Brian Sullivan: 5 predictions for 2021

Airlines have increased visible cleaning standards on flights in an effort to reassure people who are nervous about flying during the pandemic.

Andrew Matthews | PA Pictures | Getty Images

From the next big story of the Covid crisis and healthcare to airline fares, Vegas and your money, here are my top 5 predictions for 2021.

A reminder you probably don’t need, but I’ll give it anyway: these predictions are for informational and conversational purposes only and should not be construed as investment advice of any kind. . Leave that to the pros. Have fun and tell me where I’m wrong. Twitter @SullyCNBC Facebook:


Prediction 1 – The “Roaring 22” start in the second half of the year (Vegas sells out in September)

The world will slowly emerge from our collective Covid crisis at the start, but once it becomes clear that a majority of the most vulnerable are protected (April?), Expect to see the start of a consumer and consumer boom. excess like anything we’ve seen in 100 years. It will be driven by the huge savings made by professionals able to work from home. While millions of Americans are struggling economically right now, the harsh reality is that millions of households are spending more than ever before, in large part thanks to locked-in savings. No travel. Little or no restaurant. No gym membership. Much of that savings has been spent on big-ticket items like cars and home improvement projects, but the history of the pandemic suggests that experiences will trump things and that money will be transferred to the exit. . What I only half-jokingly called the “GOAT” trade on CNBC (go out and travel). Every hotel room in Vegas will be sold out for a weekend by September. ETFs to watch include the Invesco Dynamic Leisure and Entertainment (PEJ) ETF, ETFMG Travel Tech ETF (AWAY), and VanEck Vectors Gaming ETF (BJK).

Prediction 2 – Popular airfares will more than double by July 4

As of this writing, a nonstop fare on United Airlines from Newark, NJ, to Los Angeles in April is $ 290, with business class running at $ 2,300. Good luck getting those rates in a few months. Although United recently said they don’t see a clear indication that the demand is going to emerge, I believe it will. More than a million people a day are already flying again on certain days, even as Covid cases explode. There is a “lockout fatigue” that we can see ending before our eyes. Americans want to fly. Airlines, still shocked from 2020, will be slow to add capacity to the market. It will also take time to get them out of the desert storage and prepare them to fly again. Higher demand for fewer seats on the more popular routes is expected to mean sky-high ticket prices. Airline XAL’s ETF has jumped on that expectation since the fall, so who knows how many airlines are left on the safe side. Pay attention to stocks, but book your ticket now.

Prediction 3 – Oil ends the year above $ 55

While the world remains inundated with oil and everyone thinks crude oil is on the way out, it is too early to cancel it entirely. In the United States, a wave of transactions and bankruptcies in Texas is expected to help reduce excess production. Globally, the astute leadership in OPEC of Saudi Prince Abdulaziz bin Salman, as well as the recent promotion of the Russian Energy Minister to Deputy Prime Minister, should help further keep cheaters from quotas such as Iraq and Nigeria. While there are tough talks on fossil fuels by Democrats, the party leadership would also like to end up turning Texas blue, and hammering oil would be politically damaging. Biden also remembers no doubt that for two years after the financial crisis, the only industry that created jobs in America was oil and gas. That almost on its own improved the look of all the underlying economic data, slowly boosting psychology and optimism. Renewable energy investment will continue – as it should – but next year will be the year of the car, airplane and cargo. Refiners should also do better with higher margins.

Prediction 4 – Commodities will outperform most stocks (DBC on SPY)

I would have preferred to write this a few weeks ago as it would have been a much easier prediction. The last few weeks have already seen a surge in commodity prices, almost all “hard” or “soft” commodities have seen prices rise. Global money supply – led by free central banks around the world – and near-record rates will continue to boost consumption (again, see Prediction 1) and manufacturing. We are already seeing huge volumes of cargo in US ports. The Port of Los Angeles experienced its busiest month in its history in October, during a pandemic. Inflation will heat up following a surge in commodities. A more direct prediction: a basket of commodities like the DBC or DJP ETFs will outperform the S & P500 between January 1 and May 1, 2021.

Prediction 5 – Top performing healthcare investments focus on the next crisis: obesity

Lockdowns, lack of sports and a fast food boom may fuel an obesity crisis even bigger than the one America is already facing. Companies that focus on solutions will likely see an advantage. The pandemic and the resulting lockdowns are likely to lead to weight gain for many. If you don’t want to cook or do the dishes for the 100th time this month, fast food is often all that’s available in many areas. We’ve all seen drive-thru lines 30, 40, 50 cars long. Who can blame us? It is cheap. It’s easy. It tastes excellent. Combine the increase in calories with the lack of exercise options and an explosion of alcohol, and this is a recipe for weight gain. Obesity is responsible for approximately 300,000 premature deaths per year and costs the United States approximately $ 350 billion each year. Per capita health care costs are also skyrocketing. 36% of Americans are obese. This outbreak was an unsustainable trend before Covid, and will likely only get worse as it comes out. Businesses that deal with weight loss or weight management, diabetes, or other similar medical issues will unfortunately see a boom. Look at names like DexCom (DXCM), Tandem Diabetes Care (TNDM), Novo Nordisk (NVO), Abbott Labs (ABT). For what it’s worth, I hate this prediction.


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