2021 YEAR AHEAD

Claudio Brocado Anthony Brocado

January 29, 2021 1 2020 turned out to be quite unusual. What may the year ahead and beyond bring?

As the year got started, the consensus was that a strong 2019 for equities would be followed by a positive first half, after which meaningful volatility would kick in due to the US presidential election. In the spirit of our prefer- ence for a contrarian stance, we had expected somewhat the opposite: some profit-taking in the first half of 2020, followed by a rally that would result in a positive balance at year-end. But in the way of the markets – which always tend to catch the largest number of participants off guard – we had what some would argue was one of the strangest years in recent memory.

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2020 turned out to be a very eventful year.

The global virus crisis (GVC) brought about by the coronavirus COVID-19 pandemic was something no serious market observer had anticipated as 2020 got started. Volatility had been all but nonexistent early in what we call ‘the new 20s’, which had led us to expect the few remaining volatile asset classes, such as cryptocurrencies, to benefit from the search for more extreme price swings. We had expected volatilities across asset classes to show some convergence. The markets delivered, but not in the direction we had expected. Volatilities surged higher across many assets, with the CBOE volatility index (VIX) reaching some of the highest readings in many years.

As it became clear that what was commonly called the novel coronavirus would bring about a pandemic as it spread to the remotest corners of the world at record speeds, the markets feared the worst.

Risk assets plunged along with the surge in volatility, and the US stock market abruptly ended what had been the longest bull phase in recent memory. In early spring the US Federal Reserve Board (Fed) led other key glob- al central banks in preemptively and forcefully delivering monetary policy stimulus, which contributed to the fast- est recovery from trough to peak in risk assets, let by US stocks.

Even the Oracle of Omaha Warren Buffett, who often in previous crises was able to snap up bargains -- as he used his enormous reputation and credibility to signal the selloff was overdone -- was unable this time around to make any meaningful investments. The Fed in a way usurped the Oracle’s traditional role, injecting a large amount of confidence and reawakening animal spirits. In the end, the US central bank did not end up making significant purchases of fixed income ETFs.

The Fed had indicated it would be willing to invest in the securities in order to restore confidence in the credit markets. Similarly, Boeing (BA -- a major global corporation based out of the US) arguably among the most af- fected companies by the first phase of the pandemic -- was soon enough able to finance itself in the markets, eliminating the need for either fiscal or monetary authorities to step in directly. Developments such as this left Buffett’s Berkshire Hathaway as actually a net seller of stocks near the bottom.

At the May 3 virtual annual shareholders meeting led by the Oracle of Omaha, the legendary investor disclosed that his conglomerate had liquidated its once sizable holdings in airline stocks. Berkshire Hathaway had also made large cuts to its JPMorgan (JPM) and Goldman Sachs (GS) stakes by then. Mr. Buffett actually sounded quite downbeat (particularly for his standards) during the Q&A portion of the annual shareholders meeting.

3 Therefore, the decisive action by the world’s major ing the large impact on economic activity from the central banks, led by the Fed, can be said to rather global virus crisis. single-handedly have engineered a meaningful recov- Even prior to the pandemic, global demographic ery in financial conditions, and US stocks led global trends had contributed to what we have long been risk assets to a major recovery. When all was said and calling the global savings glut. The resulting surplus of done, major US equities indices ended 2020 at record liquidity helped to push interest rates across most of -high levels. Many professional investors stood by in the so-called advanced economies to record lows. disbelief, and many analysts and commentators high- Negative interest rates (even in nominal, and not only lighted much of the year starting in late March the in real – inflation-adjusted -- terms) have become wide discrepancy between the markets and the real common in Europe and Japan. In the US, the key 10- economy. year Treasury note now offers yields of around 1% One of the largest surprises in terms of the stock mar- (after having gone down to roughly half that). ket brought about by the pandemic was the surge in As a result of such a low-yield environment, investors retail investor participation in US equities (and even have been compelled to take on more risk. US Treas- options). US retail investors have historically been ury securities have traditionally been viewed as virtu- more active in their stock market than many of their ally risk-free, but as they are now also essentially re- peers in other countries. Over the last couple of dec- turn free, investors must move up the proverbial risk ades, nevertheless, US retail investors had generally curve if they aspire to obtain any real return. This has stepped away from individual stocks, focusing increas- contributed to what many call the environment of TI- ingly instead on exchange-traded funds (ETFs), and NA (there is no alternative) to stocks. We have been emphasized other asset classes, such as fixed income making the case for quite a while now that the new mutual funds, in their personal investment portfolios. safe haven is represented by US large-capitalization However, widely attributed to so-called lockdowns stocks, particularly those which provide a secure and implemented in many jurisdictions around the globe - growing dividend yield. - and the related work-from-home (WFM) resulting from the pandemic -- retail participation in the stock market made a strong comeback. Led by young peo- ple -- many belonging to the so-called Millennial gen- eration -- investing apps such as Robinhood opened millions of new accounts (estimated at some 10 mil- lion new brokerage accounts in total in the US during 2020). Free equity trades now have become common- place in the US, along with the possibility of buying stocks in fractions, thus enabling even the smallest of investors to trade in high-priced stocks, such as Ama- zon’s (AMZN). Amazon was an obvious net beneficiary from the trends which had been already in place prior to the pandemic -- and which only accelerated due to what became the new normal of 2020. Even people who had never made an online purchase were in many cases compelled to do so as lockdowns spread around the world. Massive monetary and fiscal policy stimulus measures applied in a number of countries and entities such as the European Union/Eurozone were aimed at cushion-

4 For 2021, our base-case scenario is that the global interest rate environment will remain quite supportive for such equities. The Fed has made it patently clear that it will not preemptively tackle inflation. The US central bank is quite willing to see inflation move above its 2% target, not making that a hard ceiling but rather a range in which it can subsequently settle. In other words, because inflation has been so long under 2%, it can then exceed that mark, and it would take meaningful time for it to average about 2%.

The global economy is generally expected to take quite a while to recover from the damage caused by the pandemic, so global interest rates should remain low for much longer than they had been expected prior to the GVC. The global savings glut remains firmly in place. In fact, even the US, where savings rates had long been well under the levels seen across many advanced economies, is seeing much higher levels of savings. In countries such as Germany, bank account balances are at record-high levels, despite the fact that large depos- its are now widely subjected to negative interest rates.

Even in Germany, where -- as we explained in our mid-year outlook report last summer -- there generally has been little interest by the public to invest in stocks, the same trends which seemed to nudge US Millennials and even younger investors back into the equity market had the closest to the same effect. Many hundreds of thousands of new brokerage accounts were open by Germans, led by new young people suddenly interested in the stock market!

The global savings glut just discussed gives us confidence that interest rates will remain broadly supportive of equity valuations, at least through the upcoming year. Volatilities have settled back into rather ‘normal’ ranges, more in line with their historical averages, as is the case for example in the key VIX measure of volatility for US large-cap equities. Still, there has been a sufficient resurgence in animal spirits so that there are plenty of what are at least pockets of speculative activity. In fact, many market commentators now talk about widespread in- vestment bubbles. We have been calling this “the bubble in bubble calling.”

5 We remain of the view that bubbles can only be confidently called in hindsight, but we acknowledge that there are pockets of speculation. In the terminology which we coined in last year’s analog to this report, we see plen- ty of balloons, but not outright bubbles, though only time will tell. As we explain in 2020’s year-ahead note, the difference is that, while all bubbles sooner or later pop, balloons do not necessarily do so. Air can be let out of balloons, preventing their bursting.

Cryptocurrencies, such as Bitcoin, are still near their recently-logged record-high levels, and there are plenty of stocks which have shown what can only be described as parabolic rises. We still do not see a widespread bub- ble, and can cite as many or more cases of asset classes and stocks that are out of favor and trading at histori- cally-low valuations. We recently came across this nice and refreshing note on some of the asset classes, which clearly seem not to be anywhere close to what any reasonable observer would call bubble territory, in our view.

In fact, we do expect that this year will bring some mean reversion, whereby assets such as emerging markets equities (EME) and small-cap value stocks stand a good chance of outperforming some the stocks we best know and love for the long run – the ones which dominate Nuclo’s global top picks.

Since our core competitive advantage is long-term bottom-up equity investing, we continue to favor our top picks with a five-year-plus time horizon. Again, nonetheless, we would not be surprised to see these stocks un- derperform in the year ahead as more cyclically-oriented lagging stocks play catch-up. The 2020 equity market snapback benefited primarily growth and momentum stocks, and the gap between growth and value equities is at levels not seen since the TMT (technology, media and telecommunications) stock bubble at the start of the millennium.

6 Many of the so-called value stocks do happen to be in areas most affected by the conditions brought about by the pandemic. The vaccines against COVID-19, developed and approved in major countries at record speed, are now slowly being rolled out. It will take time for so-called herd immunity to be reached, but there is now light at the end of the proverbial tunnel.

With enough monetary and fiscal stimulus in the pipeline, the still-expanding global savings glut even as animal spirits reawaken, and much pent-up demand from long lockdowns, many pieces are falling into place for a sharp cyclical (and perhaps quite globally-coordinated) economic recovery. So-called cyclical stocks (which have much overlap with value equities) are already signaling a solid upswing in economic activity, in our view. Addi- tionally, the snapback in the 10-year US Treasury note yields from roughly 0.5% to over 1% also presages an economic rebound, particularly as the yield curve has been steepening quite a bit.

As the global economy recovers lost ground and eventually moves into new highs, some of the stocks most af- fected by the crisis will also recover in time. The equity markets always offer some buying opportunities, and the supportive interest rate environment will continue to provide the backdrop for plenty of investment opportuni- ties across equity markets. We at Nuclo will strive to continue to identify attractive long-term investment alternatives. In the meantime, ‘bar -belling’ a portfolio with some of the major constituents of our global top picks list with key cyclical exposure through EME — as our contributing economist and long-term emerging markets strategy guru Geoffrey Dennis advocates — may prove to be sound positioning for the year ahead. Mr. Dennis will discuss his country prefer- ences among emerging markets in another report by members of our team to come out in the next few weeks, but please watch this space for some exciting announcements regarding our plans for the rest of the year and beyond!

In this edition of our year-ahead report (in addition to my own musings), Anthony Claudio Brocado -- Nuclo’s geopolitical analyst -- will outline the upcoming calendar of global elections. 2021 being what in Germany is called a ‘mega’ political year -- due to the various levels of government on which voting will take place through- out the land -- Anthony will provide very useful additional background on the German elections. But for now,

7 New thoughts on Bitcoin

Over three years ago when I did my ‘deep dive’ into monetary economics to try to understand the cryptocur- rency phenomenon, I wrote the following (on November 8, 2017): “I seem to hear and read about investment bubbles more than ever. Bubbles are only identified with certainty in hindsight, and it seems that many people are ready to call a bubble in any asset in which they are not invested. All that said, it does seem to me that there is currently a bubble in crypto-currencies, though I admit that I may well be wrong, and that even if there is a bubble, there is no telling when it will explode.

Having historically been a value investor trying to use Warren Buffett as a model, I have also used GARP (growth at a reasonable price) in my own investment process. I strongly believe in the intrinsic value of any in- vestment being the net present value of its future cash flows. Thus, I have never been a ‘gold bug’, although from time to time I have expressed an opinion that having some gold as a diversifier or an insurance policy makes sense.

At this point, I own no gold to speak of. That said, I have been thinking a lot more about the yellow metal late- ly, in the context of the hype surrounding crypto-currencies. It is clear to me that regardless of any bubble thoughts, supply and demand dynamics can cause bull markets in just about anything.

8 The limited supply of Bitcoin, and the soaring interest in it, has of course resulted in its price soaring. Even some prominent equity market analysts are now setting price targets for the crypto-currency. I, of course, have absolutely no way of calling its price outlook. Given supply and demand dynamics, I would not be surprised if it is much higher a few months from now, but I could also easily imagine Bitcoin’s price plunging. Technical ana- lysts with a better read on what the price performance graphs say about supply/demand dynamics may have a better grip on what Bitcoin’s potential might be.

What is clear to me is that a growing number of market participants believe crypto-currencies may represent a store of value. I still have trouble calling them a currency given their high volatility, but they do appear to be an intangible asset which people are willing to put some money into. Which brings me to gold. Gold also has very limited supply. It provides no income, but it is tangible, and has been considered a store of value for many cen- turies.”

We subsequently did witness a plunge in the price of cryptocurrencies broadly and Bitcoin in particular. It does appear (with the obvious benefit of hindsight) that there had been a bubble or at least a balloon out of which much air was let out. Back then, it was primarily retail investors bidding cryptocurrencies up.

Over the last year, Bitcoin has experienced nothing short of a renaissance, with the price of the ‘granddaddy’ among cryptocurrencies making new highs. Shortly after my initial formal research into ‘this new form of mon- ey’, futures markets on Bitcoin were established. This undoubtedly has contributed to the institutionalization of the cryptocurrency, and in its most recent advance, institutional investors are reportedly the key drivers of the dizzying price performance. Bitcoin definitely seems to ‘have arrived’. In last year’s missive, I wrote that “For the truly wealthy, however, because of the diversification benefits, some cryptocurrency may be appropriate for money they are willing and able to see completely disappear. As long as you realize that you may lose your entire investment in Bitcoin, you may consider it for meaningful apprecia- tion potential over the intermediate to perhaps long haul.

9 I still do not see Bitcoin developing into a full-fledged currency, and that may actually contribute to its potential as an investment asset. A currency should be stable, and ideally provide inflation protection, but with its out- sized volatility, Bitcoin’s utility as a means of exchange drops. I still personally see no intrinsic value in crypto- currencies, but the law of supply and demand, with the supporting belief that the supply of Bitcoin is indeed capped, the search for liquid, volatile assets (with the additional benefit of an established futures market) may all provide a tailwind for the granddaddy of cryptocurrencies.

I could not devote even the more speculative portion of my own portfolio to an allocation to cryptocurrencies. However, for those even less risk-averse (or with resources so plentiful as to devote something to an asset which may well go to zero, but may also rise meaningfully), a small allocation to Bitcoin may not be as unrea- sonable as I have tended to think.”

My thinking has continued to evolve, also when it comes to Bitcoin. I still have no plans to personally purchase any cryptocurrency. Yet, in my unrelenting pursuit of listening to the markets, and trying to understand their messaging in order to ‘read the tealeaves’ which explain what happens, I have recently shifted my mind to be- ing more open to the possibility that Bitcoin does evolve into somewhat of an alternative currency.

Briefly recapping my previous writing, I used to see the cryptocurrency rather as an intangible asset in which investors could speculate on the demand for Bitcoin. Given it is generally accepted that its supply will remain rather fixed, at least in real terms, it is changes in demand that are likely to drive the cryptocurrency’s market value. Bitcoin’s extreme volatility (not to mention high transaction costs) made it a very poor candidate for cur- rency status.

Nonetheless, the global virus crisis may have accelerated or even changed a relevant trend here. The world had generally been moving towards electronic payments at the expense of cash. Work from home, lock- downs, etc., drove more people to transact more than ever online. This, undoubtedly, must have contributed to more market par- ticipants of all stripes being open to giving Bitcoin a chance. Recent developments, in- cluding the new possibility of using Bitcoin through PayPal and Square, must have boosted the legitimacy and perceived credi- bility of the cryptocurrency as a means of exchange, in my view. I do not like the use of ‘market cap’ to refer to the aggregate value of all ‘Bitcoin in circulation’. It is not a stock, but ‘aspires’ to become a currency instead.

10 I do not recall anybody seriously and generally talking about the market cap of the dollar, the euro, the yen, etc. In that sense, however, as the aggregate ‘value’ of all Bitcoin in circulation moves into the trillions (of US dollars), can it reach a critical mass in which it becomes a legitimate global currency? I am not making an assertion, but simply thinking out-loud. Perhaps, Bitcoin can become a globally-accepted means of payment, even for small transactions. The price of Bitcoin has reached levels at which only very small fractions of a Bitcoin are needed to buy many goods and services of daily use. One of the key common argu- ments against Bitcoin becoming a means of payment in small denominations for legitimate financial operations has been the associated high transaction costs. If PayPal and other mass players contribute to the essential elimination of transaction costs, small fractions of a Bitcoin could be used for making payments for items and services of daily consumption. Perversely in that sense, if the amount of Bitcoin in circulation attains a certain critical mass, it may make it more of a legitimate global currency. If this line of thinking were to hold (and I am not predicting that it will), Bitcoin’s day as a glob- al currency may yet arrive, even as the price of the cryptocurrency grows meaningfully over the next few years. Again if this line of thought holds, one could imagine that Bitcoin’s price volatility would ebb once it approach- es such critical mass. Since this would imply -- in my very uninformed view -- that Bitcoin would not need any intrinsic value, then I had been looking at it the wrong way – as an ‘investment’ rather than as a ‘currency’.

As long as Bitcoin gains enough credibility as a unit of exchange, its means-of-payment role could more fully develop, and this would likely coincide with a meaningful reduction in its ‘price’ volatility, in my view. Food for thought at this stage. Over the next year, more is likely to happen to point us in the direction in which Bitcoin is truly evolving. The best known cryptocurrency has maintained (if not even increased) its dominance among its peers, a development which could not have comfortably been predicted three years ago, when ICOs (initial coin offerings) were all the rage, bringing a wide new range of cryptocurrencies to the markets.

Now that it has passed its tenth anniversary, Bitcoin has at least proven some long-term staying power. Over the last three years, I have been surprised by the relative inactivity of key central banks and other financial regu- lators on this front, so we have yet to see how unimpeded the development of Bitcoin towards a legitimate global currency may (or may not) proceed. At the time we were writing this, however, the European Central Bank (ECB) under its current head -- former IMF chief Christine Lagarde -- voiced meaningful concerns with the recent developments with Bitcoin. In her US Senate confirmation hearings (for the post of Treasury Secretary in the new administration), former Fed Chair Janet Yellen expressed similar worries.

Finally on this major cryptocurrency, in last year’s missive we touched on the diversification benefit that this ‘asset class’ could bring to a global portfolio. While still not being convinced on Bitcoin specifically -- let alone cryptocurrencies more broadly, on their own merits -- as always, we defer to markets themselves to judge whether any investment makes sense or not. The verdict from free markets so far appears to be that Bitcoin has staying power, and adding the cryptocurrency to a well-diversified portfolio of global asset classes adds even more diversification to it.

While still having no personal plans to buy any Bitcoin, I must acknowledge yet a final time here that, when you add (even a very volatile) uncorrelated asset to any portfolio, you stand to gain diversification benefits – thus ultimately reducing the overall volatility (and therefore, riskiness) of the portfolio.

11 On our general approach to understanding markets

My frequent readers know my long-standing belief that the markets know everything knowable. I have written countless times that -- while not knowing the future (which, by definition is humanly unknowable) -- the aggre- gate wisdom of the market does provide the best educated guess as to what the future might hold, based on the complete knowledge of everything that has already happened in the past. Using the best comparable precedent, markets do the best job of calibrating their forecast of what may develop next on a constant basis. For more on this, please refer the subsequent section of this report whose title starts with “Real bubbles…”

This realization has contributed to my conclusion that it is useless -- and all but impossible -- to try to outguess the markets. A common mistake made by countless investors is to try to anticipate what the market may do, in a constant quest to beat the aggregate wisdom of markets. No single one of us will ever know even as much as the markets as a whole.

What has developed into a quite successful investing approach for me has been to carefully listen to the mes- sages the markets constantly send all of us. If, rather than questioning the wisdom of the markets, we try to understand why the markets are performing in a certain way, we may be among the early participants in antic- ipating what may become secular trends. Thus, rather than try to be the first ones to embark on any particular long-term price development, it is good enough to attempt to be earlier than most.

Striving to -- as much and as frequently as possible -- buy low and sell high is an obviously reasonable market mantra. To think that one can come even close to constantly buying the low and selling the high of any trada- ble instrument is folly. In my motto of not letting the perfect be the enemy of the good, I always try to just sell somewhat higher than the level at which I buy just about anything I may need to subsequently sell.

Many of my friends in the business seem obsessed with the quixotic quest of buying the lowest and selling the highest. Trading is a particularly difficult endeavor, and that is why I personally increasingly avoid it. In general, though, to me it is quite important to attempt to decipher as well as possible the market messaging, to understand as well as possible why the market may be doing what it is doing, and then implement that view in my trading and investing, with the mere hope to do it earlier than the consensus.

If a trend is identified early enough by carefully listening to the messages sent by the market, an investor can benefit from a large number of market participants eventually and gradually understanding the same message and following the early adopters into the particular strategy. This is to what I attribute Nuclo’s success in in- vesting in Tesla last year, as explained in further detail a bit later, but it applies to many other investments and asset classes, even well beyond stocks.

12 Who is Cathie Wood?

Bitcoin and Tesla provide us a logical segue to Cathie Wood. I recently conducted a LinkedIn poll in order to gauge how well known the emerging celebrity of investing in the new Roaring 20s may already be. I personally, despite following markets rather closely, only came across her name relatively recently. Thus, I was not shocked to learn from my survey that ‘only’ about ½ of poll respondents knew of her without having to google her name. Suffice it to say, from my own biased point of view, that -- by the time the trading and investing “bubble” which may yet develop during this still fresh decade actually inflates and pops -- Cathie Wood is go- ing to be a widely-known ‘celebrity’, a ‘household name’ perhaps not unlike the Elaine Garzarelli of the late 1980s and early 1990s.

Ms. Wood is a visionary investor, and the founder, CEO and CIO of ARK Investment Management. ARK has become the poster child for successful investing in 2020, and its ARK Innovation ETF (ARKK) has benefit- ed from handsome inflows. A recent article by CNBC’s Michael Santoli noted that, since October 30, 2020 “when the recent rally got going,” through the latest data for when his article was published on January 16, ARKK garnered over $6 billion in as- sets, nearly as much as the S&P 500 index ETF (the huge and very well known SPY), despite the fact that the SPY is almost sev- enteen times larger than the innovation ETF.

These numbers seem to me almost as mind-boggling as the trading volumes in Tesla stock itself, which regu- larly exceed a staggering $25 billion per day. The global leader in electric vehicles (EVs) has become the undis- puted top holding in ARKK with a nearly 10% weight in the ETF. Catherine D. Wood, whom some call the ‘hottest hand’ in stock-picking these days -- and 2020’s ‘best stock picker’ of the year by Bloomberg News edi- tor-in-chief emeritus Matthew A. Winkler, per Wikipedia – is likely to carry on buying TSLA as her assets under management (AUM) continue to soar.

I have personally seen this movie many times before. A portfolio manager (or fund management company) de- velops a strong following based on impressive recent performance. A virtuous cycle for the manager in ques- tion develops as other market participants (professionals as well as retail investors) catch on, and start bidding up the investment star’s favorite names. Success begets success, in that huge inflows into the products man- aged by the successful investors result in these having to buy ever more of their winners. This process goes on and on until it suddenly doesn’t.

13 As I had anticipated, S&P 500 membership would only raise the profile of TSLA. In the long run, it should be a

net positive short-to-mid-term development in that -- as I wrote in this report – it would contribute to the stock garnering the “research coverage that such a large-cap stock arguably needs and deserves…Given its extraor- dinary trading liquidity (and extremely large market cap), Tesla remains a largely under-researched stock.”

But I’ve long believed there’s such a thing as ‘too much of a good thing’, and that too much too soon is a prob- lem. By approaching already a 2% weight in the key benchmark for US stocks, TSLA is so large that there is

meaningful career risk for professional investors meas- The long-term investor in Tesla in me sees this actually ured against that index if they simply continue to ignore as a net negative for now (preventing me from addition it and not own it. to positions on near-term weakness). My frequent and long-time readers know I much prefer a gentle slope in The default position, as I have long argued, is no longer the price chart of the stocks I like for the long haul. This zero exposure to the stock. Most institutional money has been anything but the case of TSLA. On the other managers with investment performance benchmarked hand, I was saying the very same thing even before we against the S&P 500 must see the new ‘default’ position officially embraced Tesla as a key member of Nuclo’s as roughly 2% of a large-cap US equity portfolio to be global top picks list. By ‘buying’ the stock for the model allocated to TSLA. portfolio on March 2, 2020, we moved from simply issu- ing positive commentary on the stock to making a long- term commitment to it. Before its addition to the index, most investors could ‘afford’ to simply ignore TSLA (as is still the case for all

retail investors who don’t measure their own perfor- Up to that time, we had simply advocated that investors mance against some arbitrary benchmark). The appar- refrain from shorting it. For example, in this February 4 ent sky-high valuation, the many years in which Tesla article (just days after 2020’s year-ahead note) on ‘burned cash’, etc. could provide enough justification LinkedIn -- which surely would have garnered much for investment professionals to simply ignore Tesla. more readership had we put the terms Tesla and short squeeze in the title -- we discussed the ‘parabolic’ look Now a key index constituent, the ‘neutral’ position in of TSLA’s price chart at that time. TSLA is roughly 2%. If a professional money manager benchmarked to the S&P 500 does not own any Tesla, he/she is making a sizable bet against it. As long as As we have repeatedly written on contrarianism such bet is deliberate and intentional, that is what (including in last year’s missive), we’d much rather be ‘makes a market’, but simply not knowing enough/not positioned against investor sentiment than against price quite understanding Tesla is simply no longer a viable action itself. We believe there are different subsets of option, lest the money manager be willing to incur market participants, and to this day, we remain sur- growing career risk. prised at how little embrace TSLA has received from professional investors – who control very large pools of This all means Tesla is likely to garner a growing share capital. I did not personally want Standard & Poors of the global equity research ‘budget’. All investors (S&P) to add Tesla to the S&P 500 index of large cap benchmarked against the S&P 500 must gain a better US equities – at least not as soon as it did (again, as it is understanding of the global leader in EVs and its out- making the stock more dear now than it otherwise look, in my view. That must be a net positive for the might be). stock (and the company) in the long run.

14 Shorter term, Ms. Wood (a very early bull on TSLA among her peers), has what I have called in past similar in- stances the ability to ‘make her own performance’. We never know ahead of time how long such processes may or may not last, but one can somewhat comfortably predict that we are in the relatively early days, given every- thing I currently believe.

The fact that Cathie Wood is still relatively unknown (despite our living in the Internet/social media era, when these things tend to happen at ‘warp’ speed) tells me we are still in the early innings of what is still her growing celebrity. Many more investors (including amateurs) will yet follow in her footsteps.

Again, I have observed very similar processes quite a few times before. The investors in question gain an ability to ‘make their own performance’ as others copy their strategies, and even more retail participants chase their performance and shower them with flows. As AUM grow, the successful investors must be net buyers, and more often than not add to their existing top names. This buying pressure begets even more external attention, and even more money pours in. Eventually too much air gets pumped into the proverbial balloon, and it either pops or air has to be let out. This is not necessarily a healthy short-term development (in my view), but as I always ad- vocate, we must take the environment as it is, and not as we wish it were.

And now back to Elaine Garzarelli, and really dating myself. At this stage, were I to conduct a poll on her name recognition -- depending on the age of the participants, of course -- chances are that she would be even less known to younger folks than Cathie Wood. That was certainly not the case in her day. Which brings me to the closing section of my own contribution to this year’s edition of our outlook report.

15 Real bubbles tend to scare (at least) a whole generation of potential investors off

There have been previous waves of very strong retail participation in the US market. True bubbles, in my view, are very few and far-between. In a recent LinkedIn post, I argued that the term bubble is currently so overused (misused or abused) as to perhaps warranting me calling it the “b” word instead. Balloons, as discussed here in last year’s missive, are much more common, and the difference is that they need not pop (as letting out air does the job instead). That is why I keep talking about the ‘bubble in bubble calling’ being the one that keeps getting inflated. I am sure much more clever minds than I have (and will) have much to say about what truly constitutes a bubble. Last year I discussed here some of the characteristics I personally look for to try to identify such widespread in- vestment manias. Suffice it to say, though, that I agree with the many Fed officials who in the past have stated that bubbles can only be called with any significant confidence in hindsight. Real widespread bubbles, which are particularly rare, tend to leave scars, which often last at least a generation. ‘Bubble participants’ get so burned that they do not put their hands back near the proverbial stove. That is arguably what happened to those of the generation who were affected first-hand by the last bubble I per- sonally feel comfortable designating as such: the TMT (technology, media and telecommunications) stock bubble from the turn of the millennium. Bubbles are, of course, in the eye of the beholder, and many experts talk about other such manias since then, including the ‘real estate bubble’, which culminated in the global financial crisis of 2007-2009, for instance.

16 Nowadays, many pundits talk about the existence of bubbles and investing manias everywhere. Again, only time will tell.

The youngest adults out there (and this is not limited to the US) are now embracing equity investing in a way most Millennials had not when they were their age. I would argue that the generation most impacted by the TMT bubble shied away from stocks, even as the one that is closely following it is now much more open to individual stock buying. This is, in my view, contributing to the professional punditry’s conclusion that it is reckless specula- tion by young retail participants blowing what they see as the current bubble ever larger. Again, that may well turn out to be the case, yet I am not smart enough to call the current investment boom quite a bubble yet.

The advent of Robinhood, and the broadening availability of commission-free stock trading across platforms, to- gether with fractional-share trading, is resulting in what I liken to Robin Hood helping the poor kids take some wealth away from the billionaire hedge fund managers. Alas, the likes of Jim Chanos, boasting almost a year ago that he was ‘maximum short’ TSLA when the stock was in the 400s (pre-five-for-one split!), lost many billions of dollars in the aggregate. Much of that money lost by many rich folks flowed to the young investors earliest to embrace TSLA. The ongoing bull market (viewed admittedly optimistically) may yet turn out to be a great equal- izer. In any event, I have been arguing for quite a while now that we live in an era in which the wealth-making opportunities afforded by the equity market are as democratized as ever. One can buy even tiny portions of shares of any denomination, pay no commission when doing so, and the requisite research to succeed in the long run is as readily available as ever, and much of it free of charge!

The presence of short sellers in the market is (as I argued in this article, in my view) a net positive factor in mar- kets. Everything else being equal, the more widespread the knowledge of anything having to do with the mar- kets (positives, as well as negatives), the better. I have tried to explain in the past that, partly due to the asym- metry of risk/return for long owners of stocks as compared to short sellers, everything else being equal, shorting requires more skill (and arguably, thus, more in-depth research). The more people doing research on a specific investment, the better the probabilities of robust, successful price discovery.

All the above notwithstanding, I also believe that the potential to achieve outsized profits can lead to perverse incentives and questionable practices. This applies to both bulls and bears, and spreading of disinformation is by no means limited to short sellers. The one difference that I do believe is worth noting is that there are plenty of examples of prominent short sellers having contributed to self-fulfilling prophecies of the demise of companies.

Because of the importance of markets themselves in determining the level of confidence in an economy at large at the extreme (and of specific companies more narrowly), very negative stock price action can on occasion not be a reflection of actual company trouble but a determinant in and of itself. The direction of causality of a plung- ing stock price and a particular company going bankrupt is not necessarily one-way.

Tesla has brushed with bankruptcy more than once in its history. The more one company’s financial success is dependent on broad consumer acceptance, arguably, the more likely it can end up bankrupt if false rumors about the quality, reliability and safety of its products or services successfully spread. As this long article -- in what to me is nothing short of fascinating detail – explains, short-selling campaigns against Tesla made a mean- ingful contribution to its bankruptcy risk. Prior to reading the note, I did not quite understand what TSLAQ was!

17 So moving on fully and finally to TSLA. Having followed the record saying that, at some point, a drawdown of the global equities markets for decades, I have never as much as 70% is possible with such a volatile stock. come across such a wealth-generating machine. There That probably remains the case. The key question is have been many opportunities for stocks of many sizes from what level, and what it will subsequently do. to see their values multiplied many times over. Howev- Again, only time will tell, and that is par for the course er, the emergence of a large-cap stock with immense with volatile shares (so TSLA is still not for the faint of trading liquidity being woefully under-researched by heart). The most popular position (at least from the the professional investment community, which could standpoint of professional investors) remains that the still go up in value many times, makes for quite an ex- stock is in a bubble. That is not the most tenable posi- traordinary combination. tion, though, in my view.

2020, a very challenging year for most, did provide a The ‘mother of all bubbles’, which a growing number unique opportunity to invest in the company which of prominent professional investors call the current may well turn out to be the poster child for the new time, may yet come. In my opinion, nonetheless, the roaring 20s. Tesla went from ‘perennial cash burner’ to actual bubble will probably be here when we see a critical mass in the future of transportation. I expect the systemic increase in debt used to leverage the company to become a dominant player not only in EVs ‘investment’ in Tesla and Bitcoin, for instance. and autonomous driving, but increasingly in the emerging new world of energy. Tesla’s stock performance has taught me, among many

things, to more closely look at different pools of poten- With the developments made in recent years in wind tial investors. What many pros derogatorily (and and solar energy and the growing global relevance of wrongly, in my view) call the ‘dumb’ money was first in. energy storage (on an increasingly massive scale), the I believe that, money being fungible, there is no such a future is bright for new energy, and Tesla is well posi- thing as permanently ‘dumb’ vs. ‘smart’ money. The tioned to capitalize on it. I talk and write about this pool of money which happens to be early into a secular company more than many of my friends and readers trend is, by my definition, the real smart money, at care to hear/read about. Still, I cannot cease to be least when it comes to that trend! This time around it amazed by the continuing long-term potential of this was not professional, institutional investors. Up to the company and stock. moment in which S&P added Tesla to the all-important benchmark, safety in numbers for most professional

investors had been in not owning TSLA. TSLA represents a unique combination of a megacap status to begin with, along with an increasingly bright future yet to be recognized by many professional in- Many of the youngest investors with early insights into vestors. The law of big numbers normally caps the up- what Tesla was up to may yet turn out to be the smart- side of stocks of companies with such a large market est money of all. This would, in my view, be a great capitalization. Nevertheless, Tesla has a huge (and still equalizing force, if it does happen to play out. TSLA rapidly-growing) total addressable market, in my view. trades so actively that there is more than ample oppor- Much like Amazon before it was not limited to e- tunity for meaningful price discovery. As I attempted to commerce, let alone bookselling as it started, the cur- explain earlier, I always welcome the presence of short rent global leader in electric vehicles has as its reason- sellers, as their ‘contrarian’ (and, arguably rather in- able targets for disruption industries with massive mar- depth) research adds to the aggregate wisdom of the kets – in terms of potential revenues, cash flows and markets. Hopefully, skepticism on the long-term cash- stock market capitalization – namely, transportation and flow-generating potential of Tesla will remain healthy energy. As difficult (if not impossible) as it may be for as long as possible. S&P 500 index inclusion, however, most to believe, this story is still in its early days, but as is likely to more quickly disseminate the market’s always, only time will tell for sure. The ride is not likely knowledge of this company than would have otherwise to be smooth. It really has not been up to now. I am on been the case.

18

Therefore, an important lesson (or at least a hypothesis), which increasingly closely watching TSLA has taught me entails the following – with broader stock market applicability. The aggregate wisdom of the market knows every- thing knowable -- as soon as any single market participant gains some new insight. This knowledge gradually gets disseminated across all market participants. There are multiple groups of investors or pools of money, and they obtain this new knowledge at differing speeds, depending on its specific nature and/or origin.

Individual stocks gradually assimilate (and reflect in their market pricing) the new knowledge available to the mar- ket as this information spreads. If the new information is of a nature which would cause the stock in question to appreciate, for instance, the shares rise -- at least up to the point in time when the average investor obtains that knowledge.

Under this theory, the larger the gap between what the market in aggregate knows and what the average market participant already understands, the larger the potential for price appreciation of the stock for which new infor- mation emerges. This hypothesis helps to explain to me the TSLA phenomenon.

The average market participant has taken unusually long to get a full understanding of the company’s long-term potential. Everything else being equal, S&P 500 index inclusion is bound to accelerate this process. Cathie Wood appears to have been among the earliest institutional investors to understand Tesla and its likely future. Her ce- lebrity and popularity probably have quite a bit of upside still. As does the stock of the now global leader in elec- tric vehicles. Let’s now finally move on to Anthony Claudio Brocado’s discussion on what is coming up in the po- litical election and referendum calendar for the year ahead. He has some interesting background on quite a num- ber of countries!

19 A Timeline of Key Elections Scheduled to Take Place in 2021

Although the below list of planned ref- erenda and elections is by no means comprehensive, we have nonetheless compiled some of the upcoming year’s most significant votes scheduled for the following months – though naturally the coronavirus pandemic could easily re- sult in cancellations or postponements (insofar as this has not already occurred previously):

20 February 7th, 2021

The Republic of Ecuador will hold General Elections on the 7th of February, with the incumbent Presi- dent, Lenin Moreno, opting not to run for reelection. In addition to electing a new President, Ecuadori- ans will also vote on the make-up of the Asamblea Nacional or “National Assembly”, the Republic’s 137- seat unicameral legislature.

President Moreno – whose popularity had plummeted (to an all-time-low of only 7% approval) as a result of the October 2019 protests against planned austerity measures in the country – is currently facing a criminal investigation over allegations of bribery made in the so-called “INA Papers”.

Currently, the ruling coalition consists of the center-left, social democratic Movimiento Alianza PAIS (“PAIS Alliance Movement”), the centrist, liberal Partido Sociedad Unida Más Acción (“United Society More Action Party”), the center-left, social democratic Izquierda Democrática (“Democratic Left”), the centrist, populist Partido Sociedad Patriótica (“Patriotic Society Party”), the centrist, populist Fuerza Ec- uador (“Ecuador’s Force”) and finally eight political independents, with the government controlling only 67 seats on the National Assembly.

With nine primary Presidential candidates currently contesting the race, the presumed favorite is none other than Guillermo Lasso Mendoza, who once again is running on behalf of the center-right, liberal- conservative CREO (“Creando Oportunidades” or (“Creating Opportunities”) party. Having been nar- rowly bested by Lenín Moreno in 2017 (Moreno defeated Lasso 51.16 to 48.84% in the second-round runoff), Lasso and CREO are hoping for better odds this year, particularly against the backdrop of the economic hardship brought about by COVID-19 and exacerbated by the Moreno Administration’s less- than-spectacular reaction to it.

February 14th, 2021

The Autonomous Community of Catalonia will hold its Regional Election to remake the community’s unicameral 135-seat legislature, the Parlament de Catalunya or “Parliament of Catalonia”.

Currently, the ruling coalition consists of the big tent, populist Junts per Catalunya (“Together for Cata- lonia”) and the left-wing nationalist political alliance Esquerra Republicana de Catalunya–Catalunya Sí (“Republican Left of Catalonia–Catalonia Yes”), along with confidence-and-supply from the center- right, liberal Partit Demòcrata Europeu Català (“Catalan European Democratic Party”).

21 February 14th, 2021

Following the December 2017 Regional Election, Catalan pro-independence parties had managed to secure a majority of Parliament once again, leading the bloc to attempt to have Carles Puigdemont reelected as President of Catalonia. Given Puigdemont’s precarious legal situation in Greater Spain (as a result of the unrecognized Catalan declaration of independence in October of the same year), however, Puigdemont would ultimately pass on the opportunity, opting to forego such risks in favor of the inde- pendence movement’s continued health and longevity – rather than putting these at further risk through more direct personal involvement.

Given similar/related issues, two subsequent candidates – Jordi Sànchez and Jordi Turull – would also end up ultimately falling through, leading to the candidacy of Joaquim “Quim” Torra, who in turn would face investiture votes on May 12th and 14th of 2018. Though Torra would fail to obtain an absolute major- ity of votes on May 12th, receiving only 66 votes rather than the required 68, the candidate would make it through on May 14th, again receiving only 66 votes, but passing with a simple majority.

Despite this rather hard-fought ‘victory’, however, President Torra would be greeted with a new hurdle come December of 2019, when the TJSC (the “Tribunal Superior de Justícia de Catalunya” or “High Court of Justice of Catalonia”) would disqualify Torra from holding elected office or exercising govern- mental power for 18 months over a failure to comply with a ruling previously made by the JEC (or “Junta Electoral Central”) concerning the April 2019 Spanish General Election (Torra had failed to commit to the Generalitat de Catalunya’s remaining politically-neutral and had also refused to remove “banners in favor of imprisoned politicians” from the Palace which houses the Generalitat, despite election season being underway). After all attempts at appealing the High Court’s rulings had failed, a recalcitrant Torra would continue to challenge his loss of political power, vowing to push for snap elections with his former Vice President, Pere Aragonès, later taking over as Acting President in his stead on September 28th, 2020.

Given the rapid rise and spread of the coronavirus across the Kingdom of Spain, however, relatively ‘minor’ considerations such as the regional politics of the autonomous community would take a back- seat to controlling the spread of COVID-19 throughout the remainder of 2020, as Spanish authorities wrestled with an out-of-control pandemic tearing through their country with particular force.

March 17th, 2021

The Netherlands are set to hold General Elections on or before the 17th of March in order to reconstitute the Tweede Kamer der Staten-Generaal (“House of Representatives”), the 150-seat lower house of the bicameral legislature, the Staten-Generaal or “States General of the Netherlands”. Over COVID-19 con- cerns, Holland’s Minister for the Interior Kajsa Ollongren has suggested the election be held over an ex- tended time-period, namely from the 15th until the 17th of March, in order to mitigate the potential for increased spread of the virus.

22 March 17th, 2021

Currently, the “demissionary” caretaker government consists of the center-right, liberal Volkspartij voor Vrijheid en Democratie (“People’s Party for Freedom and Democracy”), the center-right, Christian demo- cratic Christen-Democratisch Appèl (“Christian Democratic Appeal”), the centrist, liberal Democraten 66 (“Democrats 66”) and the centrist, Christian democratic ChristenUnie (“Christian Union”).

The third government under the leadership of Prime Minister Mark Rutte (of the VVD), Rutte’s Cabinet made headlines on Friday, January 15th, 2021, when it was announced that it had in fact resigned, follow- ing wrongful allegations it had previously made concerning supposed child welfare fraud.

Overall, approximately 26,000 parents may have thus been falsely accused of having committed such fraud since 2012, with some families facing bills of over 100,000 EUR which the Dutch government de- manded be paid back in short order. Dutch tax authorities had subsequently admitted that 11,000 per- sons were subjected to “extra scrutiny” over their possession of dual nationalities, a fact which would naturally draw the ire of both the Dutch press and the electorate. Compensation of “at least 30,000 EUR” will be paid out to those who were wrongly accused, though many of those affected have called this figure insufficient.

Against this backdrop, it is to be expected that the VVD will presumably lose some share of its support, though recent polling would seem to indicate that the liberals can afford to underperform their 2017 re- sults while nonetheless remaining the strongest party in the Tweede Kamer.

Currently in control of 32 seats in the Second Chamber, the VVD thus wields 12 more mandates than the second-strongest party, the right-wing populist PVV, which under the leadership of the controversial Geert Wilders holds a total of 20. Having secured 21.3% of the vote in 2017, the VVD is currently polling around 43%, with the PVV in a distant second at around 21% (having received 13.1% of the vote in 2017).

It remains rather unclear just what coalition Mark Rutte may attempt to cobble together once all ballots have been counted, with 2017’s results having produced a 208-day-period during which the Dutch elec- torate was left waiting for a workable government to be announced. Should Rutte remain steadfast about his refusal to work with the PVV (something which was briefly attempted during Rutte’s first stint as PM in 2010), odds are another extended period of negotiating will have to follow the vote on March 17th.

23 March 23th, 2021

.The State of Israel will hold yet another Legislative Election on the 23rd of March, following the unsur- prising collapse of its unity government between Likud and the Blue and White Coalition over a budget row in December of 2020. Accordingly, the Israeli electorate will be asked back to the polls to remake the country’s unicameral legislature, the 120-seat Knesset. Israelis will also hold a Presidential Election later on in the year (Summer of 2021), with President Reuven Rivlin being ineligible to seek reelection at said time.

Currently, the caretaker government consists of the center-right, liberal-conservative Likud – National Liberal Movement, the centrist, liberal Blue and White alliance, the right-wing, conservative Shas, the right-wing, conservative United Torah Judaism alliance, the center-left, social democratic Israeli Labor Party, the centrist, liberal Gesher and the right-wing, conservative The Jewish Home.

Having voted previously in April of 2019, September of 2019, and March of 2020 it seems rather unlikely that the March 2021-vote will shake out too differently than the prior three contests, thus leaving both Likud and the Blue and White alliance as the likely winners of the election, as both blocs tend to share rather sizable (and comparable) levels of support. With both parties having secured 35 seats in April ’19, these figures would adjust only slightly to 33 and 32 (Blue and White earning one more mandate) by September of ’19, with another slight shift in 2020, leaving Likud with 36 seats to Blue and White’s 33.

Following the collapse of the 23rd Knesset on December 23rd, 2020, it will remain to be seen what levels of damage both of these parties may suffer, however, as neither Benny Gantz’s supporters nor those of Benjamin Netanyahu were thrilled at the prospect of the short-lived “Unity Government” which was foisted upon them by both candidates’ yearning to forego yet another election.

Now that that very election is slated to take place regardless, matters will be further complicated by Gid- eon Sa’ar, a former high-level member of Likud (Sa’ar had previously served as Minister of Education from 2009–2013 and Minister of Internal Affairs from 2013–2014), who recently left the party to form his own alternative offering, the liberal-conservative Tikva Hadasha or “New Hope” party.

April 11th, 2021

Peru is set to elect a new President, Vice Presidents (the Peruvian system uniquely features two Vice Presidents) and a Congress as a result of its upcoming General Election on April 11th. The Congreso de la República or “Congress of the Republic of Peru” functions as the Republic of Peru’s unicameral legis- lature, with the body currently featuring a total of 130 seats.

24 April 11th, 2021

Currently, the strongest party in the Congreso is the Acción Popular or “Popular Action” party, a center- right, liberal party which managed to secure 20 of its now-24 seats as a result of the snap election held on January 26th, 2020, with the AP only having held 5 prior to this feat (the total seat count lying at 25 directly following the vote). With 20 seats currently to its name, the second-strongest force in the Con- gress of the Republic is the Alianza Para el Progreso or “Alliance for Progress”, a right-wing populist par- ty founded by the Peruvian entrepreneur César Acuña Peralta in late-2001. Further parties with double- digit representation on the body include the FREPAP (“Frente Popular Agrícola del Perú” or “Agricultural People’s Front of Peru”), the FP (“Fuerza Popular” or “Popular Force”) and the PP (“Podemos por el Progreso del Perú” or “We Can for the Progress of Peru”), with these parties holding 15, 14 and 11 seats, respectively.

Peruvian politics have been particularly messy since 2018, when then-President Pedro Pablo Kuczynski Godard resigned the Presidency on March 21st, following repeated attempts by the opposition to unseat him by means of impeachment over allegations of corruption and later vote-buying. Succeeded as Presi- dent by his First Vice President Martín Vizcarra Cornejo, Vizcarra would face the daunting task of leading Peru through a period of attempted reforms, with particular focus being placed on the topic of corrup- tion, which sadly plagues the Andean nation as well as much of Latin America.

Following a Constitutional referendum held on December 9th, 2018, Peruvians would reject the prospect of restructuring their legislature into a bicameral body, while nonetheless widely approving the three remaining measures set to combat the rampant corruption which had paralyzed both the legislative- and executive branches of Peru for years. With the ball finally rolling toward meaningful reforms, however, the Peruvian Congress would choose to play hardball with Vizcarra, delaying further legislation and re- jecting the idea of new elections despite lobbying to the contrary by the embattled President. Against this backdrop, President Vizcarra would call for a vote of no-confidence on September 27th, 2019, ulti- mately dissolving Congress just a couple of days later on the 30th, and thereby ushering in a Constitu- tional crisis, as the legislature would refuse to acknowledge the President’s orders. Opting instead to declare Vizcarra’s “suspension” from the Presidency, the Peruvian Congress would name First Vice Presi- dent Mercedes Aráoz Fernández as Peru’s rightful leader, much to the outrage of both the legitimate President and his supporters.

After receiving the backing of the Constitutional Court in January of 2020, a vindicated President Vizcar- ra would lead the country into the aforementioned early election on January 26th, thereby replacing the disgraced Congress with its current body of legislators. Notwithstanding, the political chaos was far from over, with a prompt impeachment being filed against the President on September 11th over allegations of influence peddling. With President Vizcarra successfully avoiding removal from office as a result of his acquittal on September 18th, a further impeachment trial would follow in short order, this time being filed by the political opposition on October 20th over allegations of corruption during Vizcarra’s prior term as Governor of Moquegua. With a broader base of support for this second set of charges, President Vizcar- ra would fail to avoid impeachment and removal, with the November 9th, 2020 vote successfully ousting the President in favor of the interim leader and opposition figure, Manuel Merino de Lama.

25 May 6th, 2021

On the sixth of May, Scots will be asked to vote in the sixth Scottish Parliamentary Election, with the electorate being tasked with remaking the 129-seat Scottish Parliament, the country’s devolved unicam- eral legislature.

Currently, the local government consists solely of members of the SNP or “Scottish National Party”, a center-left, social democratic party which has pushed consistently for Scottish independence from the United Kingdom under its current leadership, particularly following the UK’s exit from the European Un- ion as a result of its ‘Brexit’ referendum.

Having earned 63 seats in the 2016 Election, the SNP currently retains 61 of these, making it by far the strongest party in Parliament, with the runner-up Scottish Conservative & Unionist Party holding only 30 (having originally received 31 seats), by contrast. Three further parties have managed to maintain seats on the body, namely the Scottish Labour Party, which retains 23, the Scottish Green Party which holds five, and the Scottish Liberal Democrats, which also control five seats on the body.

With the coronavirus pandemic continuing to rage worldwide, Scotland has already prepared for the possibility of delaying the May Election, with the Scottish General Election Coronavirus Bill having been introduced as draft legislation on November 16th of 2020. The bill – a summary which is available to the public via the Scottish Parliament’s website – would do as follows:

“…change the deadline for postal vote applications to give more time to process an expected high level of requests to vote by post, make “dissolution” (the time before the election when MSPs no longer hold office) last one single day, allow the Parliament to make decisions if the election needs to be postponed, give the Scottish Ministers power to hold an all-postal election and to hold polling over multiple days, allow flexible timing for the first meeting of the new Parliament and the election of a new Presiding Of- ficer, and give a reserve power to the current Presiding Officer to postpone the 2021 election by up to 6 months in certain circumstances”. Irrespective of whether or not the vote is indeed postponed, it seems highly likely that the SNP will contest the upcoming devolved election with current First Minister Nicola Sturgeon at the party’s helm, with a second independence referendum having become one of Ms. Stur- geon’s primary policy objectives since the UK’s vote to leave the European Union became a reality.

Though the SNP is widely favored to win the May vote in a commanding fashion, it remains unclear whether or not British Prime Minister Boris Johnson will allow for the Scottish government to hold its much-desired “IndyRef2”, as it will be incumbent on the UK government to grant the Scots a so-called “Section 30 order” in order for such a referendum to take place.

If Boris Johnson’s prior statements are to be believed, a second referendum will not be approved under any circumstances while he remains Prime Minister; notwithstanding, British politics can change quickly, as can the opinions of most politicians when faced with a new set of circumstances.

26 June 5th, 2021

The Ethiopian General Election, originally set to take place in August of 2020, will now be held on the 5th of June, with all 547 seats in the House of Peoples’ Representatives (the lower chamber of the country’s bicameral Federal Parliamentary Assembly) up-for-grabs. Furthermore, regional- and municipal elections are also set to take place concurrently. Currently, Ethiopia’s government consists solely of the Paartii Badhaadhiinaa or “Prosperity Party”, a centrist, liberal party, and the successor to the left-wing Ethiopian People’s Revolutionary Democratic Front coalition. As mentioned in our ‘Year Ahead’-piece published last year, the Prosperity Party resulted from a merger spearheaded by incumbent Prime Minister Abiy Ahmed Ali in November of 2019, with several left-wing parties – the ODP, ADP, SEPDM and EPRDF – coming together to form the new alliance. Despite the Prime Minister’s having received the 2019 Nobel Peace Prize for his efforts in resolving a long-standing border dispute between his country and the neighboring State of Eritrea, much has transpired since the General Election’s originally-planned August 16th, 2020 date, with said developments having the potential to sway the country’s political future in ways that no one could have predicted just months ago.

Thus, November of 2020 would bring with it the beginnings of the Tigray War on the 4th of November, when members of the Ethiopian National Defense Force (or “ENDF”) would come into conflict with members of the left-wing, nationalist Tigray People’s Liberation Front (or “TPLF”) in the Tigray Region of northern Ethiopia. Following attacks by TPLF rebels on the ENDF’s Northern Command Headquarters in the Tigrayan capital city of Mekelle (as well as further bases in the region) and the parallel capturing of 1,000 senior ENDF commanders by the rebels, the ENDF – as well as the Ethiopian government in gen- eral – would declare war on the left-wing revolutionaries, with non-civilian casualties already exceeding 5,000 men, though some claims peg this number at a figure closer to 11,000.

With the conflict still ongoing, the Ethiopian government has cracked down on the TPLF and its per- ceived sympathizers with brute force, resulting in growing concern expressed by international observers and human rights organizations, as reports of civilian casualties begin to mount. Following the ENDF’s successful takeover of Mekelle on November 28th, 2020, Prime Minister Abiy has declared victory over the rebels on behalf of the government, though the TPLF, led by Debretsion Gebremichael, has contest- ed this claim, vowing to continue localized fighting. As foreign aid convoys have slowly started to arrive in the Tigray Region as of December 12th, much work remains to be done in order to restore some sem- blance of peace and stability to Northern Ethiopia, with thousands having fled the region for the neigh- boring Sudan over the course of the protracted conflict. Furthermore, the international community will inevitably have its work cut out for itself as it relates to facilitating ongoing talks and negotiations be- tween the warring parties, as both factions have stubbornly insisted on their version of events. Looking forward to the upcoming election, it will thus remain to be seen how Prime Minister Abiy and his Pros- perity Party fare against this troubling backdrop, with the TPLF looking to be the party’s primary rival in the contest. In addition to the left-wing nationalists, further challengers will include the Oromo Liberation Front, the Ogaden National Liberation Front, the Ethiopian Citizens for Social Justice, and the Oromo People's Congress, though none of these parties currently hold seats in the lower house. Given the Prosperity Party’s current control over 512 of the lower chamber’s 547 seats, however, Prime Minister Abiy has more than a bit of ‘wiggle-room’ at his disposal, as even significant losses will likely prove insufficient to oust his party from power.

27 June 18th, 2021

The Islamic Republic of Iran is set to hold its thirteenth Presidential Election on or before June 18th, though extenuating circumstances could result in this date being pushed forward, as permitted by Iran’s current legal framework.

Currently, the government of Iran is formally headed by President Hassan Rouhani, who assumed the Presidency as the country’s seventh President on August 3rd, 2013, succeeding Mahmoud Ahmadinejad. Notwithstanding, the country’s de facto leader and Head of State is Ayatollah Ali Hosseini Khamenei, the Islamic Republic’s second “Supreme Leader”, who has held this position since June 4th, 1989, when he succeeded the country’s first Supreme Leader, Ayatollah Ruhollah Musavi Khomeini.

Under the Constitution of the Islamic Republic of Iran, Presidents are not permitted to run for a third con- secutive term, thereby ensuring that there will be a change of leadership in the Islamic Republic, given the fact that Hassan Rouhani is currently serving out the remainder of his second term as President. Ac- cordingly, it remains to be seen whether the next leader of the rogue state is an adherent to the ‘reformist’ or ‘principlist’ line of thought, with these two blocs making up the primary political factions in the religiously-conservative nation.

Following two terms under the purportedly ‘reformist’ leadership of President Rouhani, however, it re- mains to be seen to what degree this distinction still carries much weight, as Iranian belligerence in the Middle East has not decreased despite its leadership having initially been praised for its moderate (relatively-speaking) rhetoric, which experts had claimed as evidence of Iran’s gradual moves toward moderation on the geopolitical stage.

Currently, only one candidate has officially thrown his ‘hat’ in the ring, namely former Minister of Defense Hossein Dehghan, a political independent and former IRGC Air Force Brigadier General and current ad- visor to the Iranian Supreme Leader. Notwithstanding, it is rumored that none other than former Presi- dent Mahmoud Ahmadinejad has considered a run of his own, with Ahmadinejad having won a 2020 Stasis Poll of likely candidates by a wide margin (the former President received a 37%-share of respons- es, with the Speaker of the Islamic Consultative Assembly, Mohammad Bagher Ghalibaf, in a distant sec- ond-place with only 10%).

Other than Ahmadinejad and Ghalibaf, further potential contestants include Ali Larijani (the former Speaker of the Parliament of Iran), Eshaq Jahangiri (the incumbent Vice President), Mohammad-Javad Azari Jahromi (the incumbent Minister of Information and Communications Technology), Mohammad Reza Aref (former Vice President), Hamid Baghaei (former Head of the Presidential Administration of Iran), Abbas Akhoundi (former Ministry of Roads and Urban Development), Fereydoon Abbasi (former Head of the Atomic Energy Organization of Iran) and Ali Motahar (former MP for Tehran, Rey, Shemiran- at and Eslamshahr).

28 July, 2021

Mexico will hold its Legislative Election to reconstitute the 500-seat Cámara de Diputados (“Chamber of Deputies”), the country’s lower house of its bicameral Parliament, the Congreso de la Unión or “Congress of the Union”.

Currently, the government consists of President López Obrador’s left-wing, populist MORENA (i.e. “Movimiento Regeneración Nacional” or “National Regeneration Movement”), the left-wing, democratic socialist PT (“Partido del Trabajo” or “Labor Party”), and the center-right, green PVEM (“Partido Verde Ecologista de México” or “Ecologist Green Party of Mexico”), with the ruling coalition holding a com- manding majority of 322 seats in the lower house, though an overwhelming share (275) are controlled exclusively by the incumbent President’s party.

Recent electoral cycles in Mexico have witnessed a rather unique trend emerge, namely the formation of strange alliances between ideologically-disparate parties – though these coalitions tend to manifest themselves primarily in opposition to another party or bloc, rather than as a result of the parties’ en- dorsement of one another’s policy platforms.

Accordingly, the 2018 Presidential Election would see the left-wing MORENA and PT parties ally them- selves with a now-dissolved right-wing, conservative party, the PES (“Partido Encuentro Social” or “Social Encounter Party”), while the center-right PAN (“Partido Acción Nacional” or “National Action Party”) would ally itself with the left-wing, social democratic PRD (“Partido de la Revolución Democráti- ca” or “Party of the Democratic Revolution”) and the left-wing, progressive MC (“Movimiento Ciuda- dano” or “Citizens’ Movement”.

The latter trio, which would form the “Por México al Frente”-coalition (i.e. “For Mexico to the Front”), would do so explicitly in joint opposition to Mexico’s most successful party (traditionally-speaking), the PRI (“Partido Revolucionario Institucional” or “Institutional Revolutionary Party”), a technocratic, big tent party which had ruled Mexico in one-party-state fashion from 1929 to 2000.

Similarly, the 2021 Election appears to be likely to follow a similar trajectory, as the ideologically- dissimilar PAN, PRI and PRD announced on December 5th, 2020 their intention to form the so-called “Va por México” or “Go for Mexico” coalition, thereby seeking to better organize a challenge to MORENA’s hegemonic dominance over contemporary Mexican politics.

29 September 5th, 2021

Originally scheduled for September 6th of 2020, the Hong Kong Legislative Election will now presumably be held on the 5th of September, barring more intervention from Mainland China. All 70 seats on the uni- cameral Legislative Council of the Hong Kong Special Administration Region, colloquially known as the “LegCo”, will be up-for-grabs, of which 35 are to be filled by means of direct election by the voting pop- ulation.

Currently, the LegCo is controlled almost solely by the “pro-Beijing” or pro-establishment faction of the HKSAR, with members of the Democratic Alliance for the Betterment and Progress of Hong Kong, Busi- ness and Professionals Alliance for Hong Kong, Hong Kong Federation of Trade Unions, Liberal Party, New People’s Party, New Century Forum, Federation of Hong Kong and Kowloon Labour Unions and Roundtable organizations making up this bloc (as well as an independent council member).

Whereas the 2016 LegCo Election had still seen the pro-Beijing bloc maintain dominance over the Coun- cil (with the bloc holding onto 40 of the body’s 70 seats, a decrease of two when compared to the 2012 Race), its current level of dominant control would be achieved much later, namely as the result of a mass- resignation of pro-democracy legislators in November of 2020, following the disqualification of four pro- democracy Council Members over allegations of “endangering national security”, as permitted by the SAR’s controversial new National Security Law. Accordingly, in the lead-up to the long-postponed elec- tion, 27 seats on the LegCo currently remain vacant, leaving 41 seats in the hands of the pro-Beijing bloc, while the remaining two seats are held by a localist member and a political independent.

Though the postponement of the election had been rationalized on account of concerns over the coro- navirus pandemic, pro-democracy activists and international observers have strongly questioned this offi- cial narrative, as it seems rather clear that direct pressure from Mainland China produced an outcome which Beijing deemed favorable to its defenders in Hong Kong, as the pro-democracy camp had been enjoying an upward trend since its highly-publicized protests in 2019.

With COVID-19 under ‘relative’ control in China (if official figures are to be believed), it remains to be seen whether the current date for new elections in Hong Kong will be allowed to stand, or whether Bei- jing will continue to apply outside force in order to quell rising revolutionary sentiment in the Special Administrative Region, as the Chinese Communist Party fears its iron grip beginning to fade on the terri- tory it wishes to call its own.

30 September 13th, 2021

The Kingdom of Norway is set to hold its Parliamentary Election on the 13th of September, in order to remake the Scandinavian nation’s unicameral Parliament, Stortinget or the “Storting” (i.e. “Great Assem- bly”). All of the body’s 169 seats will be up for the taking, with at least nine parties contesting the race.

Of the nine parties currently represented in the Storting, the ruling minority government coalition is com- prised of the center-right, liberal-conservative Høyre or “Conservative Party”, the centrist, liberal Venstre or “Liberal Party” and the center-right, Christian democratic Kristelig Folkeparti or “Christian People’s Party”, with these three parties holding a combined 61 seats, of which 45 are wielded by Høyre.

Having headed Norway’s government since 2013, the incumbent Prime Minister Erna Solberg (Høyre) had begun her first term as Prime Minister with a minority government, consisting of her Conservative Party and the right-wing, libertarian Fremskrittspartiet or “Progress Party”, with said constellation remain- ing in place following the 2017 Election held on September 11th. Shortly thereafter, Solberg would man- age to expand this coalition, however, with the Cabinet receiving the support of the aforementioned liberal-centrist Venstre on January 14th, 2018, and subsequently adding the support of the Kristelig Folkeparti on January 22nd, 2019, thereby granting the second Solberg Cabinet a Parliamentary majority from 2019 through 2020.

Notwithstanding, this brief stint of majority rule would come to an abrupt end on January 20th of 2021, when the Progress Party would opt to withdraw its support from the Prime Minister’s government after seven years of joint governance, with this move serving as a gesture of protest against the government’s decision to repatriate a Norwegian citizen who had left her homeland in order to fight for the Islamic State (i.e. “ISIS”, “ISIL” or “Daesh”) in the Middle East.

Accordingly, with 108 Parliamentarians now making up the far-larger opposition bloc, it will be interest- ing to see how coalition negotiations shake out after all votes have been processed and counted, as cur- rent polling data shows a close race between Høyre, the center-left, social democratic Arbeidarpartiet or “Labor Party”, and the Senterpartiet or “Center Party”, an agrarian party with Eurosceptic undertones (given its historically protectionist stance). As a reminder, the Kingdom of Norway -- despite having close ties to the rest of Europe, let alone the rest of Scandinavia -- is not a formal member of the European Union. September 19th, 2021

The Russian Federation will hold Legislative Elections on September 19th, with the 450 seats on the “State Duma” being reconstituted by the Russian electorate on said date. The Duma makes up the low- er half of the Federation’s bicameral legislature, the or “Federal Assembly”, while Russia’s upper house – the 170-seat or “Federal Council” – is remade by the regional politicians and without direct elections.

31 September 19th, 2021

Currently, the government consists of the big tent, conservative “United Russia”, along with confidence- and-supply from the right-wing, conservative “Liberal Democratic Party of Russia”, the center-left, social democratic “A Just Russia”, the right-wing, populist “Rodina” and the center-right, liberal-conservative “Civic Platform”.

Under the leadership of President Vladimir Putin, who has ruled the country in various capacities since his first having assumed office on December 31st, 1999 as Prime Minister, Russia has not tended to treat elections with much seriousness, with the former KGB officer having reportedly received 76.69% of the vote in 2018, 63.6% of the vote in 2012, 71.9% of the vote in 2004 and 53.4% of the vote in 2000 when running for the Russian Presidency, with the runners-up always lagging behind the leader by at least 20% pp.

State Duma Elections haven’t proven much different, with the Putin-allied claiming 54.2% of the vote- share in 2016, 49.32% in 2011, 64.3% in 2007 and 37.57% in 2003 – just two years after its founding on December 1st, 2001. Currently chaired by close Putin-ally and former President (in name only) Dmitry Medvedev, it can be assumed with almost 100% certainty that the September 2021 Election will prove similar to past elections held in the Russian Federation – a largely symbolic process, with the outcome already being evident to all observers (foreign or domestic) before even a single Russian voter casts his/ her ballot.

September 26th, 2021

The Federal Republic of Germany is all set to hold its Federal Election to remake the Bundestag or “Federal Diet”, the country’s 709-seat legislature for the 20th time in modern German history in late- September of this year. Extra attention will be placed by us on this race, given both its geopolitical rami- fications as well as its historic implications, as it will represent the first election in the upcoming post- Angela Merkel-era – as the long-serving Chancellor has announced her intention of no longer running for the position which she has occupied since 2005.

Currently, the government consists of Mrs. Merkel’s party – the center-right “Christian Democratic Union of Germany”, its sister party – the center-right, Christian democratic Christlich-Soziale Union in Bayern or “Christian Social Union in Bavaria” and the center-left, social democratic “Social Democratic Party of Germany”. Given the CDU and the SPD’s traditionally having represented Germany’s largest and most successful political parties in the modern era, this constellation has colloquially carried the name “GroKo” or “Große Koalition”, German for “Grand Coalition”.

32 September 26th, 2021

Just days into 2021, the CDU has prepared itself for the upcoming election and its post-Merkel reorgani- zation by electing a new Party Leader, following the abrupt resignation of Mrs. Merkel’s brief successor (and hand-picked favorite), Annegret Kramp-Karrenbauer (aka “AKK”), on February 10th, 2020. Against the backdrop of the coronavirus pandemic, the CDU’s planned party conference would end up being delayed, with the election of a new leader thus taking a back-seat to public health considerations, with a digital party conference ultimately being organized and held on Saturday, January 16th, 2021.

Throughout the brief and rather untraditional campaign season leading up to the mid-January event, three challengers would contest the race, with one of these candidates, Armin Laschet (Minister- President i.e. Governor of North Rhine-Westphalia), having enjoyed the advantage of being able to showcase his leadership skills amidst the pandemic in his capacity as one of the Federal Republic’s 16 governors. Laschet, who had generally been considered the favorite for the nomination, is largely viewed as an ideological successor to Chancellor Angela Merkel, with Mr. Laschet representing the centrist, so- cially-liberal ‘wing’ of the CDU, which critics have blamed for the CDU’s gradual drift toward the center- left.

Laschet, who would opt to run on a joint ticket with current Health Minister Jens Spahn, would see his primary competition in Friedrich Merz (about whom we at Nuclo have written in the past), the former leader of the CDU/CSU Group in the German Bundestag from 2000-2002, and a successful corporate lawyer, with the latter position having landed Mr. Merz on several corporate boards, including that of BlackRock Germany. Merz, in stark contrast to Laschet, would profile himself by espousing a more hard- line, conservative stance with populist undertones, granting him a sizable and ardent following, particu- larly among those in (and adjacent to) the CDU who had yearned for a return to the party’s traditional principles and policy prescriptions pre-2000.

The third and final challenger would be none other than Norbert Röttgen, Chair of the Bundestag’s For- eign Affairs Committee, former Minister for the Environment, Nature Conservation and Nuclear Safety and former Leader of the CDU in North Rhine-Westphalia. Unlike both Laschet and Merz, Mr. Röttgen would make it a point throughout his candidacy to appeal to the broad spectrum of voters and members which the increasingly big tent CDU caters to, often repeating the statement that he “represents no wing of the party”. In the end, however, this strategy would fail to bare fruit, with Mr. Röttgen being eliminat- ed in the first round of voting, leading to a second-round runoff between the two remaining contestants.

In a way not too dissimilar from the 2020 Democratic Party Primaries, the moderate, centrist candidate – who had generally retained the status of ‘likely favorite’ throughout the majority (if not entirety) of the campaign – would emerge as the contest’s victor, with Mr. Laschet securing 521 votes to Mr. Merz’s 466, with the first round having separated the candidates by only five votes, with Mr. Merz retaining the upper hand with 385 to Mr. Laschet’s 380.

33 September 26th, 2021

Immediately following his close loss, Friedrich Merz would make headlines when speaking to Reuters, after making it clear that he had offered the newly-minted Party Leader Laschet to take over the Ministry of Economy under the current governing coalition, despite the Ministry’s currently being occupied by fellow CDU member Peter Altmaier. Much has been speculated about this clearly targeted political ma- neuver, with Merz’s critics voicing fears that his ‘offer’ may well have been more of a tacit threat about his future intentions concerning the party and pushing for increased unity between the divergent wings of the formerly conservative powerhouse.

Regardless of the CDU palace intrigue, however, it is rather likely that the Christian Democrats will con- tinue to enjoy their boost in the polls which they have seen as a result of their management of the coro- navirus crisis, as a so-called ‘rally to the flag’-effect has definitely taken hold in Germany since the pan- demic began to spread across Europe in early 2020. Recent polling data has shown the CDU (as has generally been the case throughout the majority of post-World War II Germany) leading the pack, with Chancellor Merkel’s party averaging around 35-37%, far ahead of their next-closest challenger, Bündnis 90/Die Grünen (i.e. “Alliance 90/The Greens”), the center-left green party, which has averaged around 17.5-21% across the same time-period.

Consensus seems to favor Germany’s next government being a so-called “black-green”-coalition, con- sisting of the aforementioned two parties (along with the CDU’s sister party, the CSU, which runs jointly with its larger ‘sibling’ on a federal level), with the Greens likely taking on the role of junior partner. What remains unclear, however, is just who will fill Angela Merkel’s shoes as the CDU/CSU’s candidate for Chancellor, as this has yet to be officially decided and announced.

Whereas it has generally been the case, historically-speaking, that the CDU’s Party Leader is put forth as the CDU/CSU’s Chancellorship-candidate, this has not always been the case (both the 1980 and 2002 Elections would feature the CSU’s respective leaders at the time – Franz Josef Strauß and Edmund Stoi- ber – as the CDU/CSU’s candidate), and recent months have seen the CSU’s current Party Leader, Markus Söder, make consistent (and increasingly overt) plays to push forward his own potential candida- cy to challenge that of an eventual Laschet run. If current polling data holds, Mr. Söder would clearly be the German electorate’s favorite, as the Bavarian leader tops the polls – while Armin Laschet comes in fourth overall, following Friedrich Merz and Norbert Röttgen (in that order).

34 September, 2021

The Kingdom of Morocco, following its constitutional reforms of July of 2011, will hold its third General Election since said changes were implemented at some point in the month of September, barring un- foreseen rescheduling. Moroccans will then be tasked with reconstituting the Kingdom’s lower house of Parliament, the 395-seat House of Representatives.

Currently, the government consists of the center-right, Islamic democratic Justice and Development Par- ty, the centrist, liberal National Rally of Independents, the royalist Popular Movement, the center-left, social democratic Socialist Union of Popular Forces, the center-right, liberal-conservative Constitutional Union and the left-wing, democratic socialist Party of Progress and Socialism.

Despite the aforementioned reforms, which were enacted following extensive protests and uprisings across the Kingdom from February of 2011 until September of 2012, Morocco is still far from being able to be considered a functioning democracy, with the Economist Intelligence Unit having ranked the na- tion as a “hybrid regime” in its Democracy Index 2019 to reflect this.

Accordingly, despite King Mohammed VI’s having allowed for the drafting of a new Constitution and the monarch’s having expanded the powers of the Parliament, the ruler still holds vast powers in the King- dom, over which he has ruled since his ascent on July 23rd , 1999.

Against the backdrop of the coronavirus pandemic, Mohammed and his largely loyal government have taken to cracking down on civil liberties, including by means of legislation, with the enactment of Law 22 -20 being one such example. Though the law was passed on the premise of combatting cybercrime and ‘fake news’ on social media, concerns have been raised that this legal framework may well be abused to suppress online dissent, with “a large number of people across Morocco” having been arrested since the pandemic started (as reported by Morocco World News) for allegedly having spread “false rumors about COVID-19”.

Sadly, similar conclusions have been reached by the international press, with Bloomberg releasing an article titled “Morocco Rolls Back Democracy Under Cover of Covid-19” in July of 2020, detailing the process by which the Mohammed regime had effectively rolled back much of what had been granted to the Moroccan people as a result of their protests ten years ago. Already in 2016, concerns had been raised by observers when, despite a reported lack of widespread irregularities, only 43% of registered voters turned out to cast their ballot. Given recent developments, this number is unlikely to improve much.

35 October 8th and 9th, 2021

The Czech Republic will hold Legislative Elections on the 8th and 9th of October, with all 200 seats of the Poslanecká Sněmovna Parlamentu České Republiky or “Chamber of Deputies of the Czech Repub- lic” (the country’s lower house of its Parliament, the “Parlament České Republiky”) being voted on by the Czech electorate.

Currently, the government consists of the center-right, populist ANO 2011 and the center-left, social democratic Česká Strana Sociálně Demokratická or “Czech Social Democratic Party”, along with confi- dence-and-supply from the left-wing, Marxist Komunistická Strana Čech a Moravy or “Communist Party of Bohemia and Moravia”. Interestingly, the Communist Party’s indirect involvement in the ANO-led gov- ernment since 2018 would mark the first such instance since 1989, when the Velvet Revolution ended the Communist Party of Czechoslovakia’s hegemonic rule over what would later become Czechia and Slo- vakia.

Since the 2017 Legislative Election took place in the Czech Republic, many factors have changed, with the Senate Elections of 2018 and 2020 seeing the center-right, liberal-conservative ODS (Občanská Demokratická Strana or “Civic Democratic Party”) and the center-right, liberal STAN (“Starostové a Nezávislí” or “Mayors and Independents”) do quite well at the expense of ANO 2011 and its allies.

Another factor which will likely advantage the political opposition will be the Czech government’s man- agement of the coronavirus crisis, with the pandemic having hit Czechia harder than the majority of its European neighbors, when judging by level of population. As is the case with most elections since 2020, COVID-19 will be more-than-likely to play a large (if not primary) role in voters’ considerations come Election Day.

As has been the case in prior electoral cycles in the Czech Republic, several parties have already an- nounced plans to form electoral alliances to better their general odds, with one such bloc being that of the ODS, KDU-ČSL (“Křesťanská a Demokratická Unie – Československá Strana Lidová” or “Christian and Democratic Union – Czechoslovak People’s Party”), and TOP 09 (“Tradice Odpovědnost Prosperita” or “Tradition Responsibility Prosperity”) parties, which plan on forming a right-of-center coalition under the name “SPOLU” or “Together”. STAN, for its part, would later agree to form an alliance of its own, name- ly with the center-left, liberal Česká Pirátská Strana or “Czech Pirate Party”.

Judging from the latest available polling data, it looks quite plausible that ANO 2011 may well retain its position as strongest party in Czech politics, as the party has polled between 25% and 28% in recent months, with the Together Alliance in a close combined second between 19.5% and 23%, just ahead of the STAN/Piráti Coalition. Notwithstanding these polling results, however, it will be interesting to see whether incumbent Prime Minister Andrej Babiš manages to retain his current position after the upcom- ing election, as his ANO-ČSSD-KSČM government coalition is down to only 35.2% in the polls, leaving ample opportunity for challenges come negotiation time.

36 October 22th , 2021

Japan is set to hold its House of Representatives Election on or before the 22nd of October, with the Jap- anese electorate then being tasked with the reconstitution of the Shūgiin (“House of Representatives”), the 465-seat lower house of Japan’s bicameral legislature, the Kokkai or “National Diet”. Currently, the government consists of the right-wing, populist Jiyū-Minshutō or “Liberal Democratic Party”, affiliated independents and the center-right, conservative Kōmeitō or “Komeito”, with the coalition having been led previously by Prime Minister Shinzō Abe of the LDP, though Abe would resign abruptly on Septem- ber 16th, 2020 citing health concerns. Accordingly, since said date, Abe would be succeeded by fellow party-member Yoshihide Suga, who had previously served as his predecessor’s Chief Cabinet Secretary.

Since 2012, the Liberal Democratic Party has shown itself to be a dominant force in the Japanese Shūgi- in, with the party exploding in popularity following Shinzō Abe’s takeover from Tarō Asō. Accordingly, the populists would expand their seat holdings from 119 to 294 as a result of the 2012 Election, with the party remaining relatively stable around 290 seats throughout the subsequent elections of 2014 and 2017. Over the same time-period, the Jiyū-Minshutō would also produce strong results in the House of Coun- cillors (i.e. “Sangiin”, the upper house of the Kokkai) Elections, expanding to 115 seats (from 84) follow- ing the 2013 Election, the first after Abe’s becoming Prime Minister. 2016 would subsequently see the LDP add six additional seats to its holding, though 2019 would see this trend reversed, with the Liberal Democrats losing nine mandates.

Judging from recent polling, it would appear as though the LDP’s reign over Japan will continue uninter- rupted following the upcoming vote, as the party has hardly any viable competition to speak of across the nation’s contemporary political landscape. Accordingly, the LDP has polled between 41% and 53.9% since Prime Minister Suga’s taking over for his predecessor, with the nearest party in the polls, the Con- stitutional Democratic Party of Japan, coming in at a mere 6-9.1%, by contrast.

Though the LDP itself will thus presumably fare quite well in the months to come, the same cannot nec- essarily be said for Prime Minister Suga, however, as a recent surge in coronavirus cases across Japan began to take their toll on the Prime Minister’s popularity. As Suga becomes increasingly embattled, it stands to reason that the Liberal Democrats may well opt to cut their losses with Suga (a rather common practice in Japanese politics) prior to the vote, as the LDP will hold its Party Leadership Election just prior to the Shūgiin Election in September.

With the Olympic Games still currently scheduled to take place in Tokyo, Japan in July of 2021, it will also remain to be seen whether the LDP-Komeito government chooses to go ahead with the games, which – if held successfully and without incident – would likely give the incumbents a renewed boost in the polls, where they have faltered in recent months. Conversely, however, a botched event would likely prove more damaging than a further postponement could ever be, leaving the Suga government in quite the predicament going forward.

37 October 24th , 2021

The Argentine Republic looks set to hold Legislative Elections on the 24th of October in order to recon- stitute half of the Cámara de Diputados de la Nación (“Chamber of Deputies”), the nation’s lower house, as well as one-third of its upper house, the Senado de la Nación (“Senate”). Currently, the government consists solely of the left-wing, Kirchnerist-Peronist Frente de Todos or “Everybody’s Front” coalition, made up of 20 left-of-center parties spanning ideologically from social democracy and progressivism to democratic socialism and communism. Founded in June of 2019 in time for the 2019 General Election in late-October, the Frente de Todos would clean house, managing to thereby oust incumbent President Mauricio Macri and throw the Republic back into the open arms of the Peronists.

Heading into the election, the Frente de Todos will thus wield significant power, controlling not only the Argentine Presidency, but also both houses of the Republic’s Congreso de la Nación or “National Con- gress of Argentina” – with the alliance controlling 41 of 72 seats in the Senate and 119 of 257 seats in the Chamber of Deputies. In a normal year, Argentine elections would be preceded by the Primarias Abiertas Simultáneas y Oblig- atorias (or “PASO”), a system whereby all contesting parties must hold primary elections prior to a Legis- lative- or General Election. Given the novel coronavirus outbreak, however, the Argentine Congress is currently considering a bill which would scrap PASO for the 2021 Election, with the primaries currently still being scheduled for August 8th. The bill, which was presented on December 11th of 2020, would eventually garner the support of President Fernández, as well as 19 of Argentina’s 23 Provincial Gover- nors, though the opposition bloc, led by the UCR (“Unión Cívica Radical” or “Radical Civic Union”), would put forward a bill against such a possible maneuver just days later, on the 14th.

Judging from current polling data, the Frente de Todos’ most significant challenger will inevitably be Mauricio Macri’s center-right, liberal-conservative coalition, the Juntos por el Cambio or “Together for Change” alliance, consisting of eight right-of-center parties including Macri’s own PRO, the “Propuesta Republicana” or “Republican Proposal”. With the Frente de Todos leading Juntos por el Cambio by just four seats in the Chamber of Deputies (119 vs. 115 seats, respectively), the Kirchnerist-Peronist alliance enjoys somewhat of a wider margin in the Argentine Congress’ upper chamber, where the Front holds 41 seats to the liberal-conservatives’ 26.

With Argentina having been hit with particular force by the still-raging coronavirus pandemic, it will re- main to be seen to what degree the Argentine electorate opts to ‘punish’ the current government and its allied parties for their management of the pandemic, as Argentina’s economy – which was already suffer- ing from significant instability prior to the virus’ outbreak – has experienced a commanding downturn as a result of measures undertaken by the Fernández Administration. Furthermore, following the passage of a one-off wealth tax dubbed the “millionaire’s tax” (as a result of which those with assets valued at more than 200 million pesos will have to pay a progressive rate of up to 3.5% on wealth held in the country and 5.25% for that located outside of Argentina), it will also be interesting to see whether such left-wing populism will produce a right-wing backlash from conservative voters and the country’s wealthy elite, with the Juntos por el Cambio alliance having decried the measure as “confiscatory”.

38 November 21th , 2021

The United States of America will hold Gubernatorial Election in two states on the 2nd of November, with New Jersey and the Commonwealth of Virginia being the states in question. Both Governorships are currently held by the Democratic Party, with New Jersey’s incumbent, Governor Phil Murphy, running for reelection while Virginia’s Governor Ralph Northam is term-limited and ineligible to do the same. Mur- phy currently faces three Republican Party challengers, while the Virginia race features five Democratic contenders and four Republicans.

Furthermore, the United States will also see four Special Elections for seats in the House of Representa- tives, the country’s lower house of its bicameral legislature, the Congress. Up-for-grabs will be the seats representing the 2nd and 5th Congressional districts of Louisiana, that representing the 1st Congressional district of New Mexico and finally that representing Ohio’s 11th Congressional district. Other than the Ohio race, which has no date as of yet, the remaining three seats will be voted on in March of 2021.

The Republic of Chile will hold its General Election on the 21st of November in order to elect a new Presi- dent and reconstitute the nation’s bicameral legislature, the Congreso Nacional de Chile or “National Congress of Chile”. The Cámara de Diputadas y Diputados or “Chamber of Deputies”, the lower house, features a total of 155 seats, whereas the upper house, the Senado de la República or “Senate of the Republic” features 43.

Currently, the government consists solely of the center-right Chile Vamos or “Let’s Go Chile” coalition, made up of the right-wing, conservative Unión Demócrata Independiente or “Independent Democratic Union”, the center-right, liberal-conservative Renovación Nacional or “National Renewal” and the center -right, liberal-conservative Evolución Política or “Political Evolution” – also known as “Evópoli”, for short, with the nation’s President, Sebastián Piñera Echenique, representing the National Renewal party.

With respect to the lower chamber of the National Congress, Chile Vamos wields 70 seats between its parties, while the political opposition consists of three main alliances, the center-left Unidad Con- stituyente, the far-left Frente Amplio and the left-wing Unidad para el Cambio, with these blocs wielding seat counts of 53, 14 and 16, respectively. In the Congress’ upper chamber, Chile Vamos currently holds 19 seats, whereas the Unidad Constituyente wields 22, by contrast. Of the remaining two seats in the Senate, one is controlled by the left-wing Democratic Revolution party (of the Frente Amplio), while the other is held by a political independent.

On a Presidential level, four candidates have thrown their hats in the ring, namely Joaquín Lavín Infante and Evelyn Matthei Fornet (both of the Independent Democratic Union), Daniel Jadue Jadue (on behalf of the Communist Party of Chile) and Pamela Jiles Moreno (of the Humanist Party).

39 November 21th , 2021

Much has transpired since the 2017 General Election, which then saw President Piñera best Alejandro Guillier Álvarez by just over 9% pp in the second-round runoff, while his Chile Vamos alliance made siza- ble gains in both chambers of Congress. Thus, beginning on October 14th of 2019, Chile would be rocked by the Estallido Social or “Social Outbreak”, a series of large-scale protests which would initially erupt as a result of a hike in public transit pricing.

With demonstrations rapidly growing violent, the protest movement rapidly evolved into a larger anti- austerity movement, with protestors calling for significant social reforms and a resignation of President Piñera and his government.

Ultimately, following a declaration of both a state of emergency and a curfew across much of the coun- try, the protestors would achieve significant concessions from the President, with reforms being prom- ised across several areas including in the fields of education, healthcare, and the pension system, while a plebiscite concerning the prospect of drafting a new Constitution was approved for the 25th of October, 2020. With 7,534,189 valid votes eventually being cast, 78.31% of the participating electorate would ap- prove the idea of drafting a new Constitution, with voters tasking a Constitutional Convention with this process.

Despite winning a brief, hard-fought peace with the general public, however, tensions between the Piñera government and protestors would reemerge in earnest in September of 2020 (with scattered pro- tests having taken place previously in April), after a brief pause throughout the beginning of the year due to the coronavirus and subsequent lockdown measures. As law enforcement personnel clashed with riot- ers, allegations of police misconduct would begin to mount, leading to the Chilean opposition calling on the General Director of Carabineros to resign, while some demanded the impeachment of Interior Minis- try Víctor Pérez, the latter of which would resign on the 3rd of November.

Given the levels of polarization the Republic of Chile has experienced over the past two years, it remains to be seen whether the political ‘pendulum’ will now swing back the other way, advantaging the center- left constituent parties of the Unidad Constituyente, as a former poster-child for successful capitalism in Latin America begins to increasingly falter in its traditional stability.

40 Between April 16th and May 16th

The Syrian Arab Republic will hold Presidential Elections at an unknown point in time between the 16th of April and the 16th of May, as stipulated by Syrian electoral law, though a concrete date has yet to be set. Unsurprisingly, however, Bashar al-Assad, the incumbent President (and de facto dictator) since 2000, will run for reelection once more, with “free and fair” elections thus being off the table as it were.

With a supposed voter turnout of 73.42% in 2014, Syrians reportedly ‘elected’ al-Assad by a landslide margin, with the incumbent having claimed 88.7% of the vote, besting the runner-up, Hassan al-Nouri, by a ‘mere’ 84.4% pp. Notwithstanding, the 2014 Election would at least allow for some semblance of ‘competition’, with the aforementioned al-Nouri (of the NIACS or “National Initiative for Administration and Change in Syria”) and a political independent, Maher Hajjar, having been allowed to participate in the race.

Similar ‘results’ were yielded in prior ‘elections’ held in 2007 and 2000, with al-Assad reportedly having received 99.82% and 99.7% of the vote, respectively, though in these cases the leader ran unopposed, much as his father, Hafez al-Assad, had done in 1999, 1991, 1985, 1978 and 1971.

Bashar al-Assad – much like his father before him – is a representative of the Arab Socialist Ba’ath Party, a left-wing, populist, Arab nationalist, neo-Ba’athist party which has ruled Syria as a single-party state since the 1963 coup d’état or “8 March Revolution”.

Despite unanimous agreement concerning a roadmap for Syria’s future having been achieved in 2015 with the signing of the UNSC’s Resolution 2254, the al-Assad regime has shown itself relatively unmoved by international pressure for Mr. Assad to relinquish the reins of power, with an end to Syria’s sociopoliti- cal woes therefore becoming an increasingly unlikely outcome in the short-term.

Unsurprisingly, this state of affairs has led to a growing chorus of voices espousing the position that the Syrian Presidential Elections should be ignored completely by the international community, a view shared by the Atlantic Council, a renowned Washington D.C.-based think tank specializing in international affairs, as well as local diplomats.

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