The polarisation of Americans by an autocratic leadership and a lack of bipartisan politics will be one of the most unfortunate, enduring legacies of the Trump presidency. Newly elected President Biden’s inauguration speech on Wednesday was underlined by a call for unity, in that to restore the soul and secure the future of America, this is the most elusive of all things required in a democracy. Biden’s success in attaining this goal will depend on cooperation on multiple fronts and the challenges are already mounting.
A similar call for unity was made by President Cyril Ramaphosa in his inauguration speech of 2019 (refer to an extract in our Local News below). Almost two years later, his dream of inclusiveness remains unrealised, having been frustrated not by opposition parties, but by factional fighting within the leading party itself.
“A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves.”
– Lao Tzu, an ancient Chinese philosopher and writer
- Perhaps more than any recent president, President Biden has staked his reputation and the fortunes of his administration on his ability to work with a polarised Congress, where Democrats have only the slimmest margin of control. Despite the recent history of legislative inertia and toxic politics, Biden has made it clear that he believes he can leverage his 36 years of experience and relationships on Capitol Hill to work across the aisle and achieve the breakthroughs needed to get the nation through its multiple crises.
- President Joe Biden has revealed his strategy to combat the coronavirus, but with it warned that America is not out of the woods, saying that while US infections in this latest wave may have peaked – the coronavirus will kill another 100 000 Americans by this time next month, surpassing a half million dead in the country.
- President Biden’s $1.9 trillion stimulus proposal was met with Republican resistance during Treasury secretary nominee, Janet Yellen’s, confirmation hearing in the Senate. The Biden administration will need ten Republican senators to vote in favour of the package in order for it to have swift passage into law. However, when talking about the prime beneficiaries of the 2017 Republican tax overhaul, Yellen said that tax increases will be coming.
- Senator Mitch McConnell, leader of the Republican Party, asked Democrats on Thursday to delay former President Trump’s impeachment trial until mid-February. This complicates the Democrat’s hope of a swift impeachment trial. It was not clear whether Chuck Schumer, the majority leader, will agree with McConnell’s request for a delay.
- In his last days as leader of the US, President Trump made a series of clemency actions, issuing 73 pardons and 70 commutations. Among those receiving pardons was Steve Bannon, who has not yet been charged for his role in defrauding donors through a border wall fundraising campaign. President Trump and his family were exempt from these pardons.
- Donald Trump’s business empire has been hit hard by the coronavirus: Revenue from the Trump hotel in Washington fell to $15.1 million from $40.5 million a year earlier; in his Vegas hotel, sales were down to $9.2 million from $23.3 million; the Doral Golf Resort in Miami also saw revenues drop to $44 million from $77 million a year earlier; and additionally, in both the UK and Ireland, revenues at his golf courses dropped by roughly two-thirds compared to the prior year.
- The China growth story continues: Last year the country grew its Gross Domestic Product (GDP) by 2.3%, being the only major economy to experience economic expansion. The GDP forecast for 2021 is 8%! Dynasty is in an advanced phase of our research process in terms of how to best access this structural shift in global economic power for our investors, being cognisant of the political risks and restrictions inherent in the region.
- Prime Minister Johnson has stopped saying that the country will be getting back to normal again by April, suggesting instead that the UK’s third lockdown could last into the summer.
- Bitcoin experienced a sharp sell-off once again this week, falling more than 10% on Thursday alone. This posed renewed questions on the viability of cryptocurrency and the sustainability of the cryptocurrency boom.
- “They have chosen hope over hopelessness, they have opted for unity over conflict and divisions. As we give effect to their mandate, we draw comfort from the knowledge that that which unites us is far, far more powerful and enduring than that which divides us. Despite our differences, despite a past of conflict and division and bitterness, despite the fierce political contestation among 48 political parties in recent months, we share the same hopes and fears, the same anxieties and aspirations”. Address by President Cyril Ramaphosa on the occasion of his presidential inauguration on 25 May 2019.
- The South African Reserve Bank decided, once again, to leave the repo rate unchanged at 3.50%. This means that the prime rate remains at 7.00%. The Bank reiterated that while “monetary policy will continue to support the economic recovery, a faster growth rate depends on implementing prudent macroeconomic policies and structural reforms”. This essentially implies that the Reserve Bank has done what it can to assist the economy given the prevailing fiscal, currency, and inflation risks.
- The South African Treasury is looking for ways to fund the vaccine rollout across the country. Judge Dennis Davis has backed a once-off solidarity tax or surcharge. Other options that are being considered are to raise taxes; widen the budget deficit; and reprioritise government spending – all these options being challenging in the context of SA’s stretched finances.
- SA’s budget deficit as a percentage of GDP will reach record levels: With the above point in mind, South Africa may have to revise its tax increase targets as its budget shortfall is set to breach wartime levels for a second consecutive year. According to the median estimate of 13 economists in a Bloomberg survey, South Africa’s budget deficit will reach 11% of GDP in the fiscal year through March 2022, which compares to the government’s estimate of 10.1% published in October’s medium-term budget policy statement. The impact of the Covid-19 lockdown and the increased spending to combat the virus is expected to push the gap to 15.9% of GDP in the current financial year. The largest shortfall on record was 11.6% of GDP in 1914, followed by 10.4% in 1940.
- A group of Californians have launched a lawsuit against Tencent on allegations of spying. The group alleges that Tencent’s WeChat mobile app has tracked and surveilled them, and then shared that information with Chinese authorities. This may impact South African investors as Tencent comprises in excess of 100% of SA-listed Naspers’ value, which in turn has the largest weighting by market capitalisation on the JSE.
Sources: Dynasty, Reuters, Bloomberg Markets, The New York Times, Daily Maverick, and Moneyweb, etc