Understandably Mr Bidens main preoccupation is to defeat Covid which is likely to have killed more American lives than both world wars by the end of February. Although in theory the Democratic party have not been the friends of big business in the USA my feeling is that as he will still need to have the Republican party working with him in order to get many of his policies enacted, he will probably not give way to the far left of his party which is quite anti big business. This should mean that the American markets move ahead over the coming year. One of his appointments is Janet Yellon as Treasury Secretary. She is very keen on big spending, even though this will increase the already huge deficit, as she sees it as essential to avoid economic meltdown in the USA.
The rest of the world is waiting to see what foreign policies the new president pursues but we can be fairly confident that they will be a lot less antagonistic as far as trade is concerned which should be a fillip for markets around the world. As we have discovered in the past when the American butterfly flaps its wings the effect is felt around the world.
On the home front, as with the rest of the world, focus has been on the dreadful toll Covid is still taking. Sadly, this pandemic together with the issues surrounding Brexit which are starting to come to light have not been kind to the UK markets with the FTSE100 and the FTSE250 both down over the week. There is a lot of argument over which, if any, tax increases we will see in the March budget. My best guess is that the chancellor will go for the ones which will sit well with the general public especially in the “red wall” constituencies. One of these would be pension tax relief with the link to tax rates being abolished. Although this is not a document designed to give advice, if you are a high rate tax payer now could be the time to make a contribution to your pension.
So, to the markets
In order to make the numbers more relevant I am moving away from March 2020 as the starting point to January 1st 2021. This will enable me the show the way in which markets perform as the year progresses.