We are all living in the time of a pandemic and most countries outside of East Asia seem to be getting tired of lockdowns. Many European countries are trying to open up slowly - Germany, Italy, Switzerland to name a few. In the US too, some states are starting to ease restrictions, although, most states in the US never really had a severe lockdown.
I have written earlier about the economic devastation that this pandemic is causing all across the globe and no country is immune to that, just like they aren't immune to the Virus. If anyone of you even remotely follow financial markets and have heard a thing or two about the earnings announced to far, one thing is clear - Most companies are not giving any guidance about future earnings. Difficult for them to do that, as they cannot forecast when and by how much each country will open up their economies, and whether they will be able to source supply.
The economic devastation has also led to a number of people losing their job. About 30 million or so people in the US alone have filed for jobless claims in the last 3 or 4 weeks. Some of them will go back to work when lockdowns are over but surely at the end of the year, it wouldn't be a bad assumption that nearly half of the 30 million people will not be able to find work. An economic contraction that is happening will lead to firings in other industries too.
There are number of pain points in the global economy right now. I did mention a few of them in an earlier post. Events that have transpired lately show that problems are increasing. Donald Trump has started warning about renewed trade war with China and tariffs, and cancelling debt obligations to China. There is also news about how a mortgage crisis may be brewing under all the economic mess that has been created thanks to the virus.
All the above sets us up for a very interesting event in November - US Presidential Elections. The battle will happen, most likely, between Donald J Trump and Joe Biden. Now, I was hoping that Democrats will come up with a better candidate. I must confess at this point that I do not know a lot about Joe Biden. However, with accusations of rape and a commonly known habit of forgetting things and sleeping during interviews, he can easily be targeted. Cambridge Analytica may have ceased to exist but Social Media will again play an important role in the elections and Joe Biden's image can easily be tarnished, as was HRC's.
What will matter more than jibes on social media is the stage we are at in the economic devastation. I believe that the stock market is no indicator of economic reality right now, and that it is riding up on hopes that we'll all be fine financially. But November is a long time away, and the economic reality of a GDP contraction may hit the stock markets before that. US Central Bank and Treasury Dept may have a tough time propping up markets till then. Even if they manage to get stock markets to all time highs, I think they will not be able to prop up the real economy. People will see and feel the effects of an economic contraction in their own lives. That could make up for an interesting election and people will face a tough choice. Of course, in the US, some will stay loyal to their parties (I find it extremely weird that people in the US identify themselves as republicans or democrats) but the swing voters could very well cause an anti-incumbency problem for Donald J Trump.
It may have been easy to call the outcome of the race between Trump and Biden, but I think the results can be shocking - and that shouldn't shock anyone.