Merrill erkender, at den voldsomme stigning i staternes gæld som følge af coronakrisen bliver en stor byrde for staterne, men omvendt er serviceringen af gælden blevet lettere på grund af de lave renter. Det vil give aktier en fordel i forhold til obligationer.
Uddrag fra Merrill:
Post the Pandemic: Debt, Deglobalization, Digitalization,
Demographics
The contours of the post-coronavirus investment landscape will be shaped by many
factors, including the Four D’s: debt, deglobalization, digitalization and demographics.
Each of these dynamics will determine asset prices, risk premiums, earnings momentum,
and the cost of capital, among other things, as well as macro metrics like real GDP
growth, inflation, trade and employment. In brief, we summarize below the four D’s and
pertinent investment implications.
More debt
Fighting coronavirus will prove to be very costly for governments around the world.
Increased government spending, alongside collapsing output, means the average debtto-GDP ratio in the developed nations will top 120% in 2021, according to estimates
from the International Monetary Fund (IMF). France, Spain, the United States and the
United Kingdom, among others, are all projected to have debt levels in excess of 100%
of GDP by the end of the year.
Estimates from the U.S. Congressional Budget Office (CBO) are in line with the IMF’s:
The CBO expects U.S. federal debt held by the public to reach 101% of GDP by the end
of fiscal year 2020 and widen to 108% by the end of 2021. That compares to 79%
in 2019 and reflects the massive deficit spending precipitated by the pandemic and
attendant plunge in growth.
As Exhibit 2 illustrates, the U.S. federal budget deficit for fiscal year 2020 (roughly 18%) is set to explode and easily surpass the deficit levels of the Great Recession of 2008/09.
Now the good news: yes, there will be a massive debt overhang in the United States
coming out of the crisis. But what matters more to asset prices is the cost of servicing
debt, which in the U.S. is dirt cheap thanks to aggressive measures by the Federal
Reserve and a ten-year bond with an interest rate of 0.7%.
Any country that prints its own money has the wherewithal to keep interest rates low by buying bonds, as the Fed has been doing for over a decade. Continued Fed purchases and sustained foreign demand for U.S. securities portend low rates over the foreseeable future, and diminished risks around servicing U.S. debt levels.
The combination of low rates and a rebound in growth will help debt levels stabilize and decline, as will a modest backup in inflation rates. The latter, in our opinion, is not a risk at this juncture.
For investors, this scenario favors equities over bonds, although when it comes to debt, it becomes more interesting and tricky at the state and local level.
