Dec 28, 2020

The Stories That Shaped the Global Economy in 2020

Show Notes

There is no simple way to sum up this year. 2020 saw tremendous change and suffering as well as renewed hope and heroics.

Join the conversation as we begin to make sense of this tumultuous, terrifying and hopeful time.

Show Notes:

  • Davos & Stakeholder Capitalism
  • COVID19 & the Subsequent Economic Fallout
  • Fighting the Virus
  • Vaccine delivers hope around the globe

Finally a big THANK YOU to our listeners and supporters all across the world. As we bid adieu to the year, here's to being constantly curious, setting aside our differences through  collaboration and learning something new everyday :)


Jed Tabernero [00:00:04] 2020 started out as the 11th year of the longest economic expansion since World War Two, stocks were doing great. But you probably didn't know it, 2020 was going to turn into one of the most pivotal years in the 21st century. In January, the world was watching Davos, 2020, 

Davos Conference [00:00:30] a they cordial welcome 50 years ago meeting of the World Economic Forum at Davos, I envisaged creating a global village, encouraging interaction between all stakeholders of global society, from governments to business, from civil society to the young people. 

Jed Tabernero [00:00:58] According to a McKinsey report, many at Davos had a positive outlook of 20 20. That didn't go very well. The World Economic Forum focused on some key areas during the conference. Climate change was firmly established as a C suite problem. We see a lot of executives making climate change promises and clearly making it a priority. 

Marc Benioff [00:01:24] Any plan or policy of yours that doesn't include a radical emission cuts at the source. Starting today is completely insufficient. 

Jed Tabernero [00:01:34] Artificial intelligence was also discussed. Both excitement and fear was in the air with regards to its potential. 

Sunday Pichai [00:01:44] You know, I've said this before is one of the most profound things we are working on humanity as humanity. It's more profound than fire or electricity or any of the other bigger things we have worked on. It has tremendous positive sides to it, but it has real negative consequences. When you think about technologies like facial recognition, it can be used to benefit. It can be used to find missing people, but it can be used for mass surveillance. 

Jed Tabernero [00:02:12] The one overarching theme was the solidification of stakeholder capitalism, 

Marc Benioff [00:02:20] capitalism, as we have known it is dead. And this obsession that we have with maximizing profits for shareholders alone has led to incredible inequality and a planetary emergency 

Jed Tabernero [00:02:37] stakeholders for a cohesive and sustainable world. Corporations will now focus on stakeholders rather than stockholders. Many sessions covered the breakdown in trust, probe globalization's shortcomings, and underscored the need for companies to think not only about investors, but also the planet employees and the communities in which they operate. And I think we all understand the why by now. In fact, the challenge is not the way, but how. What wasn't discussed too much was the rise of a novel coronavirus. 

Adrian Grobelny [00:03:30] In early 2020, what was thought to be another normal year covid-19 came into the mix in the early months of 2020, we'd question the seriousness of this virus, ask people Nereus what their thoughts were, and even joked about it through memes as a coping mechanism to try and stay positive. As the spread widened and people's fear began to grow, we all began to assess its impact on our well-being, jobs and future. 

Shikher Bhandary [00:04:02] Amidst all of this, the stock market was actually cruising along, the S&P 500 was at all time highs. This was literally two months after the first official case. So it seems like the market didn't present the risk. But in March 2020, we saw one of the most dramatic stock market crashes in history. 

Reporter [00:04:22] And the expectation and fear is that we will see markets in freefall this morning here in the US as they have done and the global markets already 

Shikher Bhandary [00:04:31] in barely four trading days, the Dow Jones Industrial Average plunged almost 26 percent. The S&P 500 plunged about 35 percent within six weeks in the spring, the fastest ever fall from record levels into a bear market as governments impose strict quarantines on their populations and ordered the shutdown of the bulk of business activity to counter the spread of this unknown contagion. 

Adrian Grobelny [00:05:00] Every single government on the planet announced plans of how to fight the virus and implemented worldwide shutdowns that would halt all economic activity. 

Shikher Bhandary [00:05:12] So beat stocks were hit. Hard Beach corresponds to the bookings, entertainment and life events, airlines, cruises and casinos, hotels and restaurants. Basically all the types of industries that were breeding ground for this virus. Some of them, like oil, real estate and hospitality, lost more than 50 percent of their value. 

Adrian Grobelny [00:05:35] Businesses all over the world started to think how would they survive? 

Shikher Bhandary [00:05:40] Since most of the businesses were prohibited from remaining fully operational during the imposed quarantine, they chose to adjust their labor costs by laying off employees. This, in turn, led to a sharp reduction in consumption and economic output. Close to 332 billion dollars of value had been reduced in less than a month, and the unemployment rate spiked to almost 25 percent. 

Adrian Grobelny [00:06:07] Borrowing was at an all time high. Companies would borrow so aggressively to try and stock up for the dry season. Amidst all of this borrowing, there was a record number of jobless claims a month from the announcement of the global pandemic, 22 million jobless claims have been filed. People were losing their jobs and their sanity. The government got together and also signed the biggest stimulus package the world had ever seen. Two trillion dollars. The Keres Act was meant to help give aid to all parts of the economy that were choking, including you, three months into 2020, it was looking so negative, even oil decided to go negative on us. 

Jed Tabernero [00:07:06] At the Federal Reserve, we are committed to using our full range of tools to support the economy in this challenging time. In March, we quickly lowered our policy interest rate to near zero. 

Shikher Bhandary [00:07:17] The Fed cut interest rates to near zero and outlined plans to lend billions of dollars across markets to stop the carnage that helped make the markets recovery almost as jarring as the incredible crash in March of this year. The S&P 500 came storming back up almost 15 percent by the end of the year, an epic journey during one of the most catastrophic economic collapses in American history. A big factor in this recovery has been big tech. So Apple, Amazon, Microsoft, Google and Facebook. The Fang M stocks recently made up about 25 percent of the S&P 500. Think about it. Five companies make up a quarter of the index. No wonder it came storming back as the big cap tech stocks were up big this year. The gap between the stock market's winners and losers is stark and growing. On one hand, you have the old economy, which comprised of oil, financials, real estate that just can't seem to catch a break. And then you have everything tech that has benefited from societal changes forced by the pandemic and are increasingly influential in the market today. And investors are betting this influence will grow as Americans continue working from home and shopping and streaming movies online. A prime example was Zoome. As work went remote, the video conferencing software Zoom's market cap had skyrocketed to eclipse the top seven airlines by revenue combined. This increase in wealth is really not representative of the entire economy. The covid-19 pandemic ravaged small businesses across the world, with tens of thousands of small businesses closed, leaving more market share gains to the larger corporation. One appalling stat is that just one in five small businesses will be able to make it past the pandemic. And that sums up the inequal world we live in today. But there is a light at the end of the tunnel and what has been a crazy 20-20 in an incredible collaborative effort. Companies such as Biotech, Pfizer, Moderna and AstraZeneca have been able to create and manufacture the covid-19 vaccines with an incredibly high efficacy rate. It was assumed that the vaccine would be at best 40 or 50 percent effective. But for it to have a 95 percent efficacy is quite astonishing and a testament to what humans are capable of doing with real grit and collaboration. The mass distribution of covid-19 vaccines is underway in many countries. More than one point nine million people in the U.S. have gotten the vaccine already 500000 in UK and Canada just about received the first doses last week, with around 30000 administered to the state. 

Jed Tabernero [00:10:29] 20/20 highlighted the weaknesses of our economy, but also revealed the extent of the capabilities of our ingenuity and innovation. If you've been listening to our episodes, we've talked to so many founders that showcase the brilliance of the human species in a star of space in particular, founders have had to become more versatile, more resilient and truly exceptional to survive and in some cases even thrive in this environment. Our community is no exception. Things have changed, was founded in 2020 and is built upon the challenges the 2020 had to offer me. Adrian and Shika have learned so much from doing this work. I think it's fair to say that it's been quite enjoyable through the data we've seen that our audience spans the globe, which is fascinating because the THC team comes from all over the world as well. 

Adrian Grobelny [00:11:28] Hey, this is Adrian. My parents were born in Poland and immigrated here into the U.S. about 30 years ago. And the time that they raised me here in the U.S., they took it upon themselves to teach me the language, culture and traditions that they thought were so important to them growing up in Poland. 

Jed Tabernero [00:11:45] Hi, I am Jed. I was born and raised in a town called Lespinasse in the Philippines. I moved to this country in 2011 as an immigrant. I have learned so much since then, but still keep my values from the Philippines and embody the Filipino culture. 

Shikher Bhandary [00:12:04] Hey, I'm sure I was born and brought up in Bangalore, India, and moved to the U.S. to do my master's about five years ago, conversations that I have on Piazzi is largely through a personal lens of how would this idea or trend work in emerging markets across the world. It's been an absolute pleasure learning and growing with the things of change community, and I cannot wait for what's in store in 2021. 

Jed Tabernero [00:12:28] Thank you for listening to our stories and for being a part of the THC community. We're so excited for what 2021 will bring from our family to yours. Happy holidays.