OCM Commentaries

Market Commentary 21st January 2021

By January 21, 2021 No Comments

Biden’s Executive Order Strategy Paves Way for US Economic Revival


Global stocks rose this week on optimism that fiscal and monetary stimulus will revive economic growth in 2021. As Joe Biden was sworn in as the 46th President of the United States yesterday, US markets reached all-time highs as inauguration-day jitters about potential unrest passed, with US markets posting their best first-day reaction to a presidential inauguration since 1937.

The incoming president plans to begin his first full day in office by issuing a sweeping set of executive orders to tackle the Covid-19 pandemic and revise or refashion many of his predecessor’s most heavily criticised policies. According to a Biden administration briefing, the President’s first actions will be to overhaul and unify the US approach to virus testing, stabilise the supply chain for medical supplies and boost the government’s ability to provide rapid and equitable vaccine distribution. With the Biden administration now in place, investors are looking forward to increased economic support alongside expanded federal support for the vaccine rollout across America, with an ambitious goal to administer vaccines to 100 million people over the next 100 days. Investors will be keen to observe vaccination figures gather pace in the coming months and gauge the implications of the new US Presidency over the long term.

The ECB Leaves Policy Unchanged Despite Continued Risks

ECB officials confront a challenging outlook in their first meeting of 2021, as stricter lockdown restrictions and a slow vaccine rollout across the region threaten to weigh on the recovery over the year. A resurgent outbreak of the coronavirus and concerns about new strains of the disease are testing the assumption that current stimulus will be sufficient to carry the euro area through into recovery, while political tensions in Italy are adding to uncertainty in the bloc.

In the face of ongoing risks, ECB President Christine Lagarde struck an upbeat tone for the year, maintaining the current growth outlook set in December. With more than 1 trillion euros left to spend on stimulus, the institution was not expected to rush any revamp of current policies, therefore the decision to leave rates and current QE levels unchanged did not come as a surprise for market participants. Fortunately, as the euro area enters its third round of restriction measures, financial markets understand the ECB’s reaction function, reducing room for surprise. Provided the vaccine program gathers steam over the next two months, growth expectations remain intact despite the latest wave of infections and restrictions.

German Outlook Remains Uncertain as Political Risks Loom

Despite the heightened number of virus cases in Germany, Europe’s largest economy has remained relatively resilient in its handling of the global pandemic. Although Germany contracted 5% in 2020, the nation’s economy fared relatively well when compared to its European peers, with France, Italy and Spain forecasted to have contracted 9.3%, 9.0% and 11.1% in 2020, respectively. Germany’s well positioned economy, supported through its targeted fiscal policy, is expected to improve further as the nation meets its inoculation targets over the next six months.

That being said, political risks are expected to remain a key factor impacting the longer-term German outlook ahead of the 26th September election, in which Angela Merkel has announced that she will not run. This week, Merkel’s CDU party elected her successor, Armin Laschet who could be a key candidate in the September election, however it is still too early to tell who could win. As it stands, the expectation is that there will be a change in Germany’s policy approach, which could have a direct influence on European policy.

Our update on Germany’s current economic positioning and what a new leader could mean for both the nation and Europe can be found in the Market Update Document attached.

Our Outlook

Overall, market optimism remains firmly in place, with the 2021 outlook remaining positive as key risks abate over the year. That being said, we still see volatility ahead in the short term given the continuing virus narrative, however we are encouraged by the pace of the vaccine rollouts across the UK and abroad, with data now suggesting that the UK has administered 7.1 vaccines per 100 people, while the US and Europe have administered 5 and 1.4 per 100 respectively.

Key Events We Are Watching This Week:

  • Friday: UK Consumer confidence & retail sales for Jan, European PMI data
  • Friday: UK Jobs data for Q4

For anyone who wants further data to substantiate the position please review the attached Global Economic Update document.

Model Portfolios & Indices

Global stock markets continued to display high levels of volatility over the week as countries across the world battle with surging virus cases and political uncertainty. The portfolios gained over the week as markets rallied on positive vaccine developments and stimulus hopes. Looking ahead, we are optimistic on the medium-term outlook from here, accepting further volatility in the near term, but confident in our positioning, with well diversified portfolios which have been designed to weather challenging market conditions.

*It should be noted that the make up of the equity element of the cautious portfolios (OBI 3 to OBI 5) is slightly different to the balanced portfolios (OBI 6 to OBI 8), with the equity element of the lower risk portfolios consisting of a higher weighting to globally focused and diversified multi-asset funds. As a result, the equity content tends to be lower risk and will therefore not perform as strongly as the balanced portfolios in rising markets, but tends to be less volatile in falling markets, in line with the mandate of the portfolio. If you would like to discuss the level of risk within your portfolio, please contact your adviser.

Important Information

Past performance cannot be used as a guide to future performance and the value of your investment will fall as well as rise in value.  You may not get back all of your investment and the final value of your investment will depend on the performance of your portfolio.  The actual performance of an individual client’s portfolio may differ due to different funds being used and being restricted in relation to certain asset allocations.  Performance figures quoted include fund manager charges but exclude adviser, discretionary, custodian and switch charges and trading spreads.  Unless stated, income is reinvested into the portfolio.  The information contained in in this document is for information purposes only.  It does not constitute advice or a recommendation or an offer or solicitation for investment.

We are pleased to announce that earlier today, OCM was awarded ‘Expert’ status in its 2021 Defaqto rating! The rating reflects the strong track record and ongoing management of OCM’s discretionary portfolios, with a 5-star rating designating the service as being one of the highest quality offerings in the market.

We Need Your Vote!

We are delighted to also report that OCM Wealth Management has been shortlisted by an Independent Panel for an award in the following categories.

  1. Best Discretionary Wealth Manager
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We need your help to win and would really appreciate your vote!

Please use the link below to place your vote. As an incentive to vote, you can also enter a free prize draw for a case of Moët & Chandon Champagne. Voting closes at 16:00 on 12th February 2021.



Have a great week,


Jason & Gina