At a time when conflicting voices are raised as to when full recovery will arrive, we are pleased to present below a summary of four articles with unique insights that may have an impact on our lives and portfolios in the medium term.

The Legal Fight Awaiting Us After the Election

Jeffrey Toobin, The New Yorker
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As Americans prepare for what is promising to be one of the most contentious elections in recent history, one topic that has received renewed attention in light of the pandemic is mail-in voting.  President Trump has been vocally oppositional to the prospect of widespread use of mail-in ballots, citing concerns of election fraud.  At the same time, there is a well-documented phenomenon known as a “blue shift,” where ballots counted later tend to favor Democrats.  Given that only 19% of Trump supporters intend to vote by mail while 69% of Biden voters plan to use mail-in ballots, there is a significant possibility of a significant Election Night lead for Trump being transformed into a Biden majority four days later.

This possibility has generated a flood of litigation from both sides, with the main theme being a push for looser restrictions on the Democrat side and tighter scrutiny on the Republican side.  While the Purcell principle (a 2006 Supreme Court ruling that states election process changes should not be made too close to an election to avoid confusing voters) will likely prevent any widespread reforms in either direction, the fact remains that the simple act of counting the ballots will be a monumental task.  Given both parties’ interest in ensuring the fair count of each vote, individual mail-in ballots are carefully scrutinized by representatives from both campaigns, resulting in a glacial counting pace (one New York office was able to count a mere 200 ballots per day).  With widespread concerns as to the reliability of the postal service and mail-in voting levels expected to be orders of magnitude greater than previous years, it is little wonder that election officials are concerned about the integrity of the democratic process in this year’s race.  In a year marked by a global pandemic, fracturing alliances, and a deeply divided American people, a contested election may prove to be a catalyst for yet deeper schism.

China’s Great Power Play Puts Asia on Edge

James Kynge, Kathrin Hille, Christian Shepherd and Amy Kazmin; Financial Times 
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While tensions between the US and China have reached a peak over recent months, China’s assertiveness in the Asian Pacific region is also intensifying. Analysts are attributing this renewed aggression to rising domestic insecurity after crackdowns in regions such as Hong Kong and Xinjiang, Xi Jinping’s great power ambitions, and a bit of opportunism given by the coronavirus pandemic. As usual, Taiwan has been a magnet for tensions especially as relations between the US and Taiwan are, very publicly, becoming stronger through more arms deals and military exercises. China recently conducted its own military exercises near Taiwan “to safeguard national sovereignty” and has condemned any action made by countries to support Taiwan. 

Furthermore, we have seen an escalation on the China-India border in the Himalayan region. Gautam Bambawale, a former Indian ambassador to China, said the confrontation between Chinese and Indian military forces on the border that killed 21 Indian soldiers was “not an accidental meeting. It is a well thought out, premeditated plan by the PLA.” China has also begun to crackdown on its territorial claims in the South China Seas. In response to China’s recent aggression, the ASEAN, the grouping of 10 south-east Asian nations, issued a communique this month urging self-restraint and non-militarisation in the sea. As put by Mr. Bambawale, “They (China) are saying the 21st century isn’t an Asian century. It is merely and solely a Chinese century.”

“When Will We Have a Vaccine?” — Understanding Questions and Answers about Covid-19 Vaccination

Barry R. Bloom, Ph.D., Glen J. Nowak, Ph.D., and Walter Orenstein, M.D.
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The question “When Will We Have a Vaccine?” typically encompasses three different concerns: (1) When will the public be able to have confidence that the vaccines are safe and effective? (2) When will a vaccine be available to some, most, or all people who want one? (3) When will the vaccine uptake be high enough to enable a return to pre-pandemic conditions? The Food and Drug Administration (FDA) has recently released guidelines on the testing of Covid-19 vaccines which state that the candidates are scientifically sound and indicate that no compromises will be made when it comes to evaluating their safety. However, the key to the success of a vaccine will not only rely on its scientific/medical soundness but will also depend if it will be accessible to everyone and how information about the vaccine is communicated by the media and by our national leaders. About 200 million Americans and 5.6 billion people worldwide would need to be immune in order to develop “herd immunity” and effectively end the pandemic. This requires that a vaccine is made accessible to all population groups, countries, etc., and very quickly if we would like this pandemic to end in the next few years. Furthermore, given heightened skepticism of government institutions and concerns about the politicization of a vaccine, it is critical that vaccination education strategies, key messages, and materials for clinicians and the public provide clear, truthful, and scientifically-backed information to build trust and encourage vaccination.

Peak Oil Is Already Shifting Markets

Rochelle Toplensky, Wall Street Journal 
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Many expect demand for crude oil to peak in the coming years, whether that be as late as the mid-2030s or as early as a few years from now – if it hasn’t already happened. The traditional approach of oil producers in times of abundant oil has been to agree to pump less now in order to boost prices and increase profits later on. However, the threat of shrinking demand undermines this very strategy that has guided the response of OPEC+ in recent years. The Covid-19-induced fall in demand combined with an oil glut gave us a glimpse into this future. As we saw in the oil price war between Saudi Arabia and Russia in March, producers will likely become impatient in selling their oil and will become more competitive in getting it out of the ground. Nations like Norway, Russia, and Angola are already considering new incentives to persuade companies to drill in their countries. This change in demand and strategy could mark a major historical shift in oil markets. One thing is for sure, the next 50 years for the oil market will not look much like the last 50.