The new abnormal and not so special K's

Finex — the Financial Executives Institute of the Philippines — was kind enough to ask me to be a speaker at their yearly forum last Monday and to discuss recent megatrends, especially in finance. I titled my talk “The New Abnormal.” I wish to thank Finex for honoring me with the invitation, and I hope the participants found my talk of use. Also, thanks to my Wharton classmate Ed Francisco for moderating and grade school and Wharton classmate George Chua for introducing me. Some asked for slides for the presentation and the embarrassing truth is I wrote the outline of my talk two months ago when invited and set it aside until Sunday when I revisited it and fleshed out what I wanted to discuss without actually putting it in presentation format. Some points were covered in other articles I wrote for The Manila Times (like how the stock market is not the economy and how the two can diverge), so I will write about some of the other points I brought up.

My biggest theme was, K is the key metaphor. More than six months into Covid-19 it is clear the best description to nearly everything is K. It is not a V, W, U or L or anything else recovery but a K-shaped one. Likewise, it is a K-shaped economy, competition, countries, industries and so on. What does K mean? It is dual, so there are big and small winners and same with the more numerous losers with few in the middle. Tech, especially enterprise software and cloud are in the upper end of the K that is pointing up. Same with health care. Transportation, hospitality, retailing and many other sectors are in the various stages of the lower part of the K that is pointing down. Financial services are probably in the lower part of the upper K and the higher part of the lower K depending on sector and position.