• Equity markets have started the year strongly. We thought that there was upside to the economic and earnings growth forecasts for 2021 and that is looking more likely now despite the short-term disruptions. We remain committed to our bullish call on equities. • The US non-farm payroll number indicates the scale of economic disruption we could have in the very short-term. The weakness came in all the Covid related sectors and we are likely to see more of this as we travel through January. However, on the other side we have the roll out of vaccination which should gather momentum and the ‘light blue sweep’ in the US. Although numbers in the Senate are tight, if further fiscal action is needed it should now occur quite quickly – this is different to Autumn 2020.• In addition, the Fed also remains firmly supportive. Musings by some Fed members that tapering could occur a bit earlier than thought were dismissed quite emphatically by vice chairman Clarida. His belief is there will be no change this year. The Fed will be waiting to see if policy have any sustained impact on inflation rather than theorising about what the potential impact will be.

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