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SubscribeTHIS IS NOT INVESTMENT ADVICE. Please speak with a registered investment advisor or other qualified financial professional before making any investment decisions.Over the last year, we have covered the rapid rise of technology, accelerated by the Covid-19 pandemic. In recent news, Taiwan’s exports have rapidly risen, with technology and semiconductor exports up 30% over the prior year in each of the last two months. Investors are taking notice, with US semiconductor stocks up 10% in 2021 alone. Morgan Stanley’s Chairman of Global Semiconductor Investment Banking, Mark Edelstone, is focused on a few key trends, highlighted below:What We’re Watching: Who’s investing in R&D, are those investments in next-gen technologies, and have they continued to invest. As Gordon Moore, Intel’s co-founder once said, “You can't save your way out of a recession,” and we take the same view for this industry with the current pandemic. Slowing down means falling behind, and we’re closely following those who aren’t.McKinsey Semiconductor Segment Revenue - Pre-Covid and Current ForecastsIf you’d like to support the ongoing publication of the Weekly Macro Summary, please share the publication with one of your friends or colleagues. Thank you for your readership.Goldman Sachs, “The Re-opening at a Glance”, % change y/y for week ending January 17thUS Existing Home Sales increased +0.7% to 6.76 million in Dec 2020, beating forecasts of 6.55 million. US Markit Manufacturing PMI indicator for January up to 59.1 from 57.1 in December, 3 points higher than the consensus forecast.Philadelphia Fed manufacturing surprises, rising 15 points in January to 26.5. Consensus was for an unchanged reading.Australian consumer sentiment -4.5% m/m retraces previous month's gain.German’s January ZEW indicator of economic sentiment was stronger than forecast, 62 vs 59 expected. Taiwan’s December export order growth +38.3% y/y and now at a record high of $60.6bln.Retail sales in Canada +1.3% m/m in Nov 2020, the 7th consecutive monthly gain.Reuters reported that The Bank of Japan (BOJ) will discuss ways to scale back their ETF purchase program as well as review its yield curve control (YCC) policy that caps interest rates across the government bond market. Under the YCC program, the BOJ guides short-term rates to approximately -0.1% and buys enough government bonds to keep the 10-year yield around 0%.The ECB monetary policy decision was boring with no changes to policy and no surprises.Bank of Canada (BoC) leaves interest rate policy unchanged (as expected) and made no modifications to the asset purchase program. The 4Q 2020 Euro area bank lending survey showed a net tightening of credit standards for loans to firms and households.Major dry ice manufacturers are predicting a US dry ice shortage as vaccines take priority over standard uses.Earnings season has had a strong start. As of this writing, 13% of S&P 500 components have reported earnings.The Nasdaq reached new all time highs, again, this past week. US Semiconductor stocks are leading technology higher. Those companies’ shares are up approximately 10% so far in 2021, outperforming the S&P 500 by almost 8%. The key drivers of the notable performance are:IBM dropped ~10% after missing analysts’ expectations.After criticizing the Chinese government, Jack Ma has resurfaced for the first time in three months. He can be seen briefly speaking during a virtual event held on Wednesday. The Prime Minister of Mongolia, Khurelsukh Ukhnaa has submitted his resignation and a proposal to dissolve his own government on Thursday. A controversial law has been passed in China that will allow the coast guard to use more aggressive tactics in the Western Pacific. Citigroup sees 5 potential drivers for higher inflation in 2021:Arithmetic base effects: Prices dropped to very low levels in April and May as a result of a halt in economic activity. Comparing April ’21 prices to April ’20 means there will be large year-on-year changes but these are likely to be temporary. Bounce back in depressed prices: Categories like hotel stays, airfares and apparel are well below normal levels and are likely to rebound once demand picks-up (travel) and excess inventory clears (apparel).Demand confronting limited supply.More general firming in rents: Measured shelter prices (direct and imputed) have continued to increase and house prices are rising rapidly.Inflation expectations can support longer-term inflation: “Fed officials now emphasize the important of expectations around the 2% target in generating mandate consistent inflation. The move higher in both market and survey based expectations is therefore suggestive that inflation closer to 2% can be obtained.”Morgan Stanley’s 3 Key Calls for 2021: Return to pre-Covid-19 path: We expect the global economy to enter the next phase of its V-shaped recovery by reaching its pre-Covid-19 GDP path (i.e. where GDP would have been absent the Covid-19 shock) by 2Q21. We see upside risks to this view, given the prospects of further fiscal stimulus in the US. We see limited scarring effects on private sector risk appetite. As warmer weather sets in alongside the vaccination of the vulnerable segments of population, demand will rebound sharply from March/April, especially for Covid-19-sensitive sectors.Return of EM growth cycle: EM growth will rebound on the back of both domestic and external tailwinds. Domestically, macro stability is in check and growth will get an uplift from the monetary easing that was undertaken last year. Externally, demand is being supported by stronger growth impulses in the US and China and rising commodity prices. Moreover, with the US current account deficit widening and US real rates remaining low, it will provide a conducive external backdrop for EMs. Five key factors supporting EM growth:More manageable Covid-19 challenge.Macro stability – inflation and current account – is in check.US reflationary policies will widen its current account deficit, easing EM financial conditions.China’s growth impulse will have positive spillover effects to EM.Rising commodity prices will boost terms of trade for EM commodity exporters.Return of US inflation: We expect US core PCE inflation to reach 2%Y by year-end, and cross it sustainably from 2022 onwards. With the growth recovery gathering momentum, and further fiscal stimulus in the works, the US economy could return to its pre-Covid-19 path even earlier than the 4Q21 timeline we envisage in our base case. Meanwhile, macro policies will remain very reflationary despite this growth backdrop, setting the stage for a rise in inflation.Thank you for subscribing to the Primary Dealer Review. If you have any questions or comments, please email me directly at  and I will get back to you.Do you know someone who would like to receive this publication? Please feel free to share the Weekly Macro Summary with them.This weekly summary expresses the views of the author as of the date indicated and such views are subject to change without notice. The author has no duty or obligation to update the information contained herein. Further, the author makes no representation, and it should not be assumed that past investment performance is an indication of future results.Moreover, wherever there is the potential for profit there is also the possibility of loss.This weekly summary is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services or an offer to sell or solicitation to buy any securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources.The author believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based.This weekly summary, including the information contained herein, may not be copied, reproduced, republished, or posted in whole or in part, in any form without the prior written consent of the author.© 2021 Primary Dealer. See , andThis site requires JavaScript to run correctly. Please or unblock scripts

SubscribeTHIS IS NOT INVESTMENT ADVICE. Please speak with a registered investment advisor or other qualified financial professional before making any investment decisions.Over the last year, we have covered the rapid rise of technology, accelerated by the Covid-19 pandemic. In recent news, Taiwan’s exports have rapidly risen, with technology and semiconductor exports up 30% over the prior year in each of the last two months. Investors are taking notice, with US semiconductor stocks up 10% in 2021 alone. Morgan Stanley’s Chairman of Global Semiconductor Investment Banking, Mark Edelstone, is...

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