The Covid emergency returns to scare and this time the epicenter of the fourth wave is Europe, but the European Central Bank will not extend the program Pandemic Emergency Purchase Programme (PEPP) to cope with the resurgence of the virus. The prediction comes from Antonio De Negri, founder and CEO of Cirdan Capital, according to whom there will be two potential risks for the end of 2021 and for the first quarter of 2022.
Risks on the way according to Cirdan Capital
First, the rapid spread of the virus in the so-called ‘fourth wave’; and secondly, the lack of help from the ECB. Our forecast, says De Negri, is that this scenario could increase the volatility in investor portfolios, as it could generate uncertainty regarding the economic stability of the eurozone. In fact, in order to face potential risks, an approach that focuses on a ‘prudential’ rather than an ‘opportunistic’ approach is preferred.
Analyzing the possible consequences, the expert predicts that the implications of these two factors can have a substantial impact on the labor market, fueling the ‘supply chain disruption’ (interruption in the production chain) in the eurozone. However, thanks to the large number of vaccinated people in Europe and the organization of public and private bodies, we do not expect the ‘fourth wave’ to have an impact on health as in previous waves continues the CEO of Cirdan Capital. “As we believe further supply chain inefficiencies may occur in the real economy, we expect a slowdown in the growth of financial markets in the short term, which we estimate will aggravate inflation levels in the medium term,” he concludes.