Senior Fellow, Hoover Institution,
Palo Alto, Calif.
Niall Ferguson, 56, is one of the world’s leading historians, a prolific author, and creator of the TV series The Ascent of Money, which won an International Emmy award. His new book, DOOM: The Politics of Catastrophe, will be published next spring. He is also working on the second volume of his biography of Henry Kissinger. Born in Scotland, Ferguson is now a senior fellow at the Hoover Institution at Stanford University, and founder of Greenmantle, a macroeconomic and geopolitical advisory firm.
Barron’s: What will be the best investment opportunity coming out of the pandemic?
Niall Ferguson: I’m going to go with Bitcoin. It has had a stellar year, up 165% year to date. [It’s now above $19,000.] If, at the beginning of the year, you had said, “The pandemic is coming. It’s going to be very disruptive. Should I choose gold or Bitcoin?” you would have been right to choose Bitcoin because gold is only up 21%. So Bitcoin returns have been an order of magnitude higher.
Why has that happened?
In a pandemic, financial history can be accelerated. We’ve seen that in just the same way that the use of coins as money was accelerated by the Black Death. Payments in kind were yielding to a cash economy in Europe, and this was accelerated in the 1340s. The acceptance of Bitcoin as a digital asset, a quasi-digital gold, has been accelerated by this pandemic. Almost every month, some major figure in the mainstream investment world has said, “OK, now I’ll take Bitcoin seriously.” This process of institutional adoption has further to run.
Many remain cautious or outright bearish on Bitcoin.
You could argue, if you were a skeptic like my old friend Nouriel Roubini, that this is just another bubble. But the adoption of a new financial technology tends to be quite volatile, and each time Bitcoin rallies and then folds, it folds to a higher level than the time before. So you could probably take a little bit of downside risk, but hold Bitcoin for a year to five years and feel pretty good about it.
What might drive Bitcoin higher?
In a new edition of my book, The Ascent of Money, two years ago, I observed that if all the millionaires in the world collectively decided to hold 0.2% of their assets in Bitcoin, the Bitcoin price would be $15,000, which it reached this year. If it was 1%, then the price would be $75,000 per Bitcoin. So, as people adopt this as a new form of asset that has a respectable place in a diversified portfolio, there is still quite a bit of upside.
There are about 18.5 million Bitcoins outstanding, and the total amount is capped at 21 million. That values Bitcoin at $350 billion now, versus about $10 trillion for all the world’s gold. What makes Bitcoin distinctive?
Bitcoin is the only digital asset or token that has scarcity built in. Everything in the internet is defined by a superabundance; Bitcoin is the exception.
[ticker: PYPL] and others are allowing people to use Bitcoin to buy stuff. Will that help?
I don’t think Bitcoin is for buying things at
It’s a peculiar form of asset, and isn’t highly correlated to other assets. A friend told me to think of Bitcoin as an option on digital gold. I like that formulation, because it has behaved kind of like that. So, I don’t think PayPal is the cure. It is more that, if every millionaire is adding a little bit of Bitcoin, that has a lot of power to bid the price up.
How hard is it to buy and hold Bitcoin?
It’s getting easier. Coinbase, for instance, has made it very easy to trade cryptocurrencies, but quite expensive each time you transact. That will change over time. That again is typical of an early stage of a financial innovation.
What are some key policy issues the U.S. will face in a post-Covid world?
On foreign policy, China is the big issue. The Biden administration can’t simply turn the clock back to 2016 and revert to the late Obama years when the U.S. essentially acquiesced to China’s rise. That is the main challenge for Biden, whose instincts are not especially hawkish on China. But his foreign-policy team will be telling him to stay tough, because public sentiment has changed.
Also, the pandemic revealed that our bureaucracy generally has become sclerotic. You can blame the poor response to Covid on President Trump if you like, but it wasn’t all his fault. The Centers for Disease Control and Prevention completely screwed up testing; HHS [the U.S. Department of Health and Human Services] was clueless about the nature of the challenge it faced. And state governments, not least New York, did abysmally, too. So, the question I would put to Biden’s team is, if that’s how we fail at the pandemic, what other disasters could we fail at on your watch? It isn’t likely that the next disaster will be another pandemic. History never works that way. So, there is a general problem at both the federal and state level. We have dysfunctional bureaucracies, and they don’t handle crises well. This isn’t peculiar to a pandemic. Look back over the past 20 years to [Hurricane] Katrina or even 9/11.
Will fixing the problem require more money or a different approach?
It is definitely not more money. It is about the incentives within the public sector and the curious ways in which federal agencies grow larger and more bureaucratic. Other countries don’t seem to suffer to the same extent. Germany is better run than the U.S., and Taiwan is far better run than the U.S. We need to recognize that there is something wrong in the state of our government.
What can we learn from Taiwan or South Korea?
If you are a government or a country that has reason to be paranoid, whether you are Taiwan next to the People’s Republic of China or South Korea next to North Korea, you are generally anti-fragile. This is a term from Nassim Taleb [the author of The Black Swan]. You are on the lookout for trouble without necessarily putting all your eggs in one basket of preparedness. The flexibility of the Taiwanese and South Korean response tells you something about the way they are set up, with a sort of built-in insecurity. But if you are the No. 1 superpower, you can get complacent about risks. The challenge for any new administration is to try to get away from highly detailed regulatory solutions to problems, which fill pages and pages of the federal register, and instead have a more responsive, flexible attitude toward the multitude of potential crises that we face.
Where would you most like to go when the pandemic ends?
The pandemic has made big cities hazardous places, and I’ve spent most of this year in a rural backwater. So, the place I’d most want to go is London because two of my children live there and I haven’t seen them since February. Also, because I just love the idea of being in a crowded pub in London, preferably just before an Arsenal game at Emirates [the Arsenal soccer club’s home stadium in London], surrounded by fellow Arsenal fans, having a pint and not worrying when somebody coughs in my face. That’s what I am really looking forward to.
Share your thoughts on the post-pandemic world: What do you think will be the greatest investment opportunity post-Covid? What will be the most important public policy issue that the U.S. will face? Where would you most like to visit once the virus is no longer a threat to travel? Click here to share your thoughts with us.
Write to Andrew Bary at firstname.lastname@example.org
GM to Invest Nearly $800m for EV Output at Ontario Plant – Bloomberg
General Motors Co. will invest nearly $800 million to bring production of the BrightDrop EV600 electric vehicle to its CAMI manufacturing plant in Ontario, Canada.
The investment will convert the factory into a large-scale electric delivery vehicle manufacturing plant to support GM’s timing to deliver the EV600 in late 2021, the company said in a statement. The agreement is subject to ratification with union Unifor and confirmation of government support.
GM on Tuesday announced the creation of a wholly owned company, BrightDrop, last week, with plans to supply battery-powered vans but also offers fleet-management services.
The proposed investment would create Canada’s first large-scale commercial EV manufacturing plant, Ontario Premier Doug Ford and Minister of Economic Development Vic Fedeli said in a statement.
Separately, Ford Motor Co. reached a tentative contract agreement with Unifor in the latter half of last year, including plans to assemble five battery-powered models beginning in 2025 at the company’s Oakville, Ontario plant. The plant was at risk of closing because the Edge sport-utility vehicle made there has an uncertain future.
GM has deep roots in Ontario, having built over 20 million vehicles at its Oshawa plant since 1918. GM said last fall it will invest as much as C$1.3 billion ($997 million) to reopen its assembly plant in Oshawa under a tentative deal with Unifor.
Arizona Coyotes' Investment in Forwards Must Pay Dividends in 2020-21 – The Hockey Writers
It’s no secret that the offense hasn’t been the strength of an Arizona Coyotes team since…. well, ever. The ‘Yotes moved to the Valley of the Sun 25 years ago, and, since then, they’ve scored the second-fewest goals in the league, at 2.58 per game. They finished in the top-10 in goals only once, in 2001-02, and haven’t finished better than 20th in scoring since 2011-12.
Until this organization is able to draft and develop top-tier talent on a regular basis, scoring is likely to be a problem, so they’ll need to continue winning games in the manner in which they did so in 2019-20 – with outstanding defense and goaltending, along with a scoring-by-committee approach at the other end.
These efforts will be bolstered in 2020-21 if the Coyotes’ three highest-paid forwards – Clayton Keller, Phil Kessel, and Nick Schmaltz – are able to help out offensively on a regular basis. Across the NHL, there have been 379 different 60-point seasons from various players throughout the past eight years. Meanwhile, the only Coyotes’ skater to reach that mark since 2011-12 was Keller, in 2017-18. This needs to change in 2020-21, and Arizona’s highest-paid forwards need to be the ones leading the way.
Coyotes Counting on Keller
First and foremost in this group is the 22-year-old Keller, who has just wrapped up his entry-level contract and is now into his eight-year deal with an average annual value of $7.15 million. With the increase in pay comes an increase in expectations and responsibility, and Keller will need to reverse the trend in his play that has emerged over his first three years in the league.
After a breakout rookie season in 2017-18 where Keller posted 65 points, hopes were high that the Coyotes had finally found the game-breaking forward that they’d spent the better part of the prior two decades searching for. However, Keller’s play declined in Years 2 and 3, as he posted 47 and 44 points, respectively, and failed to match the 23 goals or the 42 assists he recorded as a rookie.
With star forward Taylor Hall now playing for the Buffalo Sabres, Keller is expected to lead Arizona’s offense in 2020-21. He’s fresh off of a solid performance in the Edmonton playoff bubble, where he posted seven points in nine games, and he collected two points in Thursday’s opening-night shootout loss to the San Jose Sharks, so there’s reason for optimism here.
If Keller is able to produce consistent offense at even strength and help the team’s power play, the Coyotes should be in good shape and should be in the conversation for the West Division’s fourth playoff spot in May as the season winds down. If not, it could be a long year in Glendale.
Schmaltz, Kessel Must Rebound
While Keller is the main piece of the Coyotes’ forward group, Kessel and Schmaltz are not far behind. Arizona’s second and third-highest paid forwards, respectively, Kessel and Schmaltz had down years in 2019-20, but Kessel’s production was especially concerning.
‘Phil the Thrill’ endured an injury-plagued 2019-20 season, his first in Arizona. His ironman streak is now up to 845 games, but one could argue that he would have been better off sitting for a few games in order to recover from the various ailments he was attempting to play through.
At any rate, Kessel posted arguably his worst season as a pro last year, with just 14 goals and 24 assists, good for 38 points. This came after a three-year run in Pittsburgh where Phil racked up 244 points in 246 games. Obviously, this is a huge drop-off in production. While it’s true that leaving a team with Sidney Crosby and Evgeni Malkin would result in most NHL players seeing a decrease in offensive output, Kessel’s play fell off of a cliff last season in a development that few saw coming.
As with Keller, though, Kessel got out to a good start in 2020-21, scoring the biggest goal of his Coyotes tenure with 3.2 seconds left in the third period on Thursday at Gila River Arena:
When it comes to Schmaltz, the Coyotes are looking for consistency from him this season. Acquired from the Chicago Blackhawks on Nov. 25, 2018, in the trade that sent 2015 third-overall pick Dylan Strome to the Windy City, Schmaltz is in his third year in Arizona. He enjoyed a brief run of success in 2018-19 after coming over from Chicago, posting 14 points in his first 17 games in the desert (a 68-point pace) before going down with a knee injury on Dec. 30, 2018.
Coyotes Need Consistency from Schmaltz
Last year, Schmaltz posted 45 points in 70 games, which is fine and equates to a 52-point pace over a full 82 games, but he was invisible for large parts of the season. In a 16-game stretch between Nov. 7 and Dec. 6, Schmaltz scored only once to go with five assists, while in 18 games from Jan. 7 to Feb. 17, the Madison, WI native endured a seven-game scoring drought while posting just a single goal along with four helpers.
These offensive downturns were offset by two 13-game hot streaks where Schmaltz averaged better than a point per game. From Oct. 10 to Nov. 5, the 24-year-old collected 4 goals and 10 assists, while from Dec. 8 to Jan. 4, Schmaltz scored twice and added 13 helpers, for a combined total of 29 points in 26 contests.
Unlike the rest of his teammates, Schmaltz did not have a chance to build upon his regular-season performance in the Edmonton bubble, as he was the recipient of a questionable hit from noted Vegas Golden Knights’ tough guy Ryan Reaves in an exhibition game between the two Pacific Division rivals on July 30. Schmaltz suffered a head injury on the play and missed both the qualifying round against the Nashville Predators as well as the first-round series against the Colorado Avalanche.
In 2020-21, Schmaltz will need to become a more consistent scorer in order to avoid being labeled as a “streaky” player, as was the case with many Coyotes players in the past, most notably so for winger Radim Vrbata, who was notorious for going long stretches without scoring before coming out of seemingly nowhere to dominate the opposition and light up the scoresheet.
For example, over the final 41 contests of the 2013-14 campaign, Vrbata had a three-game heater where he collected five assists, which was followed by a stretch where the veteran posted six points in 18 games, which was immediately followed by a six-point outburst across four games, which was then followed by a season-ending cold streak with a goal and four assists in 16 games.
In order to live up to his $5.85 million salary over the next six seasons, Schmaltz must avoid becoming just another skilled but streaky NHL forward. Obviously, it’s unrealistic to expect Schmaltz to consistently score 15 points in 13-game stretches throughout the year (as discussed above), but the potential is there for the former first-round pick to be a 60 to 70-point player in the league. It’s why the Coyotes gave him a $41 million contract extension, and it’s time for him, along with Keller and Kessel, to step up and be difference-makers for Arizona in 2020-21.
Turkey announces $18.5 billion public investment programme for 2021 – The Journal Pioneer
ANKARA (Reuters) – Turkey has announced a 2021 public investment programme worth 138.5 billion lira ($18.53 billion), with communication and transportation projects receiving the largest allocation of the investment funds.
The programme, published in the Official Gazette late on Friday, set aside nearly $6 billion for public investments in the transportation and communication sectors in 2021, and another $2.6 billion for education projects. Other investment areas include manufacturing, health, agriculture, tourism and energy.
Under the programme, Turkey’s Transport and Infrastructure Ministry will receive some $2 billion, while the State Hydraulics Works (DSI) will receive $1.8 billion and the Highways Directorate $1.75 billion.
President Tayyip Erdogan, who has been in power for nearly 20 years with five consecutive election victories, had until 2018 enjoyed steady annual growth of around 5% fuelled by cheap foreign credit and “mega projects” ranging from bridges and tunnels to highways, hospitals and other construction.
(Reporting by Tuvan Gumrukcu and Ebru Tuncay; Editing by Kirsten Donovan)
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