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Economy

Recapping 2020: Politics, Covid-19, Economy, Investment Themes For 2021 – Forbes

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As we say goodbye to 2020, our focus is on 2021 and the many things that will unfold. Last year was, to say the least, difficult and life altering for people, businesses, and governments worldwide. The explosion of misinformation, which was also mind boggling, contributed greatly. The Covid-19 Pandemic will surely be remembered as a key turning point in American and world history. Many trends emerged and other trends accelerated as a result.

We’ll discuss todays Georgia Senate runoff, the coronavirus, the economy, a Biden presidency, and investment themes for 2021 and beyond.

Georgia Election

Residents of Georgia are voting to elect two senators. Currently, republicans hold a 50-48 edge in the Senate. If the democrats win both seats, they will have the edge with a 50/50 balance where Kamilla Harris casts the deciding vote in the event of a tie. More importantly, democrats will assume the Senate majority role, replacing Mitch McConnell. However, if either republican is victorious, republicans will control the Senate. The polls indicate it will be a very close race. Early voting favored the democrats and it’s been suggested that republicans need to win the in-person voting by a 70/30 margin to overcome the heavily democratic weighted early voting. That’s a tall order for sure. We’ll see.

It’s not unusual for the party of a newly elected president to control both sides of Congress. This was the case for the last four presidents (Trump, Obama, Bush, and Clinton). What is unusual is for one party to sweep the presidency and Congress in the same election. If that does occur, I believe we must look no further than the handling of the coronavirus.

Covid-19

The coronavirus is surging in many parts of the world. Moreover, given the emergence of a new and more contagious strain (but NOT more deadly), experts believe the worst is yet to come. With over 85 million cases worldwide and 21 million here in the U.S., plus the slow rollout of the vaccine, it’s easy to see how. Why has the vaccine rollout failed to reach the Trump administration’s goal? I attribute it to a lack of coordination and inadequate funding. The latter issue is why I wrote a Forbes article December 7 entitled, Why The Next Coronavirus Stimulus Bill Will Happen Soon. In it, I stated that neither party wants to be remembered as the “party that failed to fund the vaccine rollout.” I’m glad they finally came together.

This virus is insidious. While it has the worst effect on the elderly and those with certain comorbidities, it is also mysterious. It has taken the lives of otherwise healthy individuals in their 30s, 40s, and 50s. Even if the actual numbers are not exact, the fact that it is unpredictable is reason enough to be cautious.

Economy

Early on we were faced with the prospect of the worst economy since the Great Depression. To their credit, Washington stepped in and provided relief in the CARES Act, which took effect March 27, 2020. The question at that time was: How efficient and effective will the federal government be in getting relief to those who need it? We now know it was extremely effective. However, when the federal unemployment subsidy expired July 30, Congress failed to act, leaving millions of workers in several industries to figure it out for themselves. Finally, five months later, Washington acted. How could they fail to act when so many were out of work due to government policies mandating the closure of entire industries?

President Biden

With a Biden presidency comes democratic policies. However, this is contingent upon the Georgia vote today. If the democrats fail to win both seats in the Georgia Senatorial race, republicans will have the power to prevent Biden from implementing his policies. If the democrats win Congress, here’s what I expect will happen (in no certain order):

·        Increased tax rates on highest income earners

·        If Congress repeals the 2017 Trump tax cuts, higher taxes on the majority of taxpayers

·        Increased regulation (i.e., less business friendly)

·        Legalization (at the federal level) of cannabis

·        More aggressive action on climate initiatives (rejoin the Paris Agreement)

·        More aggressive action to stem Covid-19

·        Rejoin the W.H.O.

·        Via Congress: Bill to repeal liability protections for gun manufacturers

·        Massive new stimulus bill

·        Effort to help minorities gain more prominent positions

These are only a few of the items to watch. Again, it depends on what happens in Georgia today. Regardless, Biden’s first order of business will be the virus. During this phase, I doubt he will attempt to raise taxes or promote economically unfriendly policies. These policies may get pushed to 2022.

Biden turned 78 on December 20, 2020. Camilla Harris is only 56. If Biden is unable to complete his term, Harris would become president. Harris has a much more left-leaning view than Biden.

Investing Themes

Which industries will lead the 2020s? Here are a few ideas and a few companies to consider.

Online retail was already gaining traction, but with Covid-19, it has accelerated greatly. In short, companies like Amazon, Walmart, Shopify and others will continue to reap the benefits from the pandemic. If individuals adopt this method of consumerism long enough, it will become a habit and a new way of purchasing what they need, including groceries.

Some of the “work from home” movement will stick in a post pandemic world, reducing demand for office space, and allowing companies to lower expenses. This will benefit companies like Zoom and usher in a new wave of companies offering this service. This may also depress commercial real estate prices.

Health care is another industry that should benefit as more people seek medical help. With the surge of Covid-19, many hospitals have decided not to perform elective and non-life-threatening procedures. Thus, there should be a good deal of pent-up demand for these services.

On the climate front, we will see an increase in clean energy, including electric vehicle production. Currently, Tesla is the leader, but competition is quickly ramping up.

Artificial intelligence is another beneficiary of the Pandemic.

With the growth of online activity and especially after the recently discovered hacks on many government institutions, cybersecurity will become increasingly important.

Infrastructure will be another place to consider, however, it’s not clear when this may happen.

From investing themes to a Biden presidency to the economy to Covid-19, one thing is sure, 2021 will look vastly different from the pre-pandemic era. What will happen and when will it happen? It depends largely on today’s Georgia election, after which, we’ll know much more.

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Economy

Opinion: Plant protein beckons as a key component of economic diversity – Calgary Herald

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Alberta can add value through processing to many of our crops — fractionating the plants into ingredients such as protein, starch and fibre that will then be exported or further developed locally into commercial products for food, beverages, pharmaceuticals, nutraceuticals, cosmetics, pet food or livestock feed.

Take peas alone: if we process 35 per cent of the average pea crop grown in Alberta, it will add an additional $1 billion annually to the provincial economy compared to just exporting the crop as a bulk commodity.

But there is growing competition globally in plant-ingredient processing and there is already disparity within the Prairie provinces.

In Western Canada, $1 billion has been invested into protein processing plants in the past few years. However, Alberta has not yet announced a single commercial facility that extracts pea protein, even though our farmers grow nearly half of the field peas in the West. Every tonne is exported.

Alberta is at risk of letting this moment pass us by while others move ahead decisively.

What needs to happen?

First, and most importantly, the provincial government must make the plant-ingredient processing sector one of its top priorities.

Developing a plan is key. Elected officials and bureaucrats at all levels need to demonstrate a depth of knowledge — publicly and in private negotiations — backed with a clear strategy and a true commitment. Premier Jason Kenney and Agriculture and Forestry Minister Devin Dreeshen have said agriculture will drive economic recovery and have allocated funds for investing in value-added processing. Focusing on a cohesive plant-based strategy and making it a government priority will ensure we seize this realistic chance to diversify.

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Economy

Japan’s economy to recover to pre-pandemic levels in 2022, Bank of Japan’s Kuroda says – The Globe and Mail

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Bank of Japan Governor Haruhiko Kuroda attends a news conference at the BOJ headquarters in Tokyo, Japan, on July 30, 2019.

KIM KYUNG-HOON/Reuters

Japan’s economy will likely recover to levels before the coronavirus pandemic as early as March next year, Bank of Japan Governor Haruhiko Kuroda said on Monday, offering an upbeat view on its recovery prospect despite headwinds from COVID-19.

Kuroda also said a combination of expansionary fiscal and monetary policies have successfully stabilized Japan’s economy, signalling that the BOJ has offered sufficient stimulus for now to cushion the economic blow from the health crisis.

“Both fiscal and monetary policies have been successful in preventing corporate failures and unemployment,” Kuroda told a virtual meeting of the World Economic Forum.

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“We expect, probably by the end of fiscal 2021 or early fiscal 2022, that Japan’s economy would recover and come back to levels before the pandemic started,” he said.

In its latest quarterly projections released last week, the BOJ expects the world’s third-largest economy to expand 3.9% in the fiscal year beginning in April, followed by a 1.8% increase in fiscal 2022.

The key challenge for policy-makers would be to prevent the pandemic from leaving a lasting scar on the economy, and to provide impetus to growth such as by promoting digitalization and a “green” economy, Kuroda said.

“Greening the economy…was important before the pandemic. But now it’s more important. It would make our economy more sustainable. At the same time, it would provide some growth impetus,” he said.

After suffering its biggest postwar slump in April-June last year, Japan’s economy has been recovering moderately from the pandemic thanks to a rebound in exports and output.

But a resurgence in infections has forced the government to declare a new state of emergency in January, threatening to cool consumption and push the economy back into recession.

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Economy

German economy to stagnate in Q1 – economist – TheChronicleHerald.ca

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BERLIN (Reuters) – The German economy will stagnate in the first quarter of the year, Ifo economist Klaus Wohlrabe said on Monday, in the latest sign of the toll being taken by lockdown on Europe’s largest economy.

“The German economy is starting the year with little confidence,” Wohlrabe said, adding that delays in COVID-19 vaccine deliveries were adding to the uncertainty.

German business morale fell by more than expected in January as a second wave of COVID-19 brought to a halt a recovery in Europe’s largest economy, a survey showed on Monday.

(Reporting by Rene Wagner; Writing by Riham Alkousaa; Editing by Thomas Escritt)

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