At the very start of the pandemic, on a plane from somewhere to somewhere, I pulled a furious article out of the China Daily. The author was maddened by criticism of Chinese handling of Covid. The New York Times had accused it of “Mao Style Socialist Control”; Foreign Policy had gone for plain old “Incompetent”; and China Uncensored for “Authoritarian Crackdown”. But as far as the paper was concerned, the criticism was all about the West running a xenophobic anti-China campaign “because they really want you to hate.”
I kept it, then, as a reminder of just how Chinese and US relations were breaking down. But now it is also a trying reminder of how much less of the moral high ground the West is hanging on to than it was even in March. We aren’t exactly welding people into apartment buildings here. But there’s a nasty precedent in being told that not only must we never see more than five other people at the same time, we must report those who do to the police. So are we doing things the right way?
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The idea that we are perhaps worrying a little too much about Covid is seconded by the latest Bank of America Global Fund Manager Survey. A second wave remains the biggest worry for managers. But it is being fast caught up by concerns about global trade wars (very valid – see above!), the US election and the rising odds of a “systemic credit event”.
There are also two new entrants to the worry list this month – inflation and a new tech bubble, both things I suspect MoneyWeek readers have (quite rightly) had on their worry list for some months now. We still worry about tech valuations but we don’t think the market as a whole is in bubble territory: the median price/earnings ratio of the S&P 500 is 17.5. Not cheap – but not a bubble either.
Elsewhere there are opportunities aplenty (but avoid pigeons – see this week's "Great frauds in history"). China is booming (for more, turn to the markets pages). And even after the extraordinary recovery since March, the shock of the pandemic has left some pockets of value. This week, we also look at how to invest in the end of oil – there will be a wave of money pouring into anything remotely green post-pandemic.
Want to feel good and make money at the same time? Here’s your chance. If the former is less important to you than the latter, look to the end of that story: we are only at the beginning of the end of oil so perhaps you should not entirely neglect the old industry players.
Finally for the genuinely contrarian, Matthew explains why to start buying Carnival on this week's Trading page. Cruise ships are pretty filthy (they mostly burn heavy fuel oil) and about as Covid-unfriendly a business as any. But, says Matthew, Carnival’s finances are pretty shipshape – and people will cruise again. They may even go back to their offices again – quite soon. Particularly if James turns out to be right, and normalisation is nearer than we think.
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