Market Health

Top 10 Forecasts for 2021

We’ve all just survived a year no one could have ever imagined.

Now the question is… What’s in store for 2021?

Today, Energy and Infrastructure Strategist David Fessler and I each provide five forecasts – our top five trends to watch – for the year ahead.

Matthew Carr

  1. Cannabis Grows Like a Weed: In 2021, I think we will see the inklings of major changes at the federal level – like the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, Secure and Fair Enforcement (SAFE) Banking Act or Strengthening the Tenth Amendment Through Entrusting States (STATES) Act passing. And I think as many as five more states will legalize cannabis markets this year! I’m watching Connecticut, New Mexico, New York, Pennsylvania, Rhode Island and Virginia.
  2. Travel and Leisure Stocks Recover: 2020 was a devastating year for airline, cruise ship, restaurant, movie theater, theme park and travel stocks. As I’ve written about before, bankruptcies abounded in these sectors. But in my opinion, these are must-haves for 2021. There is pent-up consumer demand for travel… and being anywhere besides home.
  3. The Energy Bull Is Back… for Now: In 2021, expect U.S. crude to retake $60 per barrel – a level not seen since the early days of 2020. Pre-pandemic consumption won’t return this year. But I think we’ll have a multiyear rally – albeit a bumpy one – in energy. This sector was the worst performer in 2020 by a considerable margin. Time to go discount shopping!
  4. The Stock Market Rally Continues: It’s a new year, and there’s a new leader at the helm of the U.S. The first year in the modern U.S. presidential cycle that I created is one of the best years for stocks. We’ve enjoyed double-digit gains on the Dow in the first year of six of the last eight presidential cycles. However, we did see two losses in 2001 and 2005. Those are important to note because of the similar economic backdrops. But I think we’ll see another year of gains for U.S. stocks, with small caps leading the charge.
  5. Bitcoin Tops $30,000: The reward halving that happens every four years triggers a multiyear bull market. Last year, I predicted Bitcoin would have an explosive 2020. Since then, the cryptocurrency has more than doubled and set new all-time highs. But there’s still room for this bull to run. I think $30,000 is a feasible target, with potentially a lot more in store. (Writer’s Note: I made this prediction when Bitcoin’s price was at $20,000. Since the new year began, Bitcoin’s price has already surpassed $30,000, so my estimate was far too conservative!)

David Fessler

  1. Economic Uptick: Starting in the second quarter, I expect to see markets anticipate the beginning of America’s reopening and its subsequent economic improvement. By the end of the second quarter, every American who wants to be vaccinated should have had that opportunity. Matthew and I agree that this will be a boon for travel and leisure stocks!
  2. New Technology: 2021 will see plenty of new technologies gain further traction. Some areas I’m watching are business automation and robotics, artificial intelligence, new computer architectures, next-generation communications, and advances in cybersecurity. Businesses will use these technologies to increase efficiency and resilience. They will be integral to expanding operations in a cost-effective manner.
  3. Green Hydrogen: It’s become clear that green hydrogen is one of the elements key to a carbon-free future. This is one of the fastest-growing areas in the energy sector. When green hydrogen is burned, it produces energy, heat and water vapor. There are no pollutants. It will be crucial to decarbonizing sectors of the economy that are difficult to electrify. Long-haul trucking, heavy manufacturing and aviation could all use green hydrogen to operate.
  4. Energy Storage: Energy storage was installed at record rates in 2020, and utilities are making large-scale investments in this sector. Paired with solar and wind resources, energy storage gives these electricity-generating sources baseload capability, eliminating the need for fossil fuel-based generating sources. I think we could see a fivefold or sixfold increase in the energy storage business by 2025. It’s a multibillion-dollar opportunity for investors.
  5. 5G and Satellite Internet: Faster internet for all will be the norm in 2021. It’s all about enhancing our connectivity to the rest of the world and each other. Whether it’s from a 5G fixed wireless access device or a Starlink satellite account, faster connections with lower latency open new doors in terms of what’s possible. And 5G brings the threat of obsolescence to fiber- and cable-based networks.

There you have it!

We’ll be sure to revisit these top 10 trends throughout the year to check on their progress.

Until then…

Here’s to high returns,

Matthew

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