 1.3% in June).
  • Global inflation will stay contained during the crisis. Tech and excessive debt levels will also subdue inflation until MMT-inspired “helicopter money” becomes ongoing policy.


  • To date, fiscal stimulus has been more reactive (replacing lost income) than proactive (stimulus). We expect that to change next year regardless of who controls Congress and the White House.
  • The structural change to higher inflation may take as long as until the next general election in 2024, but we believe it may be inevitable given shifting demographics there is no political appetite or will for the alternative.

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