December 7, 2020 BARRON’S 25
How much will those actions matter for the
economy and the markets?
There will be a hit to the economy, but markets know
that. We know roughly what is going on with the virus,
and roughly what is going to happen with lockdowns in
some states. The question is whether the data are going
to surprise to the downside because the financial markets
haven’t fully internalized the impact on the economy. But
I don’t want to get too bearish because the vaccine is like
having a global stimulus.
It’s that important.
If we find that there’s a problem with theModerna
[MRNA] andPfizer[PFE] vaccines, that’s what will take
the market down. It could be that we have big issues with
cooling the Pfizer one—minus 70 degrees Fahrenheit is
pretty cold. It’s extremely good news that we have all these
other vaccine options, because if all those vaccines required
that, I’m sure we couldn’t generate that amount of cooling.
Where should investors look for opportunities?
We’re very focused on tourism. The vaccine is key to
that. The pent-up demand for travel, entertainment, that
kind of thing, will be immense.
The airlines are tricky. You still have a question mark
around business travel because we now have this struc-
tural shift toward work-from-home, so I don’t think it’s
going to come back in the same easy way. I feel more
strongly about the stuff that is driven by consumer de-
mand: hotels, anything to do with entertainment, restau-
rants. People are going to want to have social experiences.
Ironically, the countries hardest hit by Covid could
benefit from these trends.
There is going to be a difference between the countries
that have an elimination strategy and those that don’t. If
you’re New Zealand and you don’t have any Covid at all,
it’s a tough decision how you open your economy. If you
are Mexico, and you’ve never had an elimination strategy,
it’s an easy decision. So, some of the countries we look at
will be Mexico, South Africa, Thailand, maybe.
How can you play the recovery?
You can trade directly from a currency angle—for exam-
ple, through the Thai baht and the Mexican peso. Tour-
ism is such a big part of those economies; it’s a big piece
of the balance of payments. If there’s a local stock or a
local stock index that has those exposures in it, that will
be a turbocharged way of doing the trade.
How does China emerge from this crisis?
China has managed to eliminate Covid in a large country,
while a lot of Western countries failed to control it well
or at all. From that perspective, it’s a win. It shows that
what their system was able to achieve was superior to the
Western system. China was able to navigate this without
shutting down their supply chains.
Demand for Chinese bonds has been impressive.
We have 0% interest rates everywhere in the world,
pretty much, except in China. That has generated a re-
gime shift in capital flows. We went from having a trickle
of foreign buying of those bonds to something pretty
meaningful now. That’s a shift that will be lasting.
Will the boost to China’s economy last?
The shift in global consumption patterns was very bullish
for China. Since you don’t go to your local restaurant as
much as you used to, you might want to spend on your
webcam and electronics and these kinds of things instead.
China got a boost, but that will eventually peter out.
Where are you going to go once you can travel?
We are going to Buckingham Palace to see the Queen of
England. I promised my kids.
Thanks, Jens.
—Ben Levisohn
“Wehave0%interestrates
everywhere in the world...except
in China. That has generated a
regime shift in capital flows.”Jens Nordvig
Photograph byJEFF BROWN