The observation on the reliability of gold was echoed by Deutsche Bank Metals Analyst Nicholas Snowdon in his February 2020 Trade Finance TV appearance, A golden safe haven, just before most lock-downs had started. “Geopolitical events support safe haven buying and this creates a strong environment for gold investor demand,” he explained. And the extraordinary negative plunge of Brent Crude was something we examined more closely in April in our article Covid-19 and commodities, which highlighted how at one point on 20 April the May contract for West Texas Intermediate (WTI), the US oil benchmark, which had started the day at US$17.85/bbl, traded at –US$39.55/bbl and remained in negative territory for around six hours before recovering to US$1.43 the next morning.

As for 2021, “We see upside risks to our forecast (Brent USD 45/bbl in H1, USD 50/bbl in H2), with potentially little to stand in the way before Brent US$ 60/bbl in 2021,” the team notes.

In our flow article Covid-19 and Inflation, Reid observes, “Most bailouts before the GFC tended to be less than US$10bn in today’s inflation adjusted terms. The [1986-95] savings and loan (S&L) crisis (US$293bn in 2020 inflation-adjusted terms) and [1994] Peso (US$93bn) crises saw higher numbers but still relatively small for more recent times. The GFC moved us from ten billion being a big number to a trillion being the new bail-out currency. This Covid-19 crisis has moved us towards ten trillion plus being the bailout currency globally.” By the end of 2020, he pronounces that global developed market government debt is likely to be the highest on record (see Figure 3).

Figure 3: Historical median Debt/GDP for a sample of advanced economies, along with the IMF's forecasts for the advanced economies

“Will a post-Covid world see inflation or will we revert to pre-Covid norms?” asks Reid; a question reprised by The Economist in its leader of 12 December where it makes the point, “Even a small probability of having to deal with a surge in inflation is worrying, because the stock of debt is so large and central-bank balance-sheets are swollen. Rather than ignore the risk, governments should take action now to insure themselves against it.”¹ In their more in-depth article, “A surge in inflation looks unlikely”, the newspaper identifies the main factors at play on what will shape the outcome: “the after-effects of the stimulus measures taken by governments to cope with the pandemic; demographic shifts; and changes in policymakers’ attitudes towards the economy”.²

So the overall view of whether we are heading for inflation or deflation as discussed in the 20 May flow article is unchanged seven months on. “The new normal will be somewhere between the extremes of Zimbabwe (galloping inflation) or Japan (deflation). It just depends on which balm economies apply to the pandemic scar tissue as to where on the spectrum between the two extremes that might be.”

As for expected take-up, this is still patchy across age groups. “The older UK and German populations are more prepared to take a vaccine. More work is needed elsewhere…,” observes Reid. In the flow article, Race for a vaccine (September) he notes the issue of indemnity from future liability claims has been “a tricky point in supply negotiations with the European Commission’s Directorate-General for Health and Food Safety”, and might have something to do with any lingering reluctance of certain groups to take the vaccine.

In the monthly dbDIG Survey for December 2021 covering 984 market professionals across the world, nearly half of the respondents (48%) said they would readily volunteer for a jab within one month of an approved vaccine being made available to them. Reid calls this “a decent rate”.

When the same group was asked when they expect to be vaccinated, taking into account potential availability as well, only 11% expect to have done so by the end of Q1 2021, with just over half by the end of H1 and three-quarters by the end of Q3 next year. Just 4% of readers preferred not to get vaccinated “which is encouraging”, he concluded.

On a festive note, it was this group (so this is the demographic in question) that declared the worst possible Christmas present someone could get them was “a cheap bottle of alcohol followed by cheap confectionary. “Our readers have refined palates, only the best for them,” comments Reid.