10 Monster Stock Market Predictions For 2021

In this write-up, I review my 10 predictions for 2021. Clearly, anything can happen, but there is a point to this exercise -- it helps me layout a game plan and thought process for the path that may lie ahead this coming year.

10.) The global economy contracted in 2020 due to the coronavirus pandemic. But with a vaccine being rolled out, there is hope and optimism that the virus can be contained and controlled. It should lead to a better-than-expected GDP growth rate here in the US, approaching 5%.

9.) Faster than expected GDP and lower comparables will give the illusion of higher inflation rates in the first half of 2021. However, the second half of 2021 will prove to be more challenging as inflation rates normalize and fall below the Fed’s long-run average rate of 2%.

8.) Higher GDP growth and faster inflation rates will lead to higher 10-year yields in the first half of 2021. The yield will approach 1.5%, steepening the yield curve dramatically.

7.) Higher Yields in the US, faster growth, and stronger inflation will result in the US dollar strengthening. After struggling below 91 on the dollar index in the first half of the year, it will rise back to 96 in the second half of 2021. The strong dollar will help to halt rising inflation in the second half of 2021.

6.) Higher inflation rates in the first half of the year and fears over the dollar’s debasement will result in gold prices rising in the first half of 2021 to nearly $2,300, a record. However, as inflation normalizes, gold will retrace, give back all of its gains, and finish lower on the year.

5.) Platinum may be the metal to watch as the auto sector recovers and production returns. It will result in higher demand for the metal, as it is used in the catalytic converter and emission controls, and right now, it is the cheapest of its peers; Palladium and Rhodium. This means that platinum will soar to around $1,600.

4.) Rising rates will hurt the technology sector in the first half of 2021, as the sector has already seen a tremendous amount of multiple expansion due to the low rate. But rising rates mean that this sector’s valuation will be too high, resulting in lower equity valuation, before recovering by the end of the year.

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Disclosure: Mott Capital Management, LLC is a registered investment adviser. Information ...

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