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James Bowen takes a look ahead to the end of this year, and shares his thoughts on four likely scenarios that may come to pass. 

Today we live in an environment of extreme uncertainty. More than 26 million Americans who had jobs a month ago are now unemployed. No one can tell you whether that number will be bigger or smaller a month from now. We have seen negative prices for the West Texas Intermediate oil contract, but that same barrel traded yesterday for $28.82 for December delivery, giving a tremendous premium to anyone who can store crude oil. As I previously posted, the expectations of risk priced into equity markets have unquestionably increased; it’s difficult even to estimate how much, because any estimate of future cash flows at this point is mostly guesswork. Point estimates are worthless and even probability distributions of future outcomes are likely based on shifting sands.

The four outcomes explored are:

• Stagflation
• International Competition
• Prolonged Recession
• Robust Recovery

Read the full article, Four Scenarios for Year-End 2020, on LinkedIn.