A 2020 Word Cloud

As everyone knows, Christmas gets earlier every year. In New York, the flagship store of Macy’s will unveil its Christmas window displays on Thursday—more than a month before Christmas and even a week before Thanksgiving, when it sponsors a nationally televised parade through the city’s streets.

But it isn’t just department stores. The annual ritual of large investment houses unveiling their predictions for the year ahead has also nudged earlier and earlier. In mid-November, the season is already in full swing. You might think that 2018 had been a cautionary tale, when the biggest sell-off of the decade brought the S&P 500 down more than 20% from its peak, and culminated on Christmas Eve. All the 2019 forecasts were already out, and suddenly what had been estimates of a rather flat year in 2019 had been turned into prognostications of a 25% gain. 

This episode may have dampened the ardor of strategists and fund managers for making precise numeric predictions. And it also dampens my own ardor for going through those outlooks in detail. But it hasn’t stopped investment banks and fund managers from launching lavish productions. My favorite so far saw a panel of experts from UBS Group AG at New York’s Four Seasons hotel joined by a hologram of their Asia-Pacific strategist Min Lan Tan, who took part without ever leaving Singapore. 

Through all the words and beautifully presented PowerPoints, some themes are emerging. I haven’t crunched all the transcripts, but I am confident that a word cloud of all the presentations I attended would feature some of the following words in big capitals:  


Senator Elizabeth Warren’s name arose repeatedly, as one of the biggest risks for next year. If presenters didn’t bring her up spontaneously, there would be a question about her. Sectors she could most affect are financials, energy and healthcare, in that order: M&A will dwindle because she would be tougher on antitrust; and nobody felt like making strong predictions either way about her chance of winning. One intriguing way to benefit from a Warren presidency might be to try investing in ESG funds. If a President Warren is going to force us all to buy ESG investments, the argument goes, then buy ESG funds now and enjoy a pop when she makes everyone else join in.

To give a notion of Warren’s impact, I recall no mention of the words Biden, Sanders or Buttigieg, even though these three are all in a rough tie with her in polls in Iowa. Her name came up even more than the word Trump. To some extent she stands to play the same role that Trump did four years ago. A year ahead of the election, discussion revolved around him, with many openly terrified of the prospect of a Trump victory — so that of course there was a dramatic rally as soon as he won. Like Trump, Warren represents change and the unknown, along with a risk to the current model of capitalism that is serving money managers and their clients very well. One related issue:


A year ago, the concern was about “populism,” generally taken by investors to be a bad thing. This year, there is more of a direct focus on inequality, which is acknowledged as a serious problem — and also as a risk that could yet bring capitalism as we currently know it unstuck.

There is less inclination to talk about Warren’s plans to attack inequality with a wealth tax. The press debate of the last few weeks has probably convinced the investment community that nothing good can come of complaining about extra taxes for billionaires.

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