Parts of the market 'are going to roar' while tech will climb modestly on stimulus tailwinds, vaccine, Citi senior banker says

  • David Bailin, Citi Private Bank chief investment officer, said tailwinds from the stimulus and good news of a vaccine will cause parts of the market to “roar” in the next year and a half.
  • He told Bloomberg on Friday that investors need to be thinking ahead to what will happen to markets when a successful vaccine is readily available to everyone.
  • He said small and medium-sized industrial companies have a “fair amount of room to snap back,” while technology will only “move modestly ahead.”

David Bailin, Citi Private Bank chief investment officer, told Bloomberg on Friday that news of a vaccine and tailwinds from a stimulus package suggest that parts of the market will have a strong rebound in the next 12 to 18 months.

Bailin said investors need to “look out six months” and ask themselves what will happen when a vaccine actually arrives. The investor said he thinks a successful vaccine is “going to change everyone’s mindset.”

The investment chief also said the global amount of spending could be up to $US12 trillion and will have a “tailwind that’s going to be very stimulative in ’21 and ’22.” He said Citi has written to all of its clients in the last several weeks that this is a very important tailwind.

This vaccine, combined with the effects of the unprecedented amount of fiscal and monetary spending globally, is good news for specific sectors of the market that haven’t yet been fully priced, Bailin said.

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“There are parts of the market that are going to roar ahead in the future and parts like technology that are going to move very modestly ahead because they’re so fully priced and discounted so much of the future already today,” he said.

Bailin mentioned small and medium-sized industrial companies in the US as an example of areas that are not fully priced yet, and have a “fair amount of room to snap back.”

“There’s a lot for investors to do, and I think it’s moving their portfolios away from technology where they have got this extraordinary gain, and into some of these other sectors that will allow them to make alpha, extra profits over the course of the next 12-18 months,” he said.

The investment chief added that “the market, because of the news flow of course, is very focused on what’s happening today. Citi Private Bank, however, is looking out 12 to 18 months for investing,” he said.

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