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Welcome to Firstlinks Edition 382

  •   5 November 2020
  • 28

At 3.20am AEST on Sunday, Joe Biden became the 46th US President by winning Pennsylvania and reaching 270 Electoral College votes. Donald Trump is yet to concede and continues to push his unproven accusations of electoral fraud and threats of legal action.

Meanwhile, the US experienced 126,000 cases of coronavirus on Friday, the third day in a row over 100,000, and Biden warned that the country is heading for 200,000 a day.  

When we are all older and greyer, sitting in our rocking chairs and slippers and contemplating what happened in the last 100 years, we will remember 2020. The pandemic challenged our lives, and now the President of the United States is challenging democracy.

On election evening, with many states still undecided, Donalf Trump called for counting to stop, a step no President has previously contemplated. He said:

"This is a fraud on the American public. This is an embarrassment to our country. We were getting ready to win this election. Frankly, we did win this election.

So our goal now is to ensure the integrity for the good of this nation, this is a very big moment, this is a major fraud on our nation. We want the law to be used in a proper manner. So we’ll be going to the US Supreme Court. We want all voting to stop. We don’t want them to find any ballots at four in the morning and add them to the list, OK?" 

We start this Weekend Edition with three reviews of the investment implications of the Biden win (written prior to the final count)

Capital Group: What the US election means for investors

MFS Investments: Blue wave fails to reach shore

Perpetual: Biden impact not as important as China for Australia

After Donald Trump falsely claimed a win, he continued tweeting, inciting his followers to doubt the election results. Twitter refused to allow many of his tweets. 

It was fascinating to watch betting markets ebb and flow during the early counting on Wednesday and Thursday AEST. At one stage, Joe Biden paid $5 for a $1 bet as the early voting went Trump's way before the mail-in ballots were counted.  

The US feels so different to the country my family visited on a wonderful holiday in 1998. On a walk in Washington DC, we strolled past The White House and saw a queue near the gates. I asked a policewoman what was happening, and she said The White House was open to the public that day. She invited us four Aussies to go straight in. I don't recall a detailed security check, and in fact, we entered through the kitchens. The photo below shows me standing near the window of the Oval Office as a tourist not even carrying a passport.

A lot has changed in 22 years. Globally, the threat of terrorism legitimately makes such casual entry into the halls of power impossible. There are no tours of the West Wing. The election shows how deeply divided the nation is, with a red block of Republican support in the middle and blue of the Democrats on the east and west coasts. From Washington to New York to San Francisco, businesses have boarded up their premises this week, fearing rioting by supporters of the losing party.

For all the faults of Australian politics, it's difficult to imagine a Prime Minister whipping up a crowd to challenge a poll result on declaration of a winner. A few days ago, Bloomberg reported that a Federal Court judge rejected Republican attempts to invalidate 127,000 votes in Texas. “For lack of a nicer way of saying it, I ain’t buying it,” U.S. District Judge Andrew Hanen said.

Let's look at two US charts as background to what the country looks like, and one cause of this divide. The Federal Reserve Board issues data on wealth by percentile groups, and as shown below, the top 1% own as much wealth as the bottom 90%. And 17 times the wealth of the bottom 50%. That's an incredible wealth disparity, and although Donald Trump's promise to 'drain the swamp' was more words than action, it tapped into this inequality.

Among the generations, the Baby Boomers have the money from decades of prosperity, rising asset values and inheriting the wealth of their parents, who are now dying. Millennials who are already up to 40-years-old will also inherit much of this wealth, but without the right parents, it will be far more difficult to compound asset returns when bond rates are negative in real terms, debt will be passed on by the trillion and stock markets are already expensive.

Compared to US politics, investments markets look sane and rational, even as they rally into a global pandemic of rising numbers and a major threat to economic growth in Europe and the UK in particular.

Back to investing with a wide range of topics this week ...

We start with UBS Securities research on why companies with a strong tech focus have performed so well on the stock market, and why it might continue.

Then Simpson Sanaphay explores four themes that affect investment portfolios during an economic recovery, while David Gait warns about investing that focuses on spurious index weight comparisons that encourage unwelcome short termism. Thought provoking insights into where our investing should be heading.

Remember Brexit? With the attention on the US, it's easy to overlook the problems in Europe and especially the UK. In 2016, the Brexit result was as much a surprise as the Trump win. Michael Collins examines the latest implications of Britain's EU exit amid a global pandemic. It will be a long, tough winter for Boris.

And a couple of videos of my sessions with Chris Cuffe and Noel Whittaker at the Morningstar 2020 Individual Investor Conference, held last week. It drew over 2,000 registrations and anyone who signs up for a free trial with Morningstar can tap into the expertise of other leading names such as Hamish Douglass, Gemma Dale, Kate Howitt, David Harrison and Anton Tagliaferro.

Meanwhile, as a sampler, there is free access to Chris talking about investing lessons and particularly how he selects fund managers, and Noel on long-term investing to make retirement simpler and healthier with more financial security. My personal thanks to both for sessions that received a lot of good feedback.

This week's White Paper from Perpetual Investments is a look at three major market developments in recent weeks, written just before the US election.

Graham Hand, Managing Editor

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Global ETF Review Q3 2020 from BetaShares

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Plus updates and announcements on the Sponsor Noticeboard on our website


Greg W
November 09, 2020

Yes siree, Hell hath no fury like privileged old white blokes who claim to have had their FEELINGS hurt by goddamn liberals! FWIW this somewhat-privileged old white bloke continues to have HIS feelings hurt BIGGLY by the preaching of the sanctimonious hypocrites who claim a mortgage on goodness for the god-deluded and a special place in their heaven for the lying narcissist who is trashing Brand America and all that decent folk [oooh, there they go again!] would think Firstlinks subscribers might hold sacred.

Graham Hand
November 09, 2020

Indeed, biggusriggus, as you note, I did not say 'fearing rioting from Republicans', I said from the losing party. I doubt business owners are fearing rioting by the winning party. And I did not simply assert it but provided photographic evidence.

November 09, 2020

Thank you Graham. My quibble is the inference, intended or unintended, between the proclaimed loss of the election by Trump and the boarding up of businesses due to a perceived threat of rioting by supporters of the losing party.

Rod Thomas
November 09, 2020

Getting a bit of stick there Graham !

Graham Hand
November 09, 2020

Hi Rod, indeed, and you should see the stuff we haven't published! Apparently, some people think I'm not allowed an opinion that differs from theirs.

November 09, 2020

That would be a strawman right there, Graham.

Merely asserting a statement to be true does not make it so. One must form an logical argument based on reason. If one's opinion does not stand up to criticism, it's hardly anyone else's fault. But if we argue honestly, everyone wins.

Take for example, this quote:

"From Washington to New York to San Francisco, businesses have boarded up their premises this week, fearing rioting by supporters of the losing party."

- It is true, as far as I am aware, that businesses have boarded up their premises.
- It is true, as far as I am aware, there is feared rioting.
- It is true, as far as I am aware, that there is historical rioting threat from democrat backed vandals (Source:
- It is not true, as far as I am aware that there is historical rioting threat from republican backed vandals

Therefore, the statement "fearing rioting by supporters of the losing party" does not appear to be factually correct, if that losing party is republican. If you have reasonable evidence to support this claim, it should be considered on its merits. But by contrast, what we appear to be seeing is republicans exploring avenues of legal process for "challenging democracy" – whether you agree this is acceptable or not is another matter.

As information changes, any reasonable person should revise their views. A wise man once said, hold strong opinions but hold them lightly. As I stated, I think well-spirited discussion is important. But we should all aim to be honest.

Thanks again.

Warren Bird
November 10, 2020

Perhaps it's time to stop people using pseudonyms and nicknames. I wonder if some of these folk would say the stuff they are about you and the article if we had to know their real names.

November 08, 2020

I am surprised, even disgusted, that you would take the Pelosi line that Trump is corrupt and "uses the Presidency for his own purposes". Hello Graham, evidence? But then you totally discount the possibility of fraud in the ballots, even though there is plenty of anecdotal evidence, yet to be investigated. The anomalies are mind boggling.
So, there you are, part of the anti-Trump hysteria of the MSM outlets here in the US.
For my money, a good reason after years of following you, to close the book on your biases and far-left opinions.

November 09, 2020

A flailing turtle on its back in the middle of summer was one of the better descriptions of Trumps leadership. Of a conservative nature myself you still have to call it what is was and he was indeed most interested in making everything about himself. Yes he has help light a fire under the status quo, which is a good thing, but we now need to look past this general paradigm shift in society. Life is too short to always be in conflict with each other and too shallow if self interest always prevails.

Adam Shultz
November 08, 2020

A great article Graham! In 1998 the world and the USA were a much simpler place. As a subscriber thank you for continuing to deliver free and informative investment news. In the past few months and I'm sure the next few, investment markets will continue to be heavily influenced by global political events and I hope that Firstlinks will continue to cover them despite the criticism from some in the commentary above. All the best.

Graham Hand
November 08, 2020

Thanks, Adam, appreciate the support. I'm trying to point out that Donald Trump tapped into legitimate grievances on the inequality of wealth, and millions of Americans identified him as an 'outsider' like them because so many feel disenfranchised. There are enough of them to build his support base.

November 08, 2020

Biden will be a disaster for the US ,and for "us" , in that he won't last long in office before Harris takes the reins due of Biden's "lack of mental capacity" and then there will be a "full-blown socialist puppet" in office. The RINOS got it wrong and need to be weeded-out and replaced before the next election campaign. Donald , due to lack of support , was unable to "drain the swamp" and it cost him the job ! Washington DC voted 93% BIDEN !! and THAT is supposed to be Democracy at work ???? Regrettably , our administrative capital is little better ! A Leftist alliance [ Labor - Greens ] polled almost TWICE that of the Centrist Opposition Party.....hardly a reflection of the National political opinion ........but indicative of our own "swamp" formation and it's growing influence and control . Like WILLIAM , and NOT ENOUGH OTHERS , "In closing, I'll just say I've grown so tired of being lectured to by my self-appointed 'betters'...."

November 08, 2020

I thought this was an investment site. Can we jump out of the Trump v Biden v election result v US politics etc discussion please? Those wanting to continue can find many, many other platforms for doing so. I am much more interested in the impact of the result for investors, markets, better understanding of market drivers, macro implications etc than who shoulda, coulda, did or didn't.

Graham Hand
November 08, 2020

John, in case you missed it, the first three articles are from leading asset managers on the investment implications of the Biden win. Not much more we can do as an investment site.

November 08, 2020

I believe Biden made a Freudian slip some time ago
And it's not the first time he's told the public exactly who he is
Compare this with a young Trump in 1980

There's a lot of you out there that are disconnected from reality, I'm afraid. I wonder if you've spoken with anyone that doesn't already agree with you. This type of moralising would not last five seconds in a pub, from what increasingly appears to be a morally bankrupt class of society. Trump is far from perfect, but you at least know what you're getting – someone with a backbone. For a more balanced assessment, I would refer anyone to the commentary of Victor Davis Hanson.

Sorry about the strong rhetoric, but some of you folks really need to get a grip (love your work more generally, Graham). And by the way, the only threat of "rioting by supporters" relates to the potential of a democrat/globalist backed BLM movement as far as I am aware. A movement, I note, which has been supported by many Australian institutions, nonwithstanding its communist ideology which promotes the "disruption of the nuclear family". (removed from website Sept '20).

Brexit is mentioned and the conclusion is indeed correct – it shares the same sentiment as the Trump phenomenon. If one lives in a liberal-multicultural bubble that is London or any large city for that matter, Brexit would be a surprise. However, I would suggest that if one had a conversation with any common man it would not be a surprise at all – it is a pushback against moralising, ignorant, hubristic, technocrats – seeking greater control of individuals, families and communities more generally for "the greater good."

That said, appreciate all the work that you do. And thanks for the opportunity to discuss. The solution to this growing ideological gap is more rigrious and well-spirited argumentation, not less.

November 08, 2020

William you are on the money.

November 07, 2020

"No evidence of fraud" in the US election? It's debatable whether there's evidence of widespread fraud or outcome-altering fraud but there's plenty of evidence of election fraud. Whether it's dead people voting, people who have moved out of state still voting in their old state, election officials wearing "Biden 2020" facemasks whilst handling ballots (were the same officials also curing ballots unobserved by GOP observers?), 100k+ votes suddenly being found that are 100% Biden votes, GOP observers being denied access to watch counting then being kept 30 feet away from the ballots and then even when a judge ordered that they be allowed 6 feet from the ballots, they were still initially denied access contrary to the judge's orders.

November 08, 2020

OhReally BRUCE where did you get that stuff from?

November 08, 2020

We'll find out soon enough whether the allegations of voting fraud can be substantiated in court. This year December 8th is the "Safe Harbor" deadline to ensure that there is time for the Electors to meet on the Monday after the second Wednesday in December (this year, the 14th). I'm happy to wait until December 8th to decide whether the claims have merit or not.

November 05, 2020

I think we overcomplicate things. The US is clearly centre-right, more so than most other western countries. So when the Democrats keep shuffling to the left they lose more votes than they gain. Remember, no Green party of any consequence in the US so the 'far left' are much more part of the Dems. If you look at Australia and the UK recent elections, moves to the left are not vote winners. Plus the Dems are pretty inept at the best of times.
So with such a deeply unpopular President (I know, he has a solid fan base) how come the Dems, even if they win as looks likely, did so poorly (they didn't flip the Senate as they expected). Stopping lecturing the electorate might be a good start. People don't respond positively when talked down to.

Peter Chegwyn
November 05, 2020

It is not that long ago when the USA had the lowest unemployment rate in 50 years. Anyone could get a job blacks, hispanics and all comers. The choice given to the American people was two poor candidates so you had to choose the better of two evils.Sadly Biden is not strong enough to deal with China. At my 80 plus years it will not be an issue for me but I remain very concerned for my grandchildren with a weak Biden president

November 05, 2020

Only elite RINOs don't understand how Trump wins over low-income earners. This outcome was highly predictable.

Elisa W
November 08, 2020

RINOs? What does that mean.

November 08, 2020

Republicans In Name Only.

November 05, 2020

People support Trump because he angers the left so much. That's not because the left is wrong, in many cases they're correct. Its just that they shout down anyone who disagrees with them. Part of it is the media bias. While Sky News is clearly right wing bias, the ABC and others are consistent in their usually more subtle bias.
As a quick test, ask people and/or put on a SMH or Age chat about how many people have died from COVID due to Trump's rallies. Then pose the question whether the BLM protest in Melbourne was part of the virus spread. Common sense says both these large gatherings with people infected will be a problem, and all our Premiers and Chief Health Officers say avoid large gatherings. Deputy PM Michael McCormack raised this on Q & A, so you can just watch that to see what happens. Yes, the left is right about Trump rallies, its their response to suggestions about BLM here and in the US that turns people against them. The other factor is the working classes forgotten by the left. Qld in the last federal election was an example of the issue. In the Hunter region of NSW, what happens to the mining workers if a Labor Government looks to close coal mines to address climate change. Again, they are right on the policy, but will implement it in a way that antagonises the workers there. Here all they need to do is to talk about and deliver new jobs appropriate for the affected workers.

john walker
November 05, 2020

so trump has achieved nothing and Biden is an angel?

Graham Hand
November 05, 2020

As I point out, there are legitimate concerns about inequality in the US, but how much did Trump focus on fixing it by reducing taxes for the wealthiest? Trump's priorities were looking after himself and the politics of any decision. Of course Biden is no angel and leaves a lot to be desired.

November 05, 2020

Graham, I keep hearing this talking point of Trump looking after himself through cronyism but I've never heard anyone actually point out in any detail what this cronyism is. Perhaps you could elaborate?

As for wealth inequality, the Fed Reserve released a report a few weeks back saying wealth inequality has shrunk in the last three years under Trump. Blacks have seen their wealth increase by 35%, Hispanics 65% and Whites 4%. You may have missed it as the MSM tends to not report these things.

In regards to the tax cuts:
The law retained the old structure of seven individual income tax brackets, but in most cases, it lowered the rates. The top rate fell from 39.6% to 37%, while the 33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%.? The lowest bracket remained at 10%, and the 35% bracket was also unchanged. The income bands that the new rates applied to are lower, compared to 2018 brackets under current law, for the five highest brackets. - From Investopedia

Why is it that so many wealthy people in the finance industry hate Trump, while he is a hero to the Blue Collar workers in the States? Perhaps we can discuss that one later.

In closing, I'll just say I've grown so tired of being lectured to by my self-appointed 'betters'....


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