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Bloody moon you are in control

“The Day After Tomorrow”

Covid-19 is one of those rare events in history – like the Great Depression and fall of the Berlin Wall that will completely reshape geopolitics, societies, and markets. It is likely to be a catalyst for further tectonic shifts in the US & China decoupling, peak globalisation of supply chains and central bank quantitative failure. The consequences could be far- reaching, ranging from social unrest to further instability in oil, new economic doctrines, and re-evaluation of the social contract in sovereign states.

The world B.C. and A.C. 

(Before Corona and After Corona)

•             All G20 countries have implemented some sort of shelter-in-place order, equivalent to 80% of global GDP under lockdown1

•             Global carbon emissions could fall by 8% this year, equivalent to what India emits per year which would be the biggest drop ever recorded2

•             The fall in greenhouse gases this year alone could be greater than all the recessions of the past 50 years combined2

•             The Fed was buying more than US$1 million in financial assets every second during the peak panic phase of the crisis3

•             It took airlines 64 years to reach 50 million users, Netflix 7 years, but Disney+ achieved this in just 5 months with the kids under lockdown (Gen Z bonus stat: it took the HouseParty app just 1 month!)4

•             At 4 billion people, more citizens are now under lockdown than those who have access to internet broadband, social media or even safe toilet sanitation4

•             The US$20tn market cap of thematic enablers identified in the post-Covid era is bigger than the GDP of the US, Europe or even China + India4

•             c90% of painkillers and antibiotics (ibuprofen, penicillin, etc) on average have active drug ingredients imported from China4

•             For the first time in history, China is outspending the US on R&D (US$501bn vs. US$493bn)4

•             The number of unemployed Americans now exceeds the population of Australia4

•             More US jobs have been wiped out in the last month than were created in the past 10 years since the Great Recession5

•             Sir Isaac Newton discovered gravity during the Great Plague of 1666 when he had to practise social distancing and work from home6

•             Zoom daily active users jumped 30x in just four months from 10 million in December to 300 million in April 20207

•             Zoom’s terms & conditions are longer than the US Constitution7

See Also

•             Fortnite is now more popular than football by Google searches8

•             If you were to stack up the US$2 trillion US fiscal stimulus package in 1 dollar bills, they would be 6x higher than the International Space Station (c. 2,400km)….

•             … if you were to put them side by side, they would stretch from Earth to Mars…and halfway back again!4

Source: 1Bond Capital, 2IEA, BofA Research, Guardian, Carbon Brief, 3BofA Research, FT, 4BofA Research, 5New York Times, 6Bloomberg, 7Zoom, 8Google Trends

Post-Covid: times they are a-changing in the world order

Data is being created at the fastest rate ever, already up 50% vs. pre-Covid in parts of the west. The effect is intensifying the tech war, with governments becoming bigger and more influential – the Fed printed US$1mn every second at peak panic. Societies will be safer but less private, with more than 30 countries issuing citizen tracking orders.

5 themes and best/worst placed after the Great Isolation

Alongside a global survey of BofA analysts covering 3,000 companies and spanning 25 sectors, we outline 5 themes with US$20tn market cap of enablers for the world post- Covid. Among the secular beneficiaries are healthcare, digital consumer, ESG, staples, industrial real estate, and technology. Some of the challenged sectors include: fossil energy, commercial real estate, autos, legacy consumer, and the sharing economy:

  1. Geopolitics & Globalisation the dragon vs the eagle, round II: rising tensions clashing East/West doctrines. ‘Global to local’ on fast-forward. A third of BofA analysts now expect their companies to push for supply chain reshoring.
2.        Tech War – the race for supremacy: data is the new must need resource, meaning a resurfacing tech-war as the new geopolitical battleground. Half of our analysts expect higher IT spending than pre-Covid. We anticipate a wave of investment in new infrastructure, AI technologies and moonshot future tech.
  • Big Government a new social contract: the state has a new economic & social mandate. A third of analysts expect some erosion of shareholder rights = rise of stakeholders. Government ‘data fever’. Privacy will be the currency to buy safety.
  • Health the new wealth and focus for ESG: public health is the new national wealth. Stakeholders will increasingly focus on health-related ESG metrics; governments will come to appreciate health more as an economic resource.
  • The New Consumer – “OK, Zoomer: Gen Z is uniquely prepared for the new era of social distancing, the online world, and sustainability. Other generations will be slow to adapt. Millennials, the “double downgrade” generation, is most exposed to earning cuts as more US jobs have been wiped out this past month than have been created since the great financial crisis. EM middle class growth will stall.
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