Bull Markets, Delta Variant(s), and Politics

The three words above encompass the private sector, public sector, and government. Relations between the three are becoming a blur. Russia recently passed a law whereby unvaccinated employees in the country can be suspended without pay. Businesses that do not comply can be fined and closed for three months. Movement in hotels and other locations is limited to those who are fully vaccinated. Having your “papers” in order has taken on a new meaning. For those who refuse the vaccine, suspension from work lasts for the duration of the pandemic. With the Delta variant now making a powerful debut on the global stage, who’s to say when the pandemic will end.

The Delta variant killing hundreds of thousands in India is a variant evermore contagious than the other corona strains, spreading from India to the UK, Scotland, Indonesia, and 91 additional countries including the U.S. (World Health Organization). An even stronger variant, The Delta Plus variant, was identified in Israel among fully vaccinated residents, prompting the new Bennett leadership to reinstate wearing masks indoors.

Before the new leadership, Netanyahu launched a feasibility study on the issuance of a “Digital Shekel” from Israel’s Central Bank. Israel’s private sector, finance agencies, academia, and public sector believe the digital shekel will provide a secure and advanced alternative for cross-border payments and prevent the growth of a cash-based “shadow economy.” The Bank of Israel is currently testing Ethereum internally as a pilot test, as did World Bank in 2018. A two-year bond that raised $110 million marked the first time investors felt comfortable investing in development projects. World Bank sold more bonds in 2019.

As interest rates and consumer prices begin to creep up in the US, it signals a need to slow down the Bull Market to restrain inflation. The geopolitical factors contributing to the markets are the volatile relationship between the US trade with China in tech areas, China and Taiwan tensions over sovereignty, Cyberattacks on hegemonic governments, and the uncertainty that coronavirus variants still pose worldwide. The price tag of Biden’s ‘Build-Back-Better’ program in America starts with an infrastructure program price tag of over a trillion. The market, the virus, and politics are woefully intertwined. What we often overlook in times of uncertainty is what magicians are hiding behind their backs. In this case, history.

In the markets, post-crisis booms have occurred after the 1830s cholera pandemic in France, the 1889 Russian Flu, and the 1918 Spanish Flu. The same post-crisis booms happened across various US recessions, including the 1937-38 Roosevelt recession, 1945 WWII recession, 1953 post-Korean War recession, 1980 recession, 2001 dot-com crisis, 2008 financial collapse, and likely the 2021 post-pandemic collapse. Some analyst believe we have completed the post-pandemic cycle whereby the collapse in 2019 has normalized in 2020. Looking deeper into the ever-widening political divisions in America, history calls for a dip in confidence regarding stability in America. Since America’s top issues are related to racial divides and voting rights, a larger post-pandemic bust may occur in 2022 and 2024 during US elections.

More important, pandemics historically shape how we “interact with the modern world.” Immunity to disease affects geopolitics in terms of nationalism, trade, freedom of movement, and protection of sovereign borders. The politics of dealing with public safety issues strained by those who refuse to be vaccinated may create silos within states and regions of the world. Variants of the virus mutate because of hosts that are not vaccinated.

Regardless of politics, busts or booms, slow-growth opportunities offered by a country of your choice may be the safer way to invest, as in the previous example of Ethereum from World Bank. Financial instruments are critical in helping countries solve problems, especially problems made apparent during a crisis like the pandemic. Several problems were made apparent in African countries including one underway to being resolved, manufacturing. Aspen Pharmacare Manufacturing in South Africa was finally granted a loan after publicly demanding support to shift away from dependency on the West for vaccines, an oxymoron seeing that a loan from the West equates to further dependency.

This piece is written to provide critical thought into the realities of our times. The markets, public safety, and politics have always ebbed and flowed. Nevertheless, vulnerability and lack of stability persist.

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