Richard Haass, president of the Council on Foreign Relations, penned “The Pandemic Will Accelerate History Rather Than Reshape It” for Foreign Affairs magazine in an attempt to predict the global political fallout of the pandemic. The article is well-considered, articulate, and contains some interesting guidance for investors. It also makes for really depressing reading.
Mr. Haas expects that the post-virus world will also be ‘post-American’. The lack of U.S. leadership internationally during the crisis due to political sclerosis, lack of will, and the fading respect for America globally, is the continuation of multi-year trends.
At the same time, anti-China sentiment is rising and international bodies like the World Health Organization have been ineffectual at best. The pandemic is being dealt with on national levels while hopes for global co-operation on issues like climate change fade. The author worries that nationalism, health fears and virus-caused developed world unemployment will erase the willingness of wealthier nations to accept refugees.
There are economic implications of Mr. Haass’ bleak projections – the potential dismantling of global supply chains and the resulting downward pressure on corporate profit margins is a big one – that investors with longer-term time horizons will have to take into account.
It is Mr. Haass’ thought process, however – the belief that the current crisis will accelerate trends already underway rather than abruptly remake daily life from scratch – that holds the most valuable information for investors.
When all this is over, I suspect many people will rush back to the office with a new appreciation for their co-workers. But the benefits and feasibility of working remotely have been more firmly established and management are now far more comfortable with the process. We’re likely to see a steady rise in employees working from home.
Remote employment will create investment opportunity, notably in the software, telecommunications, and casual wear sectors, and the same is true of online shopping, package delivery, video gaming, and other businesses that were already growing and got a boost from the crisis.
In the search for new investment ideas, Canadians should look at what they’re doing more of now during the crisis, whether that involves Netflix, working remotely, reading on a tablet, gaming or other. These are the trends likely to continue to strengthen when life returns to normal.
-- Scott Barlow, Globe and Mail market strategist
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Others (for subscribers)
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Tuesday’s analyst upgrades and downgrades
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Others (for everyone)
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What’s up in the days ahead
One of Canada’s biggest fixed income investors sees an opportunity to grab equity-like returns with fixed income-like risks. David Berman will have all the details.
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Compiled by Globe Investor Staff