In this EMR, we take a look back at our forecasts and assumptions for 2021, and find that our preference for equities has been rewarded by an acceptable, differential rate of earnings growth.

Studying the literature on economic change, while focusing on the post-World War I period, is very instructive, especially as a guide to the current turbulent environment. The available forecasts reveal major economic and social imbalances. We consider them quite significant, especially in the context of current uncertain developments.

The investment outlook is rather bleak, driven mostly – but not solely – by lagging productivity, fears of rising inflation, and high and rising governmental indebtedness, as well “unwarranted” fears of an impending equity market correction.

A look at the following chart of the Dow Jones Industrial Average (DJIA) and the Consumer Price Index (CPI, referred to here as Pdot) raises some questions, doesn’t it?

The introduction of a global minimum tax for companies is being hotly debated in OECD circles. Therefore we ask ourselves the following questions in this EMR: Which influences will it have on production, consumption and international trade? Will inflation be driven by this tax? What does a cyclical comparison say about this? What effects can be expected for large and small countries? Which asset classes are promising?

Not only as a result of the COVID 19 pandemic, investors and also the public at large, are experiencing a trend reversal, away from free trade via the introduction of a new global minimum tax rate of 15%, with the aim of generating even higher revenues for the government.

The economy is expected to rise as the Covid-Pandemic measures are increasingly relaxed.

The high level of monetary and fiscal policy interventions by the USA and also by European countries are the cause of rising inflation and interest rate expectations. They cloud the prospects for the long-awaited economic recovery.

In today’s context, economic forecasting is an attempt to predict the whereabouts of the investment environment. Every analyst uses a combination of important and widely followed indicators. In this EMR, we set the focus on real GDP and its major components using them as a guide to find out what the most promising investment strategy might be!