Which opportunities in a post-pandemic world investors should look out for

In this Yahoo Finance panel in partnership with the World Economic Forum's online Davos Agenda, Economist and Author Dambisa Moyo, Rockefeller Foundation President Dr. Rajiv Shah and Ariel Investments Founder and Co-CEO John Rogers joined Yahoo Finance’s Alexis Christoforous to discuss new opportunities investors could encounter in a post pandemic world.

Video transcript

ALEXIS CHRISTOFOROUS: Hello, and welcome to the Yahoo Finance World Economic Forum's Davos agenda panel. It is part of the forum's week of virtual meetings bringing together global leaders to find sustainable solutions for a post-COVID world. And today, we're going to be examining the global economy and how it may look after COVID-19, and explore new opportunities in the post-pandemic world. We want to mention that this session is on the record. It's available online on the World Economic Forum's website, as well as on Yahoo Finance.

And I'm excited to introduce to you our panelists today, who are leaders in their respective fields. First, we have economist and bestselling author Dambisa Moyo. We have founder and co-CEO of Ariel Investments, John Rogers, and president of the Rockefeller Foundation, Dr. Rajiv Shah. Our thanks to you all for spending time with us to discuss this very important topic.

As we all know, a lot of trends that were already underway pre-pandemic have just been accelerated by the impact of the pandemic. And I think this is especially true when we look at the digital economy, so many of us now having to pivot and work from home, learn from home. There's telemedicine, delivery services. We're using technology in ways we never thought we would in our personal lives, in our work lives. Dambisa, I'm going to start with you. What do you think the future of work is going to look like post-pandemic, especially when you consider how much our digital economy has exploded in just this past year?

DAMBISA MOYO: Well, thank you so much. I'm delighted to be able to join you and to spend some time with both Rajiv and John. Your question is particularly important because, as you say, we were already talking about issues of automation and technological unemployment before COVID hit. What has happened is many institutions, public organizations, as well as private corporations have been slightly backfooted in terms of their adaptation and the speed with which we've had to adapt to these new circumstances.

Before COVID hit in earnest, the speculation-- and there were numerous reports-- in fact, one from Oxford Martin School in 2013 that had forecasted that at least 47% of jobs in the United States would be lost because of automation. That number has been adjusted a number of times, but it is absolutely the case that digitization and automation is front and center, certainly on the boards of corporations on which I serve, but more generally, as well.

I think that the question is particularly problematic because we aren't-- or we are ill-prepared for what that automated world might look like. I actually I'm in the middle of writing a paper for Harvard Business Review on how we're going to try and manage not just individuals, but teams between people who are focused on individual work versus collaborative work, and trying to find that right balance in order to make sure that companies can defend their culture, but maintain operations and make sure that employees remain engaged and motivated.

ALEXIS CHRISTOFOROUS: John, I'm going to bounce off that with you. Would you agree with Dambisa that we are ill-prepared for sort of the next chapter or the next leg of this digital economy?

JOHN ROGERS: You know, I think, you know, America has a way to always adapt. And we seemingly, you know, as Warren Buffett always talks about, last century, we got through the Great Depression, we got through the pandemic, we got through two world wars, et cetera. And so we at Ariel are always thinking long-term.

And I do think that the boards that I'm on, everyone said this has really been helpful in actually-- in some ways, it's been a horrific, obviously heartbreaking time, but when it comes to the digital transformation, we've been able to telescope five years into one year. And I think it's helping us to get actually better prepared for this new world that we're all going to be living in. And so I'm quite optimistic we're going to come out of this stronger than ever, even after all the heartbreak and death.

ALEXIS CHRISTOFOROUS: And I think you're right. I mean, it's all happening at lightning speed, and it's out of necessity that it's all happening. But Rajiv, how do we do that? How do we emerge from this in the next chapter of this digital economy, and do it in an equitable way? I mean, we know that the virus has disproportionately affected different pockets of the economy, the Black community, the impoverished being hospitalized and dying from the virus at a much higher rate than the rest of the population. So how do we move forward with the future of work and the digital economy in a more inclusive way?

RAJIV SHAH: Well, it's great to be with you, and thank you. And I agree with both John and Dambisa in pointing out that this is accelerating our transition to a new world. The question is, what is that new world going to look like? The reality, as you've just mentioned, is COVID-19 has been the largest driver of inequity we've seen since World War II.

And in fact, the world's 2,200 billionaires have gained about $2 trillion of asset value, while, at least in the United States, 60% of American households have had to significantly fall behind, choose between feeding their families and paying for their prescription drugs and trying to stay safe while being forced into kind of essential work that has also created real risks. And the brunt of that has been most severe in minority communities, where one in 1,000 African-Americans have died from COVID, and where the hospitalization rate is three to five times higher.

And you know, it's easy to think that we're just going to kind of get beyond COVID and that divergence will cease to occur, but the reality is probably the opposite. The reality is we're likely to see much of the richer industrial world get access to vaccines maybe two or three years sooner than herd immunity is achieved through vaccination and inoculation in much of the developing and emerging world. And the result of that will be big reservoirs of viral replication that continue for the next several years in a population of people that could be as high as 4 or 5 billion people.

So the reality is I think you're going to see this great divergence in economic fortunes really have even more bite over the course of the next three to five years. And that's really why strong, coordinated action to ensure that there's a just and equitable recovery is necessary right now. That starts with massive investments in making sure that everyone has access to the tools to overcome the virus, which is just not happening at the scale it needs to. And it extends to making sure that the global economic recovery is jobs-rich and focused, in particular, on those that are otherwise left behind.

ALEXIS CHRISTOFOROUS: Speaking of working together here, we have got world governments, central banks around the world basically throwing everything they've got at the pandemic. Dambisa, might this crisis perhaps force innovation in terms of the fiscal tools, the monetary tools that our world governments and central banks can use going forward?

DAMBISA MOYO: Well, again, I think this is something that was already happening. It's been catalyzed. I mean, I think the question that everyone is sort of focused on is what is the role of cryptocurrency in this space. And whether you love them or hate them, you know, someone said to me recently, it's essentially Bitcoin bugs are like gold bugs of yesteryear.

And so to the extent that the Chinese government, in particular, are focused not only on the question of what is a reserve currency look in a world that might be more balkanized and much more in a more de-globalized and institutional organize-- sort of world, we also have the question about whether the Chinese are going to support a much more crypto type of currency, which could materially affect fiat currencies, such as the dollar, which we've seen weaken somewhat in trading in the last several months. And so I do think we have to be open-minded about what this might mean.

ALEXIS CHRISTOFOROUS: John, what-- it's interesting that Dambisa brings up cryptocurrencies. We've seen a tremendous rise in Bitcoin and other related cryptocurrencies in the past year. Now, we have a new administration. Not sure yet how the Biden administration is going to deal with regulation in that industry, but how do you see cryptocurrencies sort of being a part of the narrative post this pandemic?

JOHN ROGERS: I really do believe that this is going to end up being one of the greatest bubbles of all time. You know, Bitcoin doesn't really do anything. You know, it's something that I think has just been sort of morphed into this giant, giant, giant bubble, and it's going to collapse.

I mentioned Warren Buffett earlier. You know, he has been extraordinarily critical of this. And so is his partner, Charlie Munger. Of course, they're also not big believers in investing in gold, things that really do not produce any tangible benefit to society or make any difference. And you know, I do believe, over time, you're going to see this-- people going to look back at history and say what were we thinking, what were we doing when it came to Bitcoin.

ALEXIS CHRISTOFOROUS: But does it have a place in our society maybe as another asset class, as perhaps a hedge, John?

JOHN ROGERS: It could be for a while, I guess. These things can take on a life of their own, and you never, ever know when bubbles are going to pop. They can often last much longer than anyone could anticipate. I know my good friend, Bill Miller, believes deeply in these. And I know there's another side to this argument. And so I respect the other side. But I just don't see this in the long run. I just cannot see 20 years from now, 30 years from now this being an asset class that America and the world works with.

ALEXIS CHRISTOFOROUS: OK. We'll have to come back in a couple decades and check in on that, John. But Raj, I want to get back to you and the impact the virus is going to have on our global health care system. I mean, do you think that virus screenings will just become a regular part of our lives, in very much the same way security measures became a part of all of our lives post 9/11?

RAJIV SHAH: I do. You know, you're going to have to see a much bigger and more ubiquitous set of options for testing that takes place all over the world and persists for many years. I think you're going to need systems like COVID Pass and other things that we at Rockfeller helped create so that people can document whether they've been inoculated and whether they represent a cross-border threat when traveling.

I think you're going to need much, much bigger investments in, you know, the 50 to 60 countries that right now are struggling mightily to get reasonable access to the vaccine, both because supply is too limited right now for the most effective vaccines and because of complex indemnification issues that are holding back many middle-income countries from being able to launch large-scale vaccination campaigns.

And I would just point out one thing. This is not likely to be over quickly. I think, you know, we're going to be wearing masks for a couple of years, is my guess. And I'd go beyond that and suggest that, if we allow a large viral replication reservoir to exist in the-- anywhere on Earth-- and it'll likely be in places that are more resource-poor-- that's going to present a huge risk to the rest of the planet because, you know, some of these viruses will mutate.

They will-- those mutations will affect the binding site of the antibodies that currently are working and are our pathway out, and they will invalidate the validity of current vaccines and monoclonal antibodies. And we've started to see in the South African variant some public data being published that indicates that's a very, very real risk, and it's taking place now. So in the long history of, you know, viral-- virology, this is sort of in the middle of the game, not at the end of the game. And we have to be conscientious of that, and take some bolder actions today as a globe to protect our global economy.

ALEXIS CHRISTOFOROUS: OK, so if President Biden is listening, what are some of the bold actions he should be taking in the first 100 days?

RAJIV SHAH: Well, I think he's starting to do a lot of things right on a public health basis. The first is just massively scale up access to the vaccine, both in the United States, where we've hit maybe 20% to 25% of our previously stated vaccination targets, and just as importantly, on a global basis. You know, in America, we just committed $4 billion to COVAX, and the Biden team just rejoined this global partnership to vaccinate everybody.

But it's hugely under-resourced. And when you think of the trillions of dollars of fiscal support we've had to put into the US economy to deal with the consequence of COVID, you know, if we were spending tens of billions of to vaccinate everyone on the planet and every other industrial nation was doing its part to help make this an urgent global action, that would be a great place to start.

I think genomic surveillance, where there's real-time sharing of genetic sequencing data so that everyone can see are the genetic sequences changing the virus enough to invalidate some of the tools we're all relying on, though these are small investments, a few hundred million dollars can go a long way, but they protect the whole planet from the risk of losing another $20, $30 billion-- trillion of economic value from a round two of COVID-21 or COVID-23.

ALEXIS CHRISTOFOROUS: I want to get back to how this is all going to impact corporations globally. Dambisa, this one's for you. I mean, we've seen companies, especially with international supply chains, have problems. There are shortages. There are bottlenecks. How will the supply chains look different post-pandemic? Are we going to see a lot of reshoring? And I have to think that's not great for job creation, since a lot of that, I would imagine, would become automated. So talk to us a little bit about the phenomenon of regional supply chains that we might see post-pandemic.

DAMBISA MOYO: So I think that this is at the center of the sort of important and urgent decision-making that companies are going to have to make. Full disclosure, I'm on the board of 3M. We're making the N95 masks. I believe we're the market leader. We've had enormous-- and it's been very public-- enormous challenges in terms of distribution, and really been at the [INAUDIBLE] of these geopolitical questions that you're touching on. We produce a lot of these masks in China. The Chinese government, on the back of Wuhan, decided to curb supply. And of course, the United States, under President Trump, had a Defense Protection Act imposed.

So fundamentally, supply chains-- and I'm just giving examples right now on supply chains to move-- to produce and move goods, but of course in a much more de-globalized world, all these things come into question. Our ability to trade across borders, our ability to support the carry trade, borrowing low interest rates in London and New York and investing in risk-adjusted higher-yielding environments like Brazil or South Africa becomes highly complicated in a world where there might be more capital controls.

Movement of people becomes much more challenged. And we know about immigration becoming such a hotbed, you know, third rail issue in many of the developed nations. And of course, as you think about regionalization and this question, it throws up issues of cooperation-- global cooperation. It's sort of a much more every nation for itself. Hopefully, as Rajiv just intimated, I hope there's much more motivation and catalyzing-- catalyzation towards more cooperation.

But we are already seeing even standards being challenged in the interest of questions of the splinternet with the Chinese with a new-- or really investing in intellectual protocols that could rival the West on a technology basis. So it's-- in terms of corporations and making those decisions, we have to figure out where to allocate capital and resources, in terms of human capital, in a way that we can keep functioning, keep growing, defend our cultures, but at the same time ensure that the operations continue.

That's extremely challenged even just in terms of how we think about things. We've spent 30 years plus in a globalized world where these issues were sort of more risk-mitigated. And now, they're incredibly live. And you know, as Rajiv was saying, the issues around even something like distribution of a vaccine, never mind the logistics of it, just the sort of ethical and moral questions. Do you give a Zambian who's 95 the vaccine between-- before a 50-year-old German? I mean, these are questions everybody's going to be sort of thinking about much more aggressively as this continues.

ALEXIS CHRISTOFOROUS: You bring up a lot of great points, and I want to get John in here. Just to go back to that supply chain regionalization issue, John, I would imagine this is going to create an explosion of cross-border data flows. And if that's the case, where might the opportunities be for corporations, but also for investors?

JOHN ROGERS: You know, what I've been able to see-- you know, I've been fortunate to be on a couple of large boards that are engaged and involved with this. I've been on the McDonald's board for 18 years, and a couple of years ago, I joined the Nike board. And of course, their ability to source product throughout the world and their manufacturing capability has been very, very important to their success. And I have to say that, when we talk about the future, those companies have been doing extraordinarily well. The stocks have held up very well. Nike, in particular, has been very strong.

So I think it gives you this vision that we're, again, adapting to this new world remarkably quickly, remarkably fast. And as we, you know, shift around, I think the idea is to do things intelligently and thoughtfully, but realizing this is a relatively short-term problem. And so you're not going to throw the baby out with the bathwater and transform the world, because we've all seen in the past pandemics come, and then pandemics end.

And I think at the time, sometimes you get so swept up in the moment of now and the emotions of now you think you need to transform everything. I think these extraordinary businesses that have been built over generations kind of understand that. So there are adjustments to be made, there are things to be made, but I think at the end of the day, they're going to be more efficient, more effective, and the companies will be able to grow and be more profitable as we move into the next year or two and three after we get through this.

ALEXIS CHRISTOFOROUS: You know, as we move into all of this, as we work our way out of it, we've seen how much governments around the world have had to spend to help combat the economic crisis that was born from this pandemic. What do we do with all the debt? And I'd like for each of you to just weigh in on this.

And Rajiv, I'll begin with you. I mean, we could continue to have the debt rise and just pass it along to our kids and their kids' kids, and so it goes. But at some point, it's going to come home to roost. So maybe we don't worry about the debt right now while we're in the throes of things, but at some point, we're going to have to do. What's the best and equitable way that we can do that?

RAJIV SHAH: Well, I will leave the long-term challenge of dealing with that debt to the others on this panel, who might have more to offer on it. I do think your point about we are in a crisis and are going to continue to be in a global economic crisis for the next several years, especially for the bulk of people, the bulk of working families across the planet. And you know, just to put it in perspective, you mentioned earlier the huge stimulus and monetary actions that have been taken.

Some estimates indicate those are roughly between 20% and 30% of GDP across most OECD countries with powerful central banks. In much of the emerging world, without that capacity, it's been closer to 3% to 5%. And that's simply not going to be sufficient. And that's why, while the 2,200 billionaires made $2 trillion, that's why the World Bank has estimated that 435 million people had been pushed back under the poverty line.

I mean, this is a rewinding of global development that-- and global human development outcomes that is probably undoing 15 to 20 years of real human progress. So managing the long-term debt issue is going to be important, but I would just highlight that we're still in an urgent crisis, and frankly, we need some type of global coordinated economic plan that helps to lift up much of the emerging world that has not had the capacity to make the kinds of investments other nations have made.

ALEXIS CHRISTOFOROUS: And you know, Dambisa, we've heard Fed Chair Powell say as much. You know, we can't worry about the debt now, we just have to worry about the issues at hand and how we can help. But again, I ask you, what should the plan be for capping this debt, or at least trying to pay it off over the next few decades?

DAMBISA MOYO: So I think, again, in terms of context, we've been dealing with a lot of these problems, particularly after the 2008 crisis. So although, again, this COVID global pandemic is accelerating a lot of these issues, whether it's around automation debt, et cetera, we were already dealing with this. We had low interest rate environment. We had a situation already where economic growth was low and slow.

Remember, Germany Q4 2019, 0% growth. The UK was around 1.2, 1.4 you need at least 3% growth per annum in order to double per-capita incomes in a generation, which is 25 years. Many big countries-- Brazil, the Australias-- excuse me, the Argentinas, South Africa, Russia were already at 1% to 2% before the crisis. So this is not something that we can hitch only to the COVID thing.

But specifically around debt, I would say, in terms of emerging markets, there are conversations that are live around [INAUDIBLE] a potential [INAUDIBLE]. So these are the heavily indebted poorest countries, some kind of either suspension or moratorium on those debts. They're trying to restructure their maturities and coupons. There are very lively discussions. I've been privileged to be part of those conversations, with the recognition that we're in a much more complicated world. China is now the largest lender in many-- in places in the emerging markets, and we need them at the table to have this conversation.

So there's no quick fix. The Congressional Budget Office in the US in 2016 was already cautioning about Social Security, Medicare, Medicaid, and the fact that every class of debt-- government, household, corporate, auto loans, student loans-- was at $1 trillion each before COVID hit. So it's a problem. I take the view, and to my last point, really drawing on the work of Ken Rogoff and Carmen Reinhart in their wonderful book called "This Time is Different," they looked at 900 years of government debt to GDP ratios being over 60%.

It has material consequences for growth, which ends up being at 2% or lower. It's not enough. But we're in an emergency, so we have to solve the here and now. And I agree with Rajiv, we've got to solve the health care crisis, and we've got to try and essentially kick the can down the road. And I think if there's more cooperation, bringing China on board, which is the largest foreign lender to the US government, to understand that we're in this crisis, we will pay at some future date when we get growth back on track, that is the sort of conversation we need to have given the situation we're in at the moment.

ALEXIS CHRISTOFOROUS: So John, weigh in here. If I'm hearing Dambisa correctly, this has to be a multilateral effort to draw down our debt in the decades to come. What's your take on that?

JOHN ROGERS: Well, you know, I think at least here in America-- you know, I'm a domestic stock picker at Ariel. That's my job here. And so I'm always thinking about the United States. As we know, we have the ability to print money. And we've had debt increasing over several generations now. You know, this is not a new problem. And of course, our stock market's going higher, our economy is growing. We've been able to have great success despite the large debt burden that we have right now.

I do think what's going to happen now, though, because of this extra stimulus coming through on top of all the other spend, that we're going to end up with higher inflation than people expect. I think it'll be significantly higher than what the Fed has been talking about. And therefore, it's going to push interest rates significantly higher than are anticipated.

And so I think that's going to be the cost to our society, is these higher rates are going to be-- of course make homes less affordable. These growth stocks that have boomed, that have benefited from enormous lower interest rates, as you value those companies, you're going to value them differently in a economy where interest rates are moving higher.

So I'd be very careful about the FANG stocks. I'd be very careful about the S&P 500 that's dominated by those high-growth companies in this new environment. And I think that will be the cost of the high inflation that will come from-- that will come from the enormous spend.

ALEXIS CHRISTOFOROUS: I want to go around the virtual table now with the few minutes that we have left and leave folks with some optimistic thoughts. And Rajiv, I'll start with you. What are you most optimistic about as we work our way through this pandemic and look forward to a post-pandemic global economy? What are you most optimistic about?

RAJIV SHAH: I'm most optimistic that this crisis will force a return to and a re-embracing of real global cooperation because there will have to be a recognition that we are all in this together. On COVID response, that means really stepping up and vaccinating everybody, while also stepping up and investing in genetic surveillance, because it matters now in the United States what type of variant is spreading quickly in South Africa and what the nature of that variant does.

You know, I'm optimistic about global cooperation on economics because I think the IMF and the World Bank, Bretton Woods Institutions, partnering with the Chinese and others, can reinvigorate financing and monetary and fiscal support for emerging markets and emerging nations, you know, that simply will need it in order to avoid this great divergence. So I think there is an increasing recognition we're all in this together, and a new willingness, certainly in the United States, and perhaps that will become infectious, to sit at the table together and hammer out solutions so we can march forward in a more just and a more equitable manner.

ALEXIS CHRISTOFOROUS: Yeah. Perhaps in no other way have we been all in this together. Dambisa, your thoughts on what you're most positive on post this pandemic.

DAMBISA MOYO: I am positive on three things. Number one, China. I think we've got to keep them around the table. They were the largest economy in the world in the 1700s. They are vying to do that again, not just on an absolute GDP basis, but on a per-capita income basis. They are the largest foreign direct investor and trading partner and sort of cooperative partner with many countries around the world. I think it could be transformative in our lifetimes.

Second point, technology. I think we've seen technology do phenomenal things. And I think John is right, if you think about the FANGs, they've been done phenomenal things, mainly on the side of social networking and consumerism. I think we are yet to see what they're going to do in public goods, such as education and health care. And I'm very excited about that. And I think that, in some silver lining argument, I think COVID has shown, whether it's telemarketing or just the speed with which you've been able to deliver the vaccines, we can actually see how technology is transforming the world.

Final point, green. I think this is a real opportunity to go back to the drawing board. I happen to be on the board of Chevron. I know Chevron is right in there, like many other energy companies, keenly interested in seeing how green energy is going to be transforming and transformative in terms of jobs, but also in terms of our economy more generally. So those are my three for now.

ALEXIS CHRISTOFOROUS: All right, and John, I'll give you the last word. Leave us with some inspiring thoughts here when we think about what our global economy is going to look like when we come out the other side of this.

JOHN ROGERS: I'd say two things. I think the first one, I would follow up on Dambisa's point that I do think technology is transforming the world so rapidly. This digital revolution is a big deal, and it's improving the quality of life for most everyone here in America. And I know there are pockets of poverty and pockets of unfairness that are not benefiting from these changes, and I know we're fighting to improve that. So I think number one point is, again, this technology revolution is going to make life better for most folks around the world.

The second point, though, is the one that gets back to what we've been talking about. This wealth divide in our country has just gotten dramatically worse. I'm optimistic that, because in this environment of the George Floyd murder, what's happened in the health care, and people are seeing the unfairness that minority communities are facing, I'm finding CEOs and political leaders are more inspired than ever and fighting hard to open up doors to improve minority business, minority employment, and understanding that, if we can bring all of our economy together and bring all of our citizens of all colors engaged in our economy fully, we'll be able to grow faster. We'll be a more dynamic society when we include everyone. And that makes me quite optimistic.

ALEXIS CHRISTOFOROUS: For sure. Hoping for a healthier and more equitable world post the pandemic. My thanks today for our wonderful panelists for their insights. Dambisa Moyo, John Rogers, and Dr. Rajiv Shah. Thank you all for being with us for this edition of Davos Agenda, a co-partnership between Yahoo Finance and the World Economic Forum. Thanks again, and we will see you next time.