(The author is editor-at-large for finance and markets at Reuters News. Any views expressed here are his own.)

LONDON (Reuters) – For a couple of days at least, there’s been a craving for the ‘old normal’. But the past is never quite what it seemed.

The mere glimpse of economic and political ‘normality’ returning with this week’s U.S. election results and COVID-19 vaccine breakthrough prompted a scramble for burnt-out ‘value’ stocks, bonds and currencies and away from lockdown winners, safe-havens and anti-globalisation plays.

One stand-out stock trade following Monday’s Pfizer/BioNTech vaccine surprise would have been to switch from online meeting firm Zoom ZM.O to cinema operator AMC Entertainment AMC.N — for a tidy relative gain of 70% in just hours.

If more restrained in price terms, that sort of move was rife across markets. Banks and energy stocks — among the biggest losers from months of lockdown, recession and floored borrowing rates — have surged for two days now, with airline, travel and leisure shares also helping push MSCI’s all-country index to new highs.

In contrast, New York’s NYFANG+TM .NYFANG index — grouping tech giants Apple, Amazon, Facebook, Alphabet and others — fell 6% from levels inflated by zero interest rates and locked-down households’ reliance on digital services.

With the gap between value stocks and growth stocks in MSCI’s global index at its highest in 20 years, investors have been itching to rotate for a long time.

And this value play, or normality trade, was not confined to sectors and stocks — it also played out in demand for bonds of Europe’s ‘laggards’, even those hit hard by the pandemic, UK stocks and sterling, and lower-rated corporate debt.

A flight from safe-haven assets like gold and Swiss francs, or long-term bonds supported by economic gloom and central bank purchases, mirrored those moves.

Even before the vaccine news, Joe Biden’s victory over self-styled political and globalisation disrupter Donald Trump had fuelled hopes for ‘trade detente’ that have recently lifted China’s yuan and other emerging market assets.

The U.S. president-elect’s green infrastructure pledge lifted renewable energy stocks, while his scepticism about Brexit is expected to hasten a trade deal between Brussels and London — another potential tailwind for the long-shunned pound.

But it is the Pfizer news that has really lifted investors.

Consultancy McKinsey reckons vaccine-aided immunity among developed world populations is possible by the second half of 2021, shifting those economies away from their crisis-footing as early as the first quarter.

Deutsche Bank said the vaccine’s efficacy was “significantly better than the market’s base case and risky assets should therefore reprice materially”. It favoured the pound as a stand-out play.

Combining some of the value themes amplifies them. UK banks priced in dollars .FTNMX8350 have jumped almost 14% in their biggest two-day gain in more than a decade.

But things can quickly get more complicated.

Graphic – Where in the world?

Graphic – Return to ‘normalcy’?

BEWARE CROSS-CURRENTS

Some mega-trends that were already developing have been catalysed by the pandemic and its passing may simply usher in what McKinsey calls the “next normal”, of further digital transformation, with all the winners and losers that brings.

As Amundi’s chief investment officer Pascal Blanque opined just hours before the Pfizer news: “The idea that the vaccine is the alpha and omega of everything is wrong.”

So reversing investment course either sectorally or geographically may not make sense for long.

More normality will mean a rethink of the monetary and fiscal policies that have kept economies and markets afloat for nine months — not least those long-duration assets highly sensitive to interest rates, from long-dated government bonds to digital stocks with near-zero future earnings discounts.

Any challenge to the assumption that central banks will keep borrowing costs suppressed for years to keep government debts affordable could destabilise record equity valuations. Rotation may make sense but seismic shifts create risks of their own.

On the other hand, interest rates had been ossifying for years due to low inflation and growth — themselves in part due to the digital revolution and demographic change. While reflation trades may now seem obvious, it’s difficult to make a case for accelerating price growth.

Biden’s election brings promises of higher spending but those could founder if Senate races leave Congress gridlocked in January.

Higher U.S. yields compared to Europe and elsewhere, seen as likely post-election and post-pandemic, could meanwhile fuel a steep dollar recovery that would challenge China and emerging markets even if global trade fears ebb.

And a new vaccine horizon itself could cut across the sort of “blue sky” fiscal and monetary policy thinking that many had hoped would lift the world out of the low-growth, low-wage funk it has suffered for much of the past decade.

“A return to normality is not the same as a move to continued fiscal stimulus that could put growth on a higher future path,” said Oliver Blackbourn, Multi-Asset portfolio manager at Janus Henderson Investors.

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