CIBC Private Wealth US

In our inflation series primer released in February, we answered client questions surrounding the biggest inflation surge in a generation. The inflation story has since been further exacerbated with the recent invasion of Ukraine, sending humanitarian, geopolitical and macroeconomic shockwaves throughout the globe.
 
As we continue to see volatility in the commodity markets, our experts focus on the energy outlook as a key driver for both growth and inflation. 

There’s been a lot of talk lately about the potential tax changes coming out of Washington—specifically the For The 99.5% Act, the STEP Act, and President Biden’s tax proposals. What could this mean for you?

Read more in the Q&A article with Tim Daly.

COVID-19 has upended just about everything, and we’re still working through it—how we work, shop, socialize, learn, worship, receive healthcare and care for others. It has laid bare both strengths and weakness in our institutions, processes and systems. The pandemic has altered life for every age group in almost every way. The coronavirus, after all, is not interested in career dreams, childcare situations or travel plans; it is only interested in host cells. 

Key innovations that emerged during this pandemic will outlive it. Others are yet to reveal themselves but will surely be part of the legacy of COVID-19. CIBC is committed to providing the perspectives and insights of top thinkers in various fields on what the legacy of COVID-19 could be. In previous installments, we presented views on biotechnology and vaccines, work and careers, artificial intelligence in healthcare during the time of COVID-19, and a CEO’s view on managing healthcare during a pandemic. In this installment, we talk with Tim Daly, CEO of EdNavigator, on the state of education during COVID-19 and how this pandemic is altering learning, children and families.  

We first talked with Tim Daly in late July 2020. Four months later, the situation with schools, and the pandemic overall, changed so much that we revisited the topic to bring it up to date. In late July, the U.S. had reported 4.54 million cases and 154,120 deaths from COVID-19, and schools were talking about reopening. In late November, the U.S. reported 13.6 million cases and 269,000 deaths,* and schools opened and closed, reopened, or never opened. 

COVID-19 has upended just about everything, and we’re still working through it—how we work, shop, socialize, learn, worship, receive healthcare, and care for others. It has laid bare both strengths and weakness in our institutions, processes and systems. The pandemic has altered life for every age group in almost every way. The coronavirus, after all, is not interested in career dreams, childcare situations or travel plans; it is only interested in host cells. 

Key innovations that emerged during this pandemic will outlive it. Others are yet to reveal themselves but will surely be part of the legacy of COVID-19. CIBC Private Wealth is committed to bringing to you the perspective and insight of top thinkers in various fields on what the legacy of COVID-19 could be. In previous installments, we presented views on biotech and vaccines, work and careers, and artificial intelligence in healthcare during the time of COVID-19 (available on our website). In this installment, we talk with Kevin Tabb, MD, the president and CEO of Beth Israel Lahey Health, a healthcare system across Eastern Massachusetts comprised of 13 hospitals, including four academic and teaching hospitals affiliated with Harvard Medical School and Tufts University School of Medicine, and more than 4,000 physicians and 35,000 employees.

Patricia Bannan is a managing director and Head of Equities for CIBC Private Wealth Management. In this role, she oversees the firm’s proprietary equity strategies.

Lance Marr is a senior investment analyst providing research and analytical support for the CIBC Energy Infrastructure strategy and serves as team lead on the firm’s Clean Energy strategy.

The energy sector arguably has the most at stake with a change in the political landscape. As we weigh the scenarios, the status quo appears likely in the event of a Trump win, with a benign regulatory environment, federal support for new energy infrastructure projects and no deals with Iran or Venezuela to bring more oil production on the market. While broadly positive, countering this are expectations for limited production growth as investors demand capital discipline in this low-price environment and state and local governments resisting advancement of new infrastructure projects.

 

When we consider the scenario for the energy sector under a Biden victory, the main focus will be on incentivizing clean energy. The most notable proposal is a $2 trillion climate plan that includes spending on infrastructure and incentives that would serve to accelerate the transition to clean energy. In a Democratic sweep, no doubt the odds of this plan coming to fruition increase. Obvious beneficiaries are companies exposed to renewable and clean energy at the expense of traditional energy companies. With that said, we don’t expect an outright assault on traditional energy companies. Instead, increased regulation on many facets of exploration and production are more likely than something more onerous, like a fracking ban. The result would be less restrictive on production, but with higher costs associated with that production. Furthermore, we may see restrictions on new permits in federally controlled areas, which could shift production to private lands.

 

Other areas of action would be a scrutiny of energy infrastructure projects under a Biden administration. A Biden team would likely also work to ease sanctions with Iran, allowing more oil on the market.

Patricia Bannan is a managing director and Head of Equities for CIBC Private Wealth Management. In this role, she oversees the firm’s proprietary equity strategies.

Brant Houston is a managing director and co-manager of the Disciplined Equity and Income Opportunities Strategies. 

In respect to financial stocks, the most significant issues related to the election are regulations, tax rates, interest rates and spending/deficits.

 

Under a Trump administration, regulations should continue to ease; under a Biden administration, it would be reasonable to expect additional scrutiny. In either case, the moves would likely be moderate.

 

Tax rates under the current administration are not likely to move dramatically. Banks were a major beneficiary of the Trump tax cuts in 2018, given their domestic focus. Any move to reverse these cuts by a Biden administration would hurt the banks. Also, increases in taxes on long-term capital gains and/or dividend income could impact how and where money is invested. Bringing long-term capital gain taxes to the short-term level may disincentivize long-term investing, raising trading volumes and volatility. 

 

Increased government spending under a Democrat administration on healthcare, infrastructure and climate could be a double-edged sword. On one hand, higher deficits may mean higher interest rates that could make stocks less attractive overall, but help banks’ earnings through higher net interest margin. But it is also important to note that deficits are not exclusively a Democrat issue, as we have seen the deficit balloon under the current administration. Any initiative to provide affordable care to the masses could have an economic benefit if it leads to a stronger financial position for individuals. If consumer credit improves, this would be a net positive for banks. And in terms of infrastructure spending, there could be a significant improvement in the employment situation.

Find more of our latest financial insights & resources at wealth.us.cibc.com

Find more of our latest financial insights & resources at wealth.us.cibc.com

COVID-19 has upended just about everything, and we’re still working through it—how we work, shop, socialize, learn, get healthcare, worship, and care for others. It has laid bare both strengths and weakness in our institutions, processes and systems. The pandemic has altered life for every age group in almost every way. The coronavirus, after all, is not interested in career dreams, childcare situations or travel plans; it is only interested in host cells. Key innovations that emerged during this pandemic will outlive it. Others are yet to reveal themselves but will surely be part of the legacy of COVID-19. CIBC is committed to bringing to you the perspective and insight of top thinkers in various fields on what the legacy of COVID-19 could be. In previous installments, we presented views on biotech and vaccines and on work and careers during the time of COVID-19 (available on our website). In this installment, we discuss artificial intelligence in healthcare with the founder and CEO of an investment management firm that invests in leading-edge health and life sciences companies that are disrupting the healthcare ecosystem. In the future, we’ll present interviews with experts in healthcare management, education, and public health law.

Daniel Lubin received a Bachelor of Science in foreign service from the Georgetown University School of Foreign Service, and a Master of Business Administration with honors from Harvard Business School. 

Key innovations that emerged during this pandemic will outlive it. Others are yet to reveal themselves but will surely be part of the legacy of COVID-19. CIBC Private Wealth is committed to bringing to you the perspective and insight of top thinkers in various fields on what the legacy of COVID-19 could be.

In this installment, Deepali Vyas provides her insights on the latest advances with hiring and onboarding being done remotely, how COVID-19 is changing the career outlook of the youngest of the workforce, and why leadership matters more than ever now. The article also discusses how CIBC Private Wealth is adapting during this pandemic.