Morgan Stanley on the amphetamine business cycle:
A year ago this week, global equities bottomed as jobless claims spiked to all-time highs with the shutdown of the global economy as a result of the pandemic, and gloom started to set in. It was also around this time that massive monetary and fiscal policy intervention began, matching the enormity of the catastrophe. Today, hope is growing for light at the end of the tunnel, and the return of March Madness is a sign that we are on the path back towards normalcy.
Vis-à-vis our 2021 Outlook published in November 2020, the US economy is aligning with our economists’ bull case, to which we assigned a likelihood of 20%. The bull case envisioned stronger growth than their above-consensus base case, with multiple COVID-19 vaccines increasing the speed and size of the roll-out, along with a more proactive US fiscal response than in their base case. This is exactly what we are seeing. The US$1.9 trillion American Rescue Plan was more than double our base-case expectation of 2021 fiscal stimulus, and another US$2+ trillion infrastructure package is in the works. The vaccine roll-out in the US has gathered pace, and the timeline for vaccinations has been brought forward, with 87.3 million people in the US receiving at least one dose of a COVID-19 vaccine and 47.4 million fully vaccinated as of last Thursday, according to the Centers for Disease Control and Prevention. Clearly, progress on the vaccination front has not been uniform globally, as parts of Europe and many emerging market economies lag the US. Still, growth is tracking the bull case narrative in our 2021 Outlook.
