- December 24, 2020
- Posted by: CFA Society India
Written by Navneet Munot, CFA,
CIO, SBI Funds Management Pvt. Ltd. and Chairman, CFA Society India
Like every year, there were several contenders.
Charles Dickens’s immortal lines echo while rewinding 2020: “It was the best of times, it was the worst of times… it was the season of light, it was the season of darkness… the spring of hope, the winter of Despair…”
20-20 turned out to be a turbulent test match, a tale of two takes: Conversations began with “you are on mute” and ended with “This too shall pass”. In between, it was all about “this time is different”.
Counting infections and deaths made every morning a mourning time. The year we were near our dear ones. The year we lost some near and dear ones. Fresh air took a flight, as human beings were grounded. Birds were seen reoccupying their place while migrant workers lost their occupation. Spanish guitars and books on Spanish influenza got dusted off.
Knowledge work found a home. Lockdown unlocked our century-old model of offices resembling factory shop floors. Move over conference rooms, meetings are on Zoom. BlueJeans and light shorts replaced long ties and dark suits. Schooling became just homework and shopping was on virtual windows. Wait, isn’t something amiss? Yes, virtual has virtues but there is something magical about physical!
The clan of Anthony Fauci deserves it. For tracing and testing proper protocols and isolating politician’s perversity. The pandemic also unmasked our frailty. Bill Gates had highlighted – the risk was real, our sense surreal. Beyond a vaccine, the lasting solution to deal with risk of these pandemics lies in building our immunity, healthcare capacity and multilateral audacity.
I thought of Tsai-Ing Wen of Taiwan and Jacinda Ardern of New Zealand for outstanding leadership.
From wet-markets of walled Wuhan to dry camps for Uighurs in Xinjiang, man-made islands in South China Sea to mysterious moves in Galawan valley, assertiveness in Hongkong or Taiwan, they unmask the sheer ambition, aggression and aggrandizement of Xi’s China. Jack Ma’s Ant faced their rant. You battle with tariffs, ban Huawei or blame it on Hubei, but China’s economy is buzzing in a global recession. It annoys its neighbors and ploys others. This Cold War will be different.
Trump survived COVID-19 and impeachment and kept Jonesing for rising Dow. He jolted Iran by assassinating Qasem Soleimani and nuclear scientists on their soil. He jostled Justice Barret just-in-time. But to no avail. Grand Old Person got mailed-into the White House Trumping the Grand Old Party. The colour of the divided house reflects the tale of two states: Rich on both coasts cozying democrats, globalisation induced miseries in midland trusting Trump. Kamala Harris carries the real blue power. Let’s hope the Old Veep with a young prosecutor executes well in reviving United States of American Values as espoused by founding fathers. That’s ‘What makes (it) a Promised land’.
The accused for George Floyd’s breath are out of jail. Racism is a mindset that Black Lives Matter targets to nail. R.I.P. John Lewis and C.T. Vivian, your legacy will prevail. The pursuit of happiness should not discriminate, this dream shouldn’t fail.
Crude shale-shocked everyone by melting below zero on overflowing tankers. Peace deal between Arab and Israel oiled by Jared Kushner was the cracker of the year. Will this fossilize Palestinian dreams? Time will tell. I wish for better times in Beirut and Yemen. Amen.
The Fed alike fed the world with trillions while treasuries threw checks from helicopters. Covid-shock infected P&Ls severely but release of monetary floodgates protected private sector balance sheets. The liquidity vaccine immunised bulls in every asset farm. Excesses like Zombie companies, SPACs and rising inequality are serious side-effects.
Public debt and inequality are touching a postwar high. If history rhymes, deflationary impulse should give way to reflation now. Den of green Infra, redistributive policies and multilateralism is what doctor Biden should order. JM Keynes was my person of the year in 2009 for rescuing the world from GFC aftermath. Time again to pull out his prescription. Modern Monetary Theory (MMT) will be practiced real-time with Yellen’s successor in Fed and Powell’s predecessor in treasury. Till debt do us part!
The herd at Robinhood was unheard of. Trading virus is spreading fast. For them, IPO stands for – Instant Profit Opportunity. In Fed, we trust. This tale will unfold later: Wisdom of the crowd or mania of the mob?
Investors hit a pot of gold in Gold. Jackpot was Bitcoin, now worth a Block of golden Chains! As deflation paves the way for reflation, 40-year old bull market in bonds may be nearing end. Weaker dollar brings cheer to commodities. Combined forces of Cheap money, tech disruptions, ESG wave and momentum led to polarized views: stocks were either priceless or valueless. Reflation reverses polarization – DM vs EM, Growth vs Value, Defensive vs cyclicals, Large cap vs small caps and so on.
The EU’s € 750 billion ‘bonding’ was perceived as a stepping stone towards a fiscal union. ECB kept PEPPing them up. Britain’s social experiment with COVID-19 didn’t work, hope the economic experiment with Brexit works. Currently, containing Coronavirus and potential new strains remain the biggest concern for both.
Macron also battled criticism for comments on a religion and reach of right to speech. Prince Harry switched his loyalty from royal fable to Canadian Maple. Putin was busy dealing with the Armenia-Azerbaijan strife, rumours on his health remain rife.
I thought of Shinzo, the longest running PM of Japan for delivering hope to Mrs WatanABE. Abenomics gives way to Suganomics. Improving governance and capital efficiency make Japanese equities a succulent Sushi.
Amidst a stringent lockdown and record recession in India, a billion souls wore PPE: Patience, Perseverance and Empathy.
Patriarchs like Pranab, Paswan and Vora left us. Nitish Kumar got victory Haar (garland) in Bihar. Chouhan got back MP’s Raj while Scindia fort switched to lotus flag.
In a geo-politically re-aligned and digitally re-designed planet, India is prominently placed. Atma-Nirbhar Bharat undercurrent is countable in the current account balance. A Decade of durable growth could be ahead as Digitalisation adds to the dazzle of Democracy, Demography and Demand. Opportunity is ours to lose. JAM trinity work wonders in widening the Social security net. Seeds of legislative reforms have been labor-iously sown, the crop will be harvested if farmed well with fertilisers of trust and execution. Time to prioritise the financial sector, administrative and judicial reforms.
The lockdown inflicted pain but also ignited the innovative spirit of corporate India. Clayton Christensen and Tony Hsieh are no more but their advice can help. Aditya Puri’s long Rath Yatra is inspiring. Investors dialed Jio from all over.
RBI was unreserved in dealing with a Pandemonium of sorts. Shakti minted solutions without being Das of any orthodoxy. Their Open market operations matched Open Mouth operations. Markets took it at face value. Forex kitty is overflowing – Moody’s downgrade didn’t dent Investors’ mood.
Stakeholders got a strong message – Yes, know your bank. Some investors suffered a “perpetual” shock. Laxmi Vilas’s chest were not blessed by the Goddess. DBS responded well to the SOS.
The Temple of Indian credit markets got really shaken. No crisis should go waste. All stakeholders should respond rightly and not react regressively. Together, the industry has done a reasonably credible job in navigating a turbulent time.
Moonshots need patient capital and impatient zeal. Elon Musk (my person of the year 2018) succeeded in sending the first crewed commercial flight in space. UAE sent a satellite to Mars while China shipped a robotic spacecraft to the Moon.
We lost legendary crafts persons like Sean Connery, David Prowse, Chadwick Boseman, Irfan Khan, Saroj Khan and Rishi Kapoor. Lots of young artists too. We pray with Bond of love – Wakanda Forever, Om Shanti Om, Pandit Jasraj and SP Bala’s voices live on.
Critics loved ‘Parasite’ but lockdown made theaters worried about the real ones eating chairs! From films to music, sports to games, everything was Over the Top (OTT). Literally. Binge watching was better than virus cribbing!
Maradona and Kobe Bryant took transfer to team heaven, tears haven’t stopped rolling yet. Nadal’s unbeatable courtship with French clay slammed Federer’s Grand record. Game, set, match 20-20! India was a king in the Chess Olympiad. Lewis Hamilton raced past Schumacher’s track record.
Earth’s biodiversity is off-track with extinction of many species and the eruption of newer viruses. Billions (that’s B) of animals blazed in Australia fires. Raging bushfires from California to Amazon, Asia to Australia and floods of cloud bursts across the planet are conveying a loud message: volatility in weather is skyrocketing, drawdowns are getting deeper. We must hedge our future fully.
So let’s take a pledge – Continue sharpening the scientific prowess to meet everyone’s needs and awakening spiritual caress to restrain our greed.
Globalisation is a tale of two tracks: rising clamour for protectionism is universal. On other hand, humanity has never been as connected. Super-spread of Covid and our collective combat is a testimony. Yes, social media builds belligerent bubbles and bizarre bards but also reflects our craving for connectivity and coziness. True globalisation is PPE: Person-to-Person Engagement.
Democratization of information and cross-fertilisation of ideas create wonders. Big Data and Artificial Intelligence are being leveraged to solve the biggest mysteries in biology, chemistry, astronomy and almost all spheres. Genetic engineering is fast maturing from a test-tube concept to a tangible cure. AR/VR are getting ever closer to reality.
Isaac Newton, one of the greatest scientists, invented calculus in 1665. The great plague in London led him to be ‘quarantined’ in his small Hamlet then. Supposedly the Annus horribilis (a horrible year) also turned out to be the Annus Mirabilis, the year of wonder.
2020 could have been Annus Horribilis. The biggest ever global health crisis leading to the worst economic recession and social upheaval, geopolitical crisis with two largest powers at loggerheads and climate calamities like never before. Sean Connery said: there is nothing like a challenge to bring out the best in man. While challenges looked dark and deep, humanity displayed its best. Nurses and doctors serving 48-hour shifts for months on the trot, frontline workers bravely holding the front, nameless citizens feeding the needy, researchers innovating to come up with vaccines in record time – the list goes on. Our resolve wasn’t in lockdown. Challenges still abound, but our resilience shows no bound.
‘Resilience and resolve of humankind’ is my person of the year. A Standing ovation!
A future Charles Dickens would write the tale of 2020:
It was a year of thunder,
It was a year of wonder.
Disclaimer: “Any views or opinions represented in this blog are personal and belong solely to the author and do not represent views of CFA Society India or those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated.”