Exposure rates of the Dorval Asset Management Range – 15th January 2021

The sharp surge in Covid-19 cases in the west and elsewhere is set to continue disrupting the economy, although the stage is still set for a very forceful recovery later in the year i.e. the vaccination program will gather speed, and we will see massive fiscal support, including Biden’s $1.9 trillion emergency relief plan, which should be approved during the quarter.

Impact of upsurge in epidemic on US figures

Retail sales / billions of dollars
Job-seekers entitled to benefits / millions of people


US retail sales deteriorated for the second month in a row in December, after November’s figures were downgraded. Retail sales have shed 2.15% again over the past three months, while the number of job-seekers entitled to benefits has taken an upturn once more (cf. chart 1). We are still a far cry from the devastation of the first wave, but Joe Biden’s announcement of a fresh emergency aid package is obviously still welcome. Congress will certainly trim back the program somewhat, but experts at Goldman Sachs expect it to vote through a $1.1 trillion plan out to mid-March – versus the $1.9 trillion advocated by Joe Biden – which would prompt them to further upgrade their growth projections for the country.


The vaccination campaign is picking up, but it will clearly take some time to turn the trend around. It will be particularly interesting to see how the situation unfolds in Israel – where a quarter of the population is already vaccinated – as this will give an indication on the time needed for the epidemic to abate (cf. chart 2). For example, the Italian health minister has mentioned pursuing herd immunity by September or October in the country. In a worst-case scenario – where one of the new variants turns out to be resistant to vaccines – Moderna has stated that the mRNA technique means a new vaccine could be developed in less than six weeks, thereby giving cause for hope.


Vaccine doses administered as % of the population

Israel / UK / US / Italy / Germany / France


It is therefore natural for the financial markets to remain fairly unscathed by the short-term deterioration in some countries’ economic activity. Cyclical themes continue to perform well on the stock-markets, along with longer-term themes. We kept our equity market exposure stable in our flexible funds this week, while all our funds particularly benefited from small-cap market momentum.



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