e2fda6f48f4beb7f2e9a16bde35b727c4d7cd8e0d73c422d49e7378ade652268;;[{"layout":"linklist","uid":24325,"publicationDate":"19 Jan 15:32","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_178987.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJLmrrwvNVFgwyS0nW2mibLk=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Thinking - Mass vaccination in 2021: What could possibly go wrong?","product":"Economics Thinking","synopsis":"<ul class=\"ucrBullets\"><li> The single most important determinant of the economic outlook is health policy and, ultimately, the way out of the pandemic is mass vaccination. Our base case is that, in the US and Europe, the vaccination programs go reasonably well and herd immunity is approached by year-end. But there is a lot that can go wrong.<\/li><\/ul><ul class=\"ucrBullets\"><li> There are three main concerns. First, how many people will get the vaccine' The rollout has so far been underwhelming, although the pace is picking up. For herd immunity, a high bar of at least 60% of the population would need to be vaccinated (or infected), and the bar is higher if vaccines with lower efficacy are used and for more infectious variants of the virus. But most worryingly of all, a significant proportion of people still say they would decline a vaccine, which could make herd immunity unachievable in some cases.<\/li><\/ul><ul class=\"ucrBullets\"><li> Second, there is uncertainty regarding how long immunity lasts for, both via vaccination and past infection, and whether the current suite of vaccines can protect against new, more infectious, variants. Once immunity wanes, the vaccination process must start over again.<\/li><\/ul><ul class=\"ucrBullets\"><li> Third, several emerging economies are lagging behind in terms of pre-ordered vaccines. This means that different parts of the world are likely to achieve herd immunity at different times.<\/li><\/ul>","hash":"e2fda6f48f4beb7f2e9a16bde35b727c4d7cd8e0d73c422d49e7378ade652268","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","synopsislength":"-1","synopsisexpand":"0","nodate":"0","nolinktitle":"0","notitle":"0","dateformat":"d M G:i","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"12"}},{"layout":"linklist","uid":24316,"publicationDate":"19 Jan 9:56","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_178977.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJLmrrwvNVFgwAeD508g43lE=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Italy: Why early elections are unlikely","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> The Italian government crisis has generated political uncertainty and, potentially, a period of political instability. However, we see early elections as the least likely outcome. We believe the current crisis will be resolved via the formation of a new government, without going to new elections. Our Chart of the Week shows one of the main reasons behind our view: indeed, at present, few political parties would be better off in the resulting new parliament, which will be a reformed one, where the number of seats would be substantially less than it is now (from 630 to 400 seats in the lower house and from 315 to 200 seats in the Senate). This is likely to discourage several parties from moving towards dissolution of parliament and early elections, and to encourage their efforts to form a new government in the current legislature.<\/li><\/ul><ul class=\"ucrBullets\"><li> The chart compares the current number of seats in the lower house and in the Senate occupied by the main parties in the current legislature with a projection in case the government crisis leads to early elections. The data in the chart are taken from the latest Ipsos simulation of the distribution of seats in a new parliament. This simulation is based on opinion polls conducted in the last quarter of 2020 and takes into account 1. that a new parliament will have fewer seats and 2. that its voting system would be the current mixed system, the Rosatellum. <\/li><\/ul><ul class=\"ucrBullets\"><li> Opinion polls are only a guide of voting intentions at a point in time and the result of early elections, if they happen, remains highly uncertain. Moreover, any final outcome will be strictly dependent on several unknowns, including, for example, political parties\u2019 decisions in terms of alliances during the electoral campaign and any new parties on offer. <\/li><\/ul><ul class=\"ucrBullets\"><li> But the main message of the opinion polls is clear, in case of early elections, the Five Star Movement \u2013 which has been suffering from a significant loss of support since the general elections in March 2018 \u2013 Forza Italia and Italy Alive will likely be the big losers, with a projected reduction in the number of their MPs of between 60% and 85%. On the other hand, Brothers of Italy, which has benefitted from a loss of momentum by the League, could be a winner. It is projected that it might be able to double its number of seats in a new parliament, potentially making it the third-largest party in parliament after the League and the Democratic Party. With many parties facing losses and few expected winners (not least, with the pandemic still raging), early elections seem unlikely.<\/li><\/ul>"},{"layout":"linklist","uid":24296,"publicationDate":"17 Jan 11:28","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_178953.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJLmrrwvNVFgw5_bvJXGFJvg=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_178953.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJLmrrwvNVFgw5_bvJXGFJvg=&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_178953.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJLmrrwvNVFgw5_bvJXGFJvg=&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<ul class=\"ucrBullets\"><li> What the most recent political events on both sides of the Atlantic mean for 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> Our economic forecasts for the year and the shifting risks, particularly:<\/li><\/ul><ul class=\"ucrBullets\"><li> The impact of the deepening of the pandemic and the prospect of vaccination, and what it may \u2013 or may not \u2013 do to economic behaviour and growth.<\/li><\/ul>"},{"layout":"linklist","uid":24294,"publicationDate":"15 Jan 15:04","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_178951.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJLmrrwvNVFgwzJJ8yCNS1Do=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Spike in indebtedness overstates the vulnerability of eurozone firms ","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Our Chart of the Week shows the evolution of two measures of indebtedness of eurozone non-financial corporations (NFCs). Gross debt includes loans and debt securities, while net debt subtracts from gross debt the liquid assets held by firms, namely currency and deposits. <\/li><\/ul><ul class=\"ucrBullets\"><li> The pandemic has pushed up both gauges. However, gross debt (as a share of gross value added) has increased significantly more and currently stands at its highest level on record, while net debt remains comfortably within the range prevailing since the credit crisis of 2008-09, and clearly below the peak reached in the aftermath of the sovereign-debt crisis. <\/li><\/ul><ul class=\"ucrBullets\"><li> Gross debt tends to be used more frequently in economic analysis, but we argue that at this juncture, net debt provides a more informative picture. As a matter of fact, the increase in net indebtedness since the outbreak of COVID-19 has been totally driven by a denominator effect (i.e. the contraction in gross value added), while the numerator \u2013 the level of net debt \u2013 has hardly changed. The reason is that eurozone firms have boosted their borrowing during the pandemic mainly to increase their liquidity buffers for precautionary motives amid the lack of visibility. Therefore, the spike in gross debt overstates the vulnerability of eurozone firms to increased leverage. <\/li><\/ul><ul class=\"ucrBullets\"><li> As a note of caution, one should consider that our chart provides an aggregate picture, while the pandemic has created unprecedented divergence among sectors. Those businesses most hit by COVID-19 (such as tourism and transport) are likely to have suffered a much more significant deterioration in their financial position than is suggested by our chart.<\/li><\/ul>"},{"layout":"linklist","uid":24272,"publicationDate":"13 Jan 15:21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2021_178928.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRozlcCgEKTWgv-25mWQRJ_Fg==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - A path to recovery (1Q21)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> We expect economies in EU-CEE and in the western Balkans, to grow by around 3.3% in 2021 after slumping by close to 5% in 2020. A weak start to 2021, lower fiscal support, looser labor-market conditions, delayed investment and external risks could result in an incomplete recovery. <\/li><\/ul><ul class=\"ucrBullets\"><li> GDP in EU-CEE and the western Balkans could return to pre-COVID-19 levels in 2022, when growth could accelerate to more than 4%. Interest rates could be increased in Czechia at the end of 2021 and in Poland and Romania in 2022.<\/li><\/ul><ul class=\"ucrBullets\"><li> EU support in the form of the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE), Next Generation EU (NGEU) and the 2021-27 EU budget could support the recovery in EU-CEE in 2022 and beyond. <\/li><\/ul><ul class=\"ucrBullets\"><li> IN EU-CEE, only the NBR is expected to cut rates in 2021. The CNB could be the first central bank to increase rates in 2H21, followed by the NBP and the NBR in 2H22. Central banks could purchase more bonds if state funding needs rise above current plans. <\/li><\/ul><ul class=\"ucrBullets\"><li> In Turkey, economic growth could accelerate from around 1.2% in 2020, to 2.9% in 2021 and 4% in 2022. Without structural reforms, most of the monetary tightening implemented in 2020 could be reversed in 2021 to spur lending and growth. This strategy is not sustainable, and may only serve to put pressure back on the current account, the currency and rates. <\/li><\/ul><ul class=\"ucrBullets\"><li> After declining by almost 4% in 2020, the Russian economy could grow by 2.2-2.3% in 2021 and 2022. The central bank could keep the policy rate at 4.25% in 2021-22 if inflation remains below the 4% target.<\/li><\/ul><ul class=\"ucrBullets\"><li> The COVID-19 pandemic will continue to affect CEE countries in 2021, with herd immunity reached this year only if vaccination accelerates significantly. However, restrictions and their negative economic impact could be much milder next winter than they are currently.<\/li><\/ul><ul class=\"ucrBullets\"><li> In 2021, government anti-pandemic support will decline compared to 2020 in all CEE countries but Bulgaria. Indirect support could be less efficient than last year, unless governments focus on grants, rather than loans to SMEs. Labor-market support may be needed to avoid a large second wave of layoffs. Support could be withdrawn starting in 2H21. <\/li><\/ul><ul class=\"ucrBullets\"><li> Political noise will be a risk in Bulgaria and Czechia, where parliamentary elections will be held in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> Democracy in CEE would benefit if the US administration returns to multilateralism.<\/li><\/ul><ul class=\"ucrBullets\"><li> In the next two years, EU fund disbursements are unlikely to be tied to observing the rule of law. <\/li><\/ul>"},{"layout":"linklist","uid":24205,"publicationDate":"05 Jan 8:45","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2021_178855.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJFC0pwZMIBERTOZjjGnWMyQ=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - German truck index sends encouraging year-end message","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Happy New Year! The fourth quarter of 2020 could become a pleasant surprise in terms of German economic activity. This is the message of the timely available truck-toll-mileage index which did not shrink but increased more than 2% qoq in 4Q20 after the rebound in autumn. In December, for which data are available until 25 December, the positive development still continued (+2% mom). <\/li><\/ul><ul class=\"ucrBullets\"><li> The basic idea of the truck-toll-mileage index is straightforward. The more pronounced the need for transportation services, the steeper the rise in real GDP and vice versa. This simple relationship worked pretty well in the past as especially flagged by the latest pattern in spring and autumn. <\/li><\/ul><ul class=\"ucrBullets\"><li> We think that high backlog orders collected by German industrial companies in previous months have been a literally \u201cdriving\u201d force of the surprisingly high transportation activity. Backlog orders have been worked off by companies, thereby still maintaining good momentum in the manufacturing sector, the heart of the German economy. In contrast, and inevitably, low activities in some services sectors such as hotels, restaurants, etc. are not (fully) reflected by the truck index. Next week, the Federal Statistical Office will release the official GDP figure for 2020 including a first estimate of 4Q20. <\/li><\/ul><ul class=\"ucrBullets\"><li> Needless to say, in the light of the latest restrictions in Germany but also abroad, the first quarter of 2021 might become a different and even tougher ball game. This is not only true for the services sector but also for the manufacturing industry where backlog orders might be dwindling. <\/li><\/ul>"},{"layout":"linklist","uid":24133,"publicationDate":"13 Dec 11:55","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178776.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJw9kLstEFPE48cAf5wS4T8=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178776.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJw9kLstEFPE48cAf5wS4T8=&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178776.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJw9kLstEFPE48cAf5wS4T8=&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<ul class=\"ucrBullets\"><li> From the world of science, I learned three key lessons<\/li><\/ul><ul class=\"ucrBullets\"><li> From the world of politics, I also learned three key lessons<\/li><\/ul><ul class=\"ucrBullets\"><li> That leads me to the world of policies, where I learned one or two intertwined key lessons<\/li><\/ul><ul class=\"ucrBullets\"><li> And what did I learn about markets this past year of dislocations and confusion about temporary shocks versus structural shifts, as well as about policies and their impact' I count four markets-related lessons<\/li><\/ul><ul class=\"ucrBullets\"><li> Finally, I have drawn four lessons from this past year with respect to the future of work, including Work-From-Home (WFH) arrangements and the Work-Life-Balance<\/li><\/ul>"},{"layout":"linklist","uid":24131,"publicationDate":"11 Dec 14:34","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178774.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJw9kLstEFPEmJtxvgmnZpM=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - The ECB has done well, but should be more ambitious","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> The ECB feels good about current financial conditions in the euro area and wants to preserve them throughout next year. Therefore, the new easing measures that were announced yesterday are mainly intended to boost the duration, rather than the intensity, of the central bank\u2019s stimulus. <\/li><\/ul><ul class=\"ucrBullets\"><li> According to our Chart of the Week, the ECB is right, but should probably be more ambitious. The chart shows the UniCredit financial conditions index for the eurozone, which we construct aggregating equity prices, equity implied volatility, corporate spreads, sovereign yields and the trade-weighted euro. When the indicator rises, financial conditions tighten and economic growth tends to slow (and vice versa). Financial conditions have improved dramatically from March when market turmoil induced by COVID-19 reached its peak, and there is no doubt that the ECB deserves great credit for this turnaround. However, financial conditions still remain somewhat tighter than pre-crisis, while the output gap is certainly much larger; this is going to delay even more the recovery of inflation towards the central bank\u2019s target. The ECB\u2019s new forecasts show headline inflation averaging 1.4% in 2023, with core inflation at only 1.2%. Hence, yesterday the ECB should have probably been bolder.<\/li><\/ul><ul class=\"ucrBullets\"><li> We see at least three possible explanations for the ECB\u2019s reluctance to go all in. One possibility is that the ECB\u2019s preferred indicators of financial conditions depict a more-favorable picture than our own indicator. As already signaled yesterday by Christine Lagarde, financial conditions are a broad concept, they encompass several financial variables and they can be measured in many different ways. A second possible explanation is that the ECB sees limited scope for further improvement in those financial variables that are more directly affected by its intervention. For example, the GDP-weighted sovereign yield curve is already trading clearly below its pre-crisis level. Given that fiscal policy is widely regarded as being more effective than monetary policy in closing the output gap at this stage of the crisis, the ECB might see little merit in acting decisively and prefers, instead, to be a backstop that prevents an upward shift in yields while fiscal stimulus does the heavy lifting. Finally, the ECB might feel that the rollout of vaccines poses stronger upside risks to growth and inflation than publicly communicated. If so, the central bank might want to avoid blockbuster stimulus now in order to minimize the risk of an abrupt exit from crisis measures down the road. <\/li><\/ul>"},{"layout":"linklist","uid":24068,"publicationDate":"06 Dec 11:37","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178706.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJw9kLstEFPE8PES_T6PXsM=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178706.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJw9kLstEFPE8PES_T6PXsM=&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178706.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJw9kLstEFPE8PES_T6PXsM=&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<ul class=\"ucrBullets\"><li> What we expect the ECB\u2019s new central forecast to be.<\/li><\/ul><ul class=\"ucrBullets\"><li> The specific risks to the growth path stemming from the second virus wave and the roll-out of vaccines.<\/li><\/ul><ul class=\"ucrBullets\"><li> The risk stemming from fiscal policy-related issues.<\/li><\/ul>"},{"layout":"linklist","uid":24035,"publicationDate":"02 Dec 11:29","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178670.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOcUrK41MJZKtoQ9N7Gy26w=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - China: GDP back to pre-crisis levels, but life is not back to normal","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> China is the only major economy to have regained its pre-crisis level of output in 3Q20 and recent data, including the November PMIs, suggest its economic rebound is gathering pace. China\u2019s outperformance is partly due to timing (it was the first to enter lockdown and the first to exit in March 2020), partly due to the strength of fiscal support for businesses and exports of health-related goods, but most of all it is because China has been successful in containing the spread of COVID-19 \u2013 with only around 100 new cases each day at the moment. Despite all this, our Chart of the Week shows one aspect of life in China that has not returned to normal yet, as the Chinese are avoiding train travel for business and leisure.<\/li><\/ul><ul class=\"ucrBullets\"><li> Before the COVID-19 crisis broke out, freight and passenger rail traffic were widely watched to gauge changes in industrial production activity and in private consumption, respectively. The chart shows the decoupling of the two variables that has characterized the Chinese recovery so far. After a slight contraction in 1Q20, freight rail traffic has since regained momentum and surpassed its pre-crisis levels. Passenger train traffic, on the other hand, contracted by 87% yoy in February at the peak of the contagion in China and has not returned to its pre-crisis level. In October, it was still down by around 15% in yoy terms. This indicator, which looks at business and leisure trips across the country, provides information that contrasts with high-frequency data from TomTom and metro passenger numbers, which show a faster normalization in inner-city mobility. This is confirmation that, even though restrictions in China are now limited, the Chinese are still adopting very cautionary behavior. They appear to be moving within cities for work and shopping, but limiting leisure activities and tourism \u2013 or they are resorting to private transportation or closer tourist attractions. <\/li><\/ul><ul class=\"ucrBullets\"><li> The first implication of the chart is that the fear of contagion continues to take its toll. Keeping the number of new coronavirus cases low is not enough to generate a strong rebound in social consumption. Going forward, when the virus is successfully suppressed through a mass vaccination campaign, the Chinese might return to their old habits and passenger rail traffic might return to pre-crisis levels. But the slow return to normality that we are observing, despite favorable health and economic conditions, poses broader and more fundamental questions about the aftermath of the crisis. Months of mandated or self-imposed restrictions might permanently change habits and social consumption patterns. According to some behavioral economic studies on habit formation, on average it takes around two months for human beings to form a new habit.<\/li><\/ul><ul class=\"ucrBullets\"><li> The 2003 SARS outbreak in China, for example, is often credited with accelerating a structural shift to e-commerce and e-payments, leading to the emergence of some domestic giants in the sector. Likewise, rail traffic might be structurally affected by the COVID-19 pandemic, both in terms of a reduction in business trips due to the widespread use of videoconferencing and changing tourist habits. As a result, consumer spending might shift towards durable goods suitable for short-distance trips such as electric vehicles, which Beijing was incentivizing even before the pandemic. Other sectors could face similar expenditure-switching effects. Therefore, the long-term legacy of the crisis could be a reallocation of resources between and within sectors that could prevent an immediate return to full potential even when the health situation normalizes as some production capacity remains unused. But, in the long term, a more efficient resource allocation might boost productivity and increase the growth potential of the economy.<\/li><\/ul>"},{"layout":"linklist","uid":23998,"publicationDate":"29 Nov 11:10","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178627.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOcUrK41MJZKN9OahXusY_4=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178627.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOcUrK41MJZKN9OahXusY_4=&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178627.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOcUrK41MJZKN9OahXusY_4=&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<ul class=\"ucrBullets\"><li> I\u2019ll argue that the EU must find a way to activate the Next Generation EU program, but without caving to the Polish and Hungarian demands. I\u2019ll summarize how this is possible, but there is not much time left.<\/li><\/ul><ul class=\"ucrBullets\"><li> With respect to the banking and capital markets union, I\u2019ll focus on bank profitability. While a proper banking and capital markets union will help restore adequate bank profitability in the longer term, a minimum level of profitability in the sector is needed to even get started. I\u2019ll argue that on the present outlook, this will be a problem. In particular, I\u2019ll address the most common misperception with respect to bank profitability, namely that the obstacle lies with banks\u2019 own excessive costs.<\/li><\/ul><ul class=\"ucrBullets\"><li> Finally, I\u2019ll reflect on Trump\u2019s obsession with the stock market and his claim that it validates his economic policies. I\u2019ll illustrate that US stocks actually didn\u2019t do that spectacularly during his four years in office, and \u2013 regardless \u2013 that the stock market is the wrong barometer for successful economic policies.<\/li><\/ul>"},{"layout":"linklist","uid":23983,"publicationDate":"26 Nov 15:25","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178608.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOcUrK41MJZKhgT8AP1mpg0=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - The US economy is deteriorating, and it`s mostly 'voluntary' for now","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> One of the big news stories this week was the second consecutive increase in weekly US initial jobless claims. Initial claims rose to 778k for the week ending 21 November, up from 711k two weeks ago on a seasonally-adjusted basis. Our Chart of the Week shows that the percentage change in initial claims (y-axis) is positively correlated with the percentage change in new COVID-19 cases (x-axis) by US state. While recent US data has been mixed, with the IHS Markit PMIs for November surprising to the upside, we put more trust in the labor market data. Importantly, since most US states have not imposed much in the way of mandated COVID-related restrictions, it suggests voluntary social distancing is likely driving the rise in jobless claims.<\/li><\/ul><ul class=\"ucrBullets\"><li> New confirmed cases of COVID-19 have been rising across all US states and surging in most. Some states have imposed new restrictions, and a small minority have forced the closure or part closure of at least some non-essential businesses (Illinois, Kentucky, Michigan, Minnesota, New Mexico, Oregon and Washington State). But overall, the restrictions imposed are far less sweeping than those mandated earlier in the year, and most states have not locked down.<\/li><\/ul><ul class=\"ucrBullets\"><li> Even in the majority of states where non-essential businesses have not been forced to close, voluntary social distancing to avoid the risk of infection is having a negative impact on jobs and economic activity. High- frequency indicators of social consumption, such as visits to retail and recreation venues, are declining and the impact is greater in those states that are experiencing larger rises in new COVID-19 cases. With hospitals under more strain now than in the spring, it seems likely that additional mandated restrictions will be needed to contain the spread of the coronavirus, particularly as today\u2019s Thanksgiving celebrations will likely accelerate new cases in the coming weeks. Around 20 million Americans are currently in receipt of some form of unemployment benefits, and well over half of these people will lose their benefits when two federal programs expire at the end of the year, unless Congress acts. We expect a new fiscal package to eventually be passed in February, of around USD 1tn. We expect zero US GDP growth in the current quarter, followed by a contraction of 2% qoq (non-annualized) in 1Q21.<\/li><\/ul>"}]

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5a46a2c43e8e161ff27c8db9247c563174973a5631ee155242991b73f3c4a1ec;;[{"layout":"linklist","uid":23915,"publicationDate":"19 Nov 16:53","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178540.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAq2DaQTse-lU2vVf2JFQ2c=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178658.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOcUrK41MJZKckCJtp_Up7U=&T=1&T=1","protectedFileLinkIt":""},"title":"The UniCredit Macro & Markets - 2021-22 Outlook: The tantalizing prospect of normality","product":"Macro & Markets","synopsis":"<p><ul class=\"ucrBullets\"><li><strong> Macro: <\/strong> New restrictions in Europe and the US will weigh on economic activity in the near term. Vaccines and medical treatments for COVID-19 are expected to gradually support a recovery in 2H21 and set the economy on course for solid growth in 2022. Monetary policy is likely to remain very loose as inflation undershoots target levels.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> FI: <\/strong> After marking new record lows in 2020, we expect long-term Bund and UST yields to move higher and reach -0.30% and 1.30%, respectively, by YE 2021, with curves bear-steepening. Real yields are set to stay well below zero over the next year. We forecast that the 10Y BTP-Bund spread will trade around 115bp throughout 2021.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> FX: <\/strong> Risk appetite will be a key driver of G10 FX and we think that more weakness lies ahead for the USD. We target 1.28 for the EUR-USD at YE 2021. We also expect the impact of Brexit on the UK economy to send EUR-GBP to 0.94 and we project that EUR-CHF will rise to 1.11. USD-JPY will likely drop below 100.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Equities: <\/strong> With strongly recovering company earnings, we forecast double-digit returns for European equities in 2021, although the path towards higher prices might not be smooth. After a solid 2020, we expect defensive sectors to lose appeal and recommend broadly cyclical exposure.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Credit: <\/strong> Squeezed by asset purchases and low net supply, IG credit spreads seem set to tighten to historical lows in 2021. We think that lower tiers of the capital structure and HY will attract good demand and deliver interesting returns. Yield hunting and solid credit quality also speak for tighter spreads across EM hard-currency credit.<\/p><\/li><\/ul>","hash":"5a46a2c43e8e161ff27c8db9247c563174973a5631ee155242991b73f3c4a1ec","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M G:i","nolinktitle":"0","synopsislength":"400","synopsisexpand":"0","shownav":"0","oldestedition":"","limit":"1"}}]

a4cdae097062004f4cf519496761beb23ec0de3a6728b0ab26a7d15635102a0a;;[{"layout":"linklist","uid":24229,"publicationDate":"08 Jan 10:39","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2021_178879.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVCsY1pNwWYpSxYneOq3LGyt4eyF56Lnjig==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - Italy\u2019s 2021 funding: We still favor the 5Y tenor","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> Heavy government-bond issuance in Italy is set to continue in 2021. The amount of medium-term and long-term (M\/L) bond issuance (all instruments) in 2021 might be around EUR 345bn, which is roughly in line with that of 2020. Because there will be a higher amount of redemptions in 2021 compared to 2020, this will result in slightly lower net market funding compared to 2020: EUR 120bn in 2021, compared to EUR 145bn in 2020. <\/li><\/ul><ul class=\"ucrBullets\"><li> We expect Italy to continue lengthening its debt maturity in 2021. Its cost of debt will likely decline further and could fall from 2.40% to 2.10-2.15% if our rate forecasts prove correct. At the end of 2021, we estimate that the Eurosystem will hold 27-28% of Italy marketable debt. <\/li><\/ul><ul class=\"ucrBullets\"><li> The portion of issuance at the 3Y and the 5Y (to a lesser extent) tenors will likely decline compared to what it was in 2020, while the portion of funding allocated at the 10Y should remain very heavy. We expect supply pressure to remain sizeable at the extra-long maturities. <\/li><\/ul><ul class=\"ucrBullets\"><li> Based on the supply outlook and our rate view, our favorite trades on the BTP curve are long 5Y vs. 10Y and long 5Y vs. 2Y, or a combination of the two in a barbell, going long 5Y vs. the wings. <\/li><\/ul>","hash":"a4cdae097062004f4cf519496761beb23ec0de3a6728b0ab26a7d15635102a0a","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M G:i","nolinktitle":"0","synopsislength":"400","synopsisexpand":"0","shownav":"0","oldestedition":"","limit":"4"}},{"layout":"linklist","uid":24066,"publicationDate":"04 Dec 14:22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_178703.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nFvdgpPgOyS7_7gSenXs8vw==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - 2021: Another year of heavy issuance but ECB to remain supportive","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> 2021 will be another year of very heavy funding requirements in the eurozone, with overall financing needs amounting to around EUR 1.52tn, only moderately lower than this year. M\/L redemptions will amount to EUR 665bn, down from EUR 700bn in 2020. We expect an overall cash deficit of EUR 835bn, only moderately lower than in 2020.<\/li><\/ul><ul class=\"ucrBullets\"><li> We expect the use of funds from the EU (under either the SURE or the NGEU) to mitigate only moderately intense issuance activity in the primary market by around EUR 85\/90bn.<\/li><\/ul><ul class=\"ucrBullets\"><li> T-bill issuance is expected to be much less heavy than in 2020: we pencil in around EUR 80bn of net T-bill supply in 2021, down from EUR 255bn in 2020.<\/li><\/ul><ul class=\"ucrBullets\"><li> This will leave M\/L domestic bond issuance to represent the lion\u2019s share of funding sources. We project M\/L-term issuance at the eurozone level to reach EUR 1.3tn in 2021, some EUR 100bn higher than this year. We expect the lengthening of debt maturity to be a theme in 2021. Net M\/L issuance will likely be particularly heavy in 1Q21, due to front-loading and low redemptions.<\/li><\/ul><ul class=\"ucrBullets\"><li> However, heavy market funding will not be a key driver of yields, as the ECB will remain extremely active with asset purchases, as in 2020. Indeed, we expect the ECB to purchase an amount similar to the entire new net issuance in 2021.<\/li><\/ul>"},{"layout":"linklist","uid":23724,"publicationDate":"29 Oct 8:09","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_178319.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nRi29dMwdIovM3G3jxYh8vw==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - Exploring the impact of EU bonds on the EGB market","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> The ECB\u2019s strong presence in the sovereign-bond market, which we expect to continue through next year, together with robust demand from foreign central banks will further increase the scarcity of safe assets in the euro area. <\/li><\/ul><ul class=\"ucrBullets\"><li> EU bonds could become an alternative to Bunds going forward, given their high rating, provided that their outstanding grows fast. Low ECB buying would also be desirable, to leave most outstanding bonds to private investors. From a portfolio perspective, EU bonds have shown a high and stable correlation with Bunds.<\/li><\/ul><ul class=\"ucrBullets\"><li> Small and mid-size sovereign issuers are likely to face stronger competition from EU bonds, given they will feature similar liquidity. EU bonds also offer good diversification relative to semi-core bonds, as underpinned by their more-stable performance in times of market stress.<\/li><\/ul><ul class=\"ucrBullets\"><li> The EU will become a key player in the EUR-denominated SSA primary market, but we do not expect that the higher liquidity and volume of EU bonds will negatively influence demand for other Supras and Agencies due to the relatively small yield pickup they offer.<\/li><\/ul>"},{"layout":"linklist","uid":23280,"publicationDate":"14 Sep 10:29","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_177861.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nyfW5CoPOGyGcSR2zWP6xCA==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - Heavier supply at the long end to meet with Fed QE","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> US marketable debt is likely to rise significantly in the coming quarters, with the Treasury probably aiming to lengthen debt maturity. Looking at the past, we analyze which impact a change in funding mix might have on the slope of the UST curve.<\/li><li> As foreign investors\u00b4 demand for USTs is likely to remain lukewarm in the near future, action by the Fed will be key to keeping yields subdued.<\/li><\/ul>"}]

eada0c4ea76c629eb47a2c699db2ed6e715070a11680a5d9921f837e1ffd3a5f;;[{"layout":"linklist","uid":24050,"publicationDate":"03 Dec 14:06","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_178685.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2npiIhNkXBBHa2N8hoO2XWEw==&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_178812.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2n65M1ZiLkezQQ5vDJdlNayQ==&T=1&T=1","protectedFileLinkIt":""},"title":"Shortened version of the Euro Credit Pilot (December 2020)","product":"Euro Credit Pilot - Strategy","synopsis":"<p class=\"ucrIndent\"><p>This is a shortened version of the Euro Credit Pilot, which we deem to be an acceptable minor non-monetary benefit under MiFID II.<\/p><\/p><p class=\"ucrIndent\"><p>The COVID-19 pandemic has created unprecedented uncertainty in the global economic outlook, implying low visibility into the future. In our base scenario, while the macro picture might be uncertain, particularly at the beginning of 2021, we expect, however, the credit market to see another strong year, supported by an economic rebound from 2Q and technical factors.<\/p><\/p>","hash":"eada0c4ea76c629eb47a2c699db2ed6e715070a11680a5d9921f837e1ffd3a5f","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"-1","showcompanies":"-1","synopsislength":"-1","showcountries":"-1","showcurrencies":"-1","synopsisexpand":"0","nodate":"0","notitle":"0","dateformat":"d M G:i","nolinktitle":"0","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"2"}},{"layout":"linklist","uid":21554,"publicationDate":"14 Feb 15:36","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_175974.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nw6n3SIBxpGTmDpAUviCpvg==&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_176061.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nNTt7vdgznH-Jqun0zij8HQ==&T=1&T=1","protectedFileLinkIt":""},"title":"Shortened version of the Euro Credit Pilot (February 2020)","product":"Euro Credit Pilot - Strategy","synopsis":"<p class=\"ucrIndent\"><p>This is a shortened version of the Euro Credit Pilot, which we deem to be an acceptable minor non-monetary benefit under MiFID II.<\/p><\/p><p><ul class=\"ucrBullets\"><li><strong> Introduction: <\/strong> The outbreak of the coronavirus has already led to the disruption of global supply chains, with numerous producers across sectors reporting production halts at facilities in China. The related uncertainties warrant defensive positioning in European credit.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Macro Outlook: <\/strong> So far there is little data on the initial impact on the global economy, and comparisons with the SARS outbreak in 2002 are not straightforward. But 1Q growth-related data will be negative.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Micro Fundamentals: <\/strong> Sluggish earnings growth in Europe will negatively impact companies\u2019 credit fundamentals.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Credit Quality Trend: <\/strong> The global economic outlook has become clouded, and the risk of economic slowdown in China due to the coronavirus has increased. Thus, the overall credit quality of European companies will likely decrease as indicated by the potential number of fallen angels.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Market Technicals: <\/strong> With the intensification of CSPP purchases, particularly in the primary market, the ECB is providing continuous support.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Valuation &amp; Timing: <\/strong> We are keeping our end-2020 spread projections unchanged.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Sector Allocation &amp; Recommendation Overview: <\/strong> Uncertainties related to the coronavirus and its ramifications for Chinese growth and the global supply chain warrant defensive positioning. In this context, we lower our recommendation on Automobiles &amp; Parts to underweight from marketweight. We also lower our recommendation on Basic Resources to marketweight from overweight.<\/p><\/li><\/ul>"}]

cee45ec3c62a2f7c371ab5aeacebf397b3dfcda3558749efec14891ce5a1d50e;;[{"layout":"linklist","uid":24272,"publicationDate":"13 Jan 15:21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2021_178928.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRozlcCgEKTWgv-25mWQRJ_Fg==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - A path to recovery (1Q21)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> We expect economies in EU-CEE and in the western Balkans, to grow by around 3.3% in 2021 after slumping by close to 5% in 2020. A weak start to 2021, lower fiscal support, looser labor-market conditions, delayed investment and external risks could result in an incomplete recovery. <\/li><\/ul><ul class=\"ucrBullets\"><li> GDP in EU-CEE and the western Balkans could return to pre-COVID-19 levels in 2022, when growth could accelerate to more than 4%. Interest rates could be increased in Czechia at the end of 2021 and in Poland and Romania in 2022.<\/li><\/ul><ul class=\"ucrBullets\"><li> EU support in the form of the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE), Next Generation EU (NGEU) and the 2021-27 EU budget could support the recovery in EU-CEE in 2022 and beyond. <\/li><\/ul><ul class=\"ucrBullets\"><li> IN EU-CEE, only the NBR is expected to cut rates in 2021. The CNB could be the first central bank to increase rates in 2H21, followed by the NBP and the NBR in 2H22. Central banks could purchase more bonds if state funding needs rise above current plans. <\/li><\/ul><ul class=\"ucrBullets\"><li> In Turkey, economic growth could accelerate from around 1.2% in 2020, to 2.9% in 2021 and 4% in 2022. Without structural reforms, most of the monetary tightening implemented in 2020 could be reversed in 2021 to spur lending and growth. This strategy is not sustainable, and may only serve to put pressure back on the current account, the currency and rates. <\/li><\/ul><ul class=\"ucrBullets\"><li> After declining by almost 4% in 2020, the Russian economy could grow by 2.2-2.3% in 2021 and 2022. The central bank could keep the policy rate at 4.25% in 2021-22 if inflation remains below the 4% target.<\/li><\/ul><ul class=\"ucrBullets\"><li> The COVID-19 pandemic will continue to affect CEE countries in 2021, with herd immunity reached this year only if vaccination accelerates significantly. However, restrictions and their negative economic impact could be much milder next winter than they are currently.<\/li><\/ul><ul class=\"ucrBullets\"><li> In 2021, government anti-pandemic support will decline compared to 2020 in all CEE countries but Bulgaria. Indirect support could be less efficient than last year, unless governments focus on grants, rather than loans to SMEs. Labor-market support may be needed to avoid a large second wave of layoffs. Support could be withdrawn starting in 2H21. <\/li><\/ul><ul class=\"ucrBullets\"><li> Political noise will be a risk in Bulgaria and Czechia, where parliamentary elections will be held in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> Democracy in CEE would benefit if the US administration returns to multilateralism.<\/li><\/ul><ul class=\"ucrBullets\"><li> In the next two years, EU fund disbursements are unlikely to be tied to observing the rule of law. <\/li><\/ul>","hash":"cee45ec3c62a2f7c371ab5aeacebf397b3dfcda3558749efec14891ce5a1d50e","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M G:i","nolinktitle":"0","synopsislength":"400","synopsisexpand":"0","shownav":"0","oldestedition":"","limit":"1"}}]

bd87e708c56b3b8a9552819c45c998d45a56266083972c3b154575aaa4cc495c;;[{"layout":"linklist","uid":23915,"publicationDate":"19 Nov 16:53","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178540.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJAq2DaQTse-lU2vVf2JFQ2c=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_178658.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOcUrK41MJZKckCJtp_Up7U=&T=1&T=1","protectedFileLinkIt":""},"title":"The UniCredit Macro & Markets - 2021-22 Outlook: The tantalizing prospect of normality","product":"Macro & Markets","synopsis":"<p><ul class=\"ucrBullets\"><li><strong> Macro: <\/strong> New restrictions in Europe and the US will weigh on economic activity in the near term. Vaccines and medical treatments for COVID-19 are expected to gradually support a recovery in 2H21 and set the economy on course for solid growth in 2022. Monetary policy is likely to remain very loose as inflation undershoots target levels.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> FI: <\/strong> After marking new record lows in 2020, we expect long-term Bund and UST yields to move higher and reach -0.30% and 1.30%, respectively, by YE 2021, with curves bear-steepening. Real yields are set to stay well below zero over the next year. We forecast that the 10Y BTP-Bund spread will trade around 115bp throughout 2021.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> FX: <\/strong> Risk appetite will be a key driver of G10 FX and we think that more weakness lies ahead for the USD. We target 1.28 for the EUR-USD at YE 2021. We also expect the impact of Brexit on the UK economy to send EUR-GBP to 0.94 and we project that EUR-CHF will rise to 1.11. USD-JPY will likely drop below 100.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Equities: <\/strong> With strongly recovering company earnings, we forecast double-digit returns for European equities in 2021, although the path towards higher prices might not be smooth. After a solid 2020, we expect defensive sectors to lose appeal and recommend broadly cyclical exposure.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Credit: <\/strong> Squeezed by asset purchases and low net supply, IG credit spreads seem set to tighten to historical lows in 2021. We think that lower tiers of the capital structure and HY will attract good demand and deliver interesting returns. Yield hunting and solid credit quality also speak for tighter spreads across EM hard-currency credit.<\/p><\/li><\/ul>","hash":"bd87e708c56b3b8a9552819c45c998d45a56266083972c3b154575aaa4cc495c","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"-1","showcompanies":"-1","synopsislength":"-1","showcountries":"-1","showcurrencies":"-1","synopsisexpand":"0","nodate":"0","notitle":"0","dateformat":"d M G:i","nolinktitle":"0","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]

fca5774f669803887558f1f8bf49f8ba6cbad35f9de48a9f1720f5619f212128;;[{"layout":"linklist","uid":24272,"publicationDate":"13 Jan 15:21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2021_178928.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRozlcCgEKTWgv-25mWQRJ_Fg==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - A path to recovery (1Q21)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> We expect economies in EU-CEE and in the western Balkans, to grow by around 3.3% in 2021 after slumping by close to 5% in 2020. A weak start to 2021, lower fiscal support, looser labor-market conditions, delayed investment and external risks could result in an incomplete recovery. <\/li><\/ul><ul class=\"ucrBullets\"><li> GDP in EU-CEE and the western Balkans could return to pre-COVID-19 levels in 2022, when growth could accelerate to more than 4%. Interest rates could be increased in Czechia at the end of 2021 and in Poland and Romania in 2022.<\/li><\/ul><ul class=\"ucrBullets\"><li> EU support in the form of the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE), Next Generation EU (NGEU) and the 2021-27 EU budget could support the recovery in EU-CEE in 2022 and beyond. <\/li><\/ul><ul class=\"ucrBullets\"><li> IN EU-CEE, only the NBR is expected to cut rates in 2021. The CNB could be the first central bank to increase rates in 2H21, followed by the NBP and the NBR in 2H22. Central banks could purchase more bonds if state funding needs rise above current plans. <\/li><\/ul><ul class=\"ucrBullets\"><li> In Turkey, economic growth could accelerate from around 1.2% in 2020, to 2.9% in 2021 and 4% in 2022. Without structural reforms, most of the monetary tightening implemented in 2020 could be reversed in 2021 to spur lending and growth. This strategy is not sustainable, and may only serve to put pressure back on the current account, the currency and rates. <\/li><\/ul><ul class=\"ucrBullets\"><li> After declining by almost 4% in 2020, the Russian economy could grow by 2.2-2.3% in 2021 and 2022. The central bank could keep the policy rate at 4.25% in 2021-22 if inflation remains below the 4% target.<\/li><\/ul><ul class=\"ucrBullets\"><li> The COVID-19 pandemic will continue to affect CEE countries in 2021, with herd immunity reached this year only if vaccination accelerates significantly. However, restrictions and their negative economic impact could be much milder next winter than they are currently.<\/li><\/ul><ul class=\"ucrBullets\"><li> In 2021, government anti-pandemic support will decline compared to 2020 in all CEE countries but Bulgaria. Indirect support could be less efficient than last year, unless governments focus on grants, rather than loans to SMEs. Labor-market support may be needed to avoid a large second wave of layoffs. Support could be withdrawn starting in 2H21. <\/li><\/ul><ul class=\"ucrBullets\"><li> Political noise will be a risk in Bulgaria and Czechia, where parliamentary elections will be held in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> Democracy in CEE would benefit if the US administration returns to multilateralism.<\/li><\/ul><ul class=\"ucrBullets\"><li> In the next two years, EU fund disbursements are unlikely to be tied to observing the rule of law. <\/li><\/ul>","hash":"fca5774f669803887558f1f8bf49f8ba6cbad35f9de48a9f1720f5619f212128","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"-1","showcompanies":"-1","synopsislength":"-1","showcountries":"-1","showcurrencies":"-1","synopsisexpand":"0","nodate":"0","notitle":"0","dateformat":"d M G:i","nolinktitle":"0","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]

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