Four Quick Q&A

1. What will the long-term impact of Covid be on the economy? 

After we get through this horrible health crisis, I expect the US and the global economy to bounce back. However, I think it’s wishful thinking to think that the impact will not have some lasting affect. I expect Covid to be a lot like other virus conditions; it’s going to be around permanently. I think this is the depressing reality. For that reason, we believe companies that are focused on pharmaceuticals and biotech will ramp up their efforts to continue to find solutions to Covid and a variety of other diseases.

2. I’ve heard all this talk about inflation, but I see that the 10-year treasury is only at 1.3%. What’s going on?

The bond market doesn’t seem to believe inflation is going to come back strong despite the Federal Reserve talking about beginning their tapering efforts. There will likely be tax increases, Covid impact, and a general slowing of economic growth after this initial burst towards reopening occurs. For that reason, I think inflation is likely not to hit the high levels that some have feared.

3. Tell me again what a slice asset is?

Per DWM, slice assets are positions that are focused on future technology and future economic growth opportunities. The term “slice” is one we have coined because it is a slice of an overall equity portfolio strategy. It’s a smaller percentage of the allocation combined with our foundation assets that we utilize in our equity portfolios.

4. How have Asia and China kept the virus under control?

Any time a virus outbreak occurs, China shuts down the economy of that city. It closes the city and mandates testing for every person in the population. The strategy is to isolate areas of a community that have an outbreak. China does not have the type of freedoms that the United States has and so the governmental power exists to do whatever they feel is necessary to shut down a virus outbreak. But China in many ways is the exception in Asia. The rest of Asia suffers greatly.
 
As for the rest of Asia, they are way behind the curve. The virus is running unchecked and Asian countries are having great difficulty keeping things under control. In my conversations with people in Asia, Covid is running rampant. Can you imagine how prevalent the virus must be in poor areas in places like Indonesia, the Philippines or Thailand? With vaccines unavailable and infrastructure not in place to handle the current need for intervention, it’s a human tragedy for sure.  
 

Disclosures: 

Inflation is the rate at which the value of a currency is falling and, consequently, the general level of prices for goods and services is rising.

The 10-year Treasury note is a debt obligation issued by the United States government with a maturity of 10 years upon initial issuance. A 10-year Treasury note pays interest at a fixed rate once every six months and pays the face value to the holder at maturity.  Treasury bond yields (or rates) are paid by the U.S. government as interest for borrowing money via selling the bond.