We believe that abundant vaccines and near-term reopening efforts will overcome economic divergence. In short, underperforming equity markets should catch up.

Forward-looking investors should be skeptical of today’s assumptions, including “US COVID exceptionalism”, which presumes that US equity outperformance will continue. We are bullish on the US growth outlook, but believe this is now significantly embedded in equity valuations.

A peak in US (and eventually European) vaccinations will send doses to the emerging world.

The Eurozone and Brazil are likely beneficiaries of a full COVID recovery, though markets doubt this. Other parts of Latin America and North Asia could lag for longer as “COVID’s losers”, but even these will close the gap as 2022 unfolds.