Sunday, 8 March 2020, was not only International Women’s Day, but the ICC Women’s World T20 Cricket final, played between Australia and India at the Melbourne Cricket Ground, attended by over 86,000 spectators.  (Australia won by 85 runs). Ten months later, over 85 million people globally have been infected and 1.85 million people have passed-away from COVID-19.

Despite the pandemic-induced turmoil, the US based Nasdaq was up an extraordinary 44 per cent for the year. In market capitalisation order, Apple (US$2.26t), Microsoft (US$1.68t), Amazon (US$1.63t), Google (US$1.19t) and Facebook (US$0.78t) were up 77 per cent, 40 per cent, 71 per cent, 24 per cent and 29 per cent, respectively, for the year to December 2020.

The sixth largest member of this prestigious group, Tesla – which recently joined the S&P 500 – has a market capitalisation of US$0.67t, after appreciating 680 per cent from US$90 to US$705 during the year.

For context, the Australian All Ordinaries Index, which comprises the top 500 companies – and was up 0.7 per cent for the year, excluding dividends – has a total market capitalisation of A$2.15t or US$1.66t – about the same market capitalisation as Amazon. It is interesting to note, the Australian All Ordinaries Index hit 6,850 points in November 2007, and so many investors have received a return which is no better than the market’s annual dividend return over the past thirteen years.

Bond yields rallied hard in the six months to June as Central Banks print money so Governments – which are now running substantial deficits – can pay for financial assets (Quantitative Easing), welfare programs, infrastructure and salaries for public servants. As Governments accumulate debt, the negative consequences of Modern Monetary Thinking (MMT) mean productivity reform is largely ignored, thus providing a handbrake to future economic growth.

Australian ten-year bond yields finished 2020 at 0.97 per cent, whilst cash rates were cut by 0.65 per cent to 0.1 per cent, and this appears to be fuelling another bubble in house prices (relative to incomes).

It seems irresponsible lending is happening on an ever-increasing basis.  And a simple example is Italy and Greece, which have virtually no prospect of ever paying off their debts, and yet their ten-year bond yields (0.55 per cent and 0.63 per cent) are around one per cent more than that of Germany (negative 0.57 per cent).

Apart from the oil price, most commodities enjoyed a good year, particularly iron-ore – which rallied 70 per cent from US$91.53 / tonne to US$155.70/ tonne. After troughing at US$0.57 during the pandemic lows in March 2020, the Australian Dollar rallied 35 per cent to US$0.77, and up 10 per cent for the year. Copper was up 26 per cent to $3.52/ lb. and Gold was up 25 per cent to US$1,900/ oz.