Fidelity’s Director of Global Macro, Jurrien Timmer, touches upon volatility, COVID-19 variants, inflation, and his market cycle outlook in this episode. Jurrien believes that on a short-term basis, the market is already oversold, also mentioning that he recognizes the recent spike in the volatility index (VIX), but believes that there is nothing in the VIX chart that indicates a drastic change. Jurrien shares that we won’t know if vaccines are effective against the Omicron variant for at least another few weeks. He also noted that the Delta wave increased hospitalizations in the U.S. from 2% to 14%, and did not lead to any significant lockdowns. He believes that if the Delta wave did not cause the economy to get locked down, it is unlikely that any other wave will, unless the vaccines are completely ineffective. In terms of inflation, Jurrien believes that it is going to take a lot more than what we saw on Friday November 26 to slow down the U.S. Federal Reserve, and that if the Omicron variant is a legitimate scare, in terms of slowing down economic growth, that might be enough to quell the inflation anxiety. Looking at the market cycle, Jurrien believes that this has been an earnings-driven bull market and that as long as that continues to be the case, every one of these scares is likely to be short lived because the fundamentals will take over. He also believes that we will continue to be in a bull market, albeit in a more mature mid-cycle phase over the next 6 to 12 months, meaning that earnings will continue to grow but at a slower pace.

Recorded on November 29, 2021.

Transcript (PDF): https://www.fidelity.ca/cs/Satellite/doc/transcript_webcast_timmer_29nov.pdf