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The fever will break in 2021, bringing the world normalcy after a delirious outlier of a year

If I only had one word to describe 2020, I would pick "feverish."

Why it matters: The fever still rages — but never has it been more certain that by this time next year, and probably much earlier, the delirium will have broken. If 2021 is the year of reversion to normal — a year of slow but certain recovery from the ravages of 2020 — then by definition a lot of the weird excesses are sure to disappear.


The intrigue: Much of our current lives has the air of unreality (Switzerland is waging a currency war?), and we'll surely look back upon this year as a delirious outlier along many different axes.

  • The big picture: The pandemic has upended lives and economies — and came during the final year of a Donald Trump presidency that shattered norms and whose actions often elicited outright disbelief.
  • Within the next few months, the Trump administration will be a memory. And if enough Americans take the vaccine, then COVID-19 is likely to be under some semblance of control.

What else will fade away?

  • Trumpism is one possibility.
  • Trade wars with Europe are likely to end, too.
  • The SPAC explosion will probably not make it into 2021. While there will still be many SPACs looking to acquire companies, the number of new SPACs will surely be much lower than in 2020.

The biggest unknown is the seemingly unstoppable momentum of the stock market, which has risen an astonishing 70% from its low point just nine months ago.

  • So long as the market is strong, expect the current parade of IPOs to continue.

What they're saying: Fed chair Jay Powell told reporters yesterday that while historic market metrics like companies' price-to-earnings ratios are high, "that's maybe not as relevant in a world where we think the 10-year Treasury is going to be lower than it's been historically."

  • In other words, if the cause of the stock market's feverishness is the fact that investors expect loose monetary policy and record-low interest rates for the foreseeable future, then maybe that particular fever won't break.
  • There's a lot of skepticism, however, that nosebleed valuations for things like Bitcoin or Tesla stock can survive a reversion-to-boring trade.

Here to stay: Geopolitical tensions, especially with China. The continued deterioration of the human rights situation in Hong Kong is only going to make matters worse.

  • Also: Domestic political tensions, between Democrats and Republicans. Those are now a permanent part of the U.S. political landscape.

The bottom line: Much of the world is still in recession, with high unemployment ravaging civil society. Supply chains have been broken, billions of people's mental health has suffered, and the global neoliberal consensus has been demolished, with no indication of what might replace it. No doubt, 2021 is going to be tough. But its challenges are likely to be much more familiar than what we faced in 2020.

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