Economic implications of a SARS/Coronavirus outbreak

[Smurf1976]

View attachment 116968

One major theme I'll note is that the things hit hardest and which have had the largest kick in the face are, broadly speaking, the exact same things widely touted as "the future" by some (but actively opposed by others....) for many years now.

Mass tourism.

Public transport.

High density living in cities.

"Cafe culture"

The service economy.

That pretty much summarises it and it's also exactly what has been smacked firmly in the face.

In contrast someone who drives their car from their suburban home to their job at a factory has been far less affected indeed not much has changed for them in their daily life, the pandemic being mostly about travel, sports, concerts and school closures if relevant.

To be fair I could be biased - I'm one of those who's opposed that whole approach all along on the basis that it wasn't economically sustainable. So to be fair, perhaps some personal bias in the comment.

 

[qldfrog]

One major theme I'll note is that the things hit hardest and which have had the largest kick in the face are, broadly speaking, the exact same things widely touted as "the future" by some (but actively opposed by others....) for many years now.

Mass tourism.

Public transport.

High density living in cities.

"Cafe culture"

The service economy.

That pretty much summarises it and it's also exactly what has been smacked firmly in the face.

In contrast someone who drives their car from their suburban home to their job at a factory has been far less affected indeed not much has changed for them in their daily life, the pandemic being mostly about travel, sports, concerts and school closures if relevant.

To be fair I could be biased - I'm one of those who's opposed that whole approach all along on the basis that it wasn't economically sustainable. So to be fair, perhaps some personal bias in the comment.

Fully agree, remember my previous rants on an economy based on baristas, paying migrants hiding as "foreign students" amd overall mass immigration as engine of growth.
And we are now seeing the coal exports being hit hard as well as agricultural products.
So what is left is to date: iron ore and....iron ore!
But we still have debt
Figures to be accessed in the next quarter...

 

[SyBoo]

Blocked Trade.
Coal; Indonesia needs to blend their brown coal with Australian coal to get up to spec before they can flog it to China. So some of the coal still goes to China via Indonesia. (WHC ships to Indo)
Barley; Was shipped of to other countries and the farmer are much happy with the new arrangements.
Beef; Overall the beef trade is down, China deceased in rank but is still 3rd. Even US volumes are down, but South Korea and Japan volumes up. At the moment a decrease in the beef trade is a good thing as helps the farmers restock.
Wine and Lobster; Are luxury items and China probable can't afford them at the moment anyway.

 

[Smurf1976]

It's only one cabaret venue but it has been there for 96 years apparently, surviving the Great Depression and WW2.

I wonder how many other "always been there" type things around the world will be lost amidst all this? At a guess, probably quite a lot.

An iconic central London cabaret venue that survived 96 years of war, bombs, recession and uncertainty has shut down with no plans to reopen

London’s Café de Paris closes forever

After 95 years of cabaret antics

www.timeout.com

 

[over9k]

yes more BS and lockdown fully demonstrated to not being of any help, etc; but look here...

One area we discussed earlier and with plenty of data from @over9k was the move out of cities..
Look who is talking ?Qldfrog left Brisbane hinterland for the greener grasses of the Noosa hinterland 3 month ago, and something planned a year earlier
Another articel about that and the role of Covid as the last straw:https://thehill.com/opinion/finance/530040-is-this-the-end-of-cities-in-america?bsft_eid=7aab17a8-5bbd-4767-962e-8038264ea030&bsft_aaid=6cecc182-bc17-40ae-993a-af857640c9d5&utm_campaign=rsi20201118&utm_source=blueshift&utm_medium=email&utm_content=rsi20201223&bsft_clkid=c5cf33b1-e017-4a7f-8125-db033ff161e6&bsft_uid=98e61677-3c2d-4623-938b-0701f75e454d&bsft_mid=99134f9d-bc50-434e-bc45-2d05e95100b9&bsft_utid=98e61677-3c2d-4623-938b-0701f75e454d-000029341811-001&bsft_link_id=230&bsft_mime_type=html&bsft_ek=2020-12-23T06:10:42Z&bsft_lx=5&bsft_tv=9
but we should not forget cities are the greatest wealth-creating engines in the history of civilisation ;
I am not a city person but I will not deny that all the creativity, mind exchange and leverage that I experience in startup nodes can NOT be accessed thru Zoom, teleconf or phone video call.
We in Australia were even at a disadvantage with a lack of critical mass even before COVID.
When you destroy cities, you destroy wealth creation, tomorrow's star businesses and inventions and ultimately destroy the economy. This is one trend that markets have not priced in and where China is once again laughing:
I am not allowed to travel back to SZ but the startup there are still running at 100%: building the 50k drones which will sink our billion dollars submarines at will or shot down our 10 millions a pop fighters; stealing and improving new EV technology, building airspace projects and obviously your phones and AI chips and maybe even manufacturing our next covid if we manage to survive this one.
Here and in the west, we lockdown and the emulation is inZoom teleconf for rapidly getting overweight workers in bathrobe and slippers

We are assisting live to the West self destruction, and i stupidly thought we would fall to the green plague or Mr Xi attacks.

I reckon the market will sort this out itself frog - if you're needed in the office, you're needed in the office.

The thing is you're probably not needed in the office every day, so let's say you worked from home 2/5 days a week, if your company sets up a hot-desk system, that's still a 40% rent reduction.

That's the thing about all of this - it's not an either/or proposition, you can be in the office when needed and stay home when not. For example, if I was only in the office one day a week I'd move hours away from work and just deal with one loooooong day each week if it meant all the other days were a commute from my kitchen to my home office 5 seconds walk away.

 

[qldfrog]

I reckon the market will sort this out itself frog - if you're needed in the office, you're needed in the office.

The thing is you're probably not needed in the office every day, so let's say you worked from home 2/5 days a week, if your company sets up a hot-desk system, that's still a 40% rent reduction.

That's the thing about all of this - it's not an either/or proposition, you can be in the office when needed and stay home when not. For example, if I was only in the office one day a week I'd move hours away from work and just deal with one loooooong day each week if it meant all the other days were a commute from my kitchen to my home office 5 seconds walk away.

True, but this is not new, once again an anecdotal evidence is my case .IT contractor since 2000.
I had been doing that since 2010, except when working for dinosaurs aka big corporations which took ages to embrace. But ultimately, i just want to stress that the demise of the city is a slow demise of innovation.
Sure you could try to create mini hubs like shared offices by Coolum or Ubud where you can recreate that cross fertility.
Being an entrepreneur..sorry for the cliche..this is the attraction of WeWorks model but the move is not from city to Outer suburbs..,as i saw when trying to sell in Brisbane hinterland this year.
it is to Noosa, Byron Bay or as i said Ubud Caribbean islands or Nevada.
This is not good news long term

 

[over9k]

Freight lorries and heavy goods vehicles are stacked at Manston Airport near Ramsgate, south east England, where freight transport was diverted to wait after France closed its borders in response to the new coronavirus strain detected in the U.K.

 

[sptrawler]

View attachment 117116

Freight lorries and heavy goods vehicles are stacked at Manston Airport near Ramsgate, south east England, where freight transport was diverted to wait after France closed its borders in response to the new coronavirus strain detected in the U.K.

It's a shame France didn't stop the U.K going over the channel to drag them out of the $hit, in two World wars. IMO.

 

[over9k]

Alright so here's the month so far:



Semiconductors in blue, dow in light blue, nasdaq in purple, sp500 in pink, r2k in orange, fangs in yellow, and I've also included midcaps in aqua. Note its uptick vs the fangs downtick over the past three days, which I'll get into in a minute.

As you can see, the fangs & the r2k are head & shoulders above everything else. However, you'll also note that the fangs have turned negative and the midcaps have turned positive over the past few days.

Here's the week:



Notice how the fangs are actually the worst for this week (not the month, just the last few days) and the midcaps have come in 2nd? It may be time to move out of the fangs and into a small & mid cap position. Semiconductors also need an eye kept on them as they came out of the gate storming above even the r2k and then had a melt before a nice uptick today. There's always a selloff after christmas as the yanks work on a calendar financial year & a lot of people decide to realise their losses for tax reasons, so we can expect markets to go negative next week, but we obviously want to keep a close eye on what's going on here as this may be the early stages of a rotation.

Meanwhile:





In case anyone's wondering what's underpinning all of these gains/where all this spending is coming from:





And china is obviously the main beneficiary of all this american spending (for now):





Result?



I think that's what you call ironic.

 

[over9k]

Housing:




"Home prices nationwide, including distressed sales, increased year over year by 7.3% in October 2020 compared with October 2019 and increased month over month by 1.1% in October 2020 compared with September 2020".

But, let's get more granular:




Despite the rapid acceleration of national home price growth, local markets continue to vary. For instance, in Phoenix, where there is a severe shortage of for-sale homes, prices increased 12.1% in October. Meanwhile, the New York-Jersey City-White Plains metro recorded only a small annual increase of 2.1%, as residents continue to seek out more space in less densely populated areas. At the state level, Maine, Idaho and Arizona experienced the strongest price growth in October, up 14.9%, 13.1% and 12%, respectively.

Cross reference this with both the aggregate drop and the locations of the biggest slumps in apartment rents I showed earlier:



And we get data points like this:




Not complex really, is it? People are, like mad, bailing out of the absolute hell that shoebox-apartment city living is and moving to where they can buy (on account of now being able to work from it) an actual house.

The overall increase in house prices isn't difficult to explain either - interest rates don't just drive up equity asset valuations, they drive up all assets prices, housing included.

Corelogic's publicly available data is here: https://www.corelogic.com/insights-...rices Nationally,October 2020 to October 2021.

 

[over9k]

 

[Knobby22]

The thing is the americans have the world's reserve currency, which puts them in an absolutely unique position in this aspect. They really can just print the daylights out of it and be basically fine because there's just so much USD floating around the world that it becomes a minimal difference to the overall money supply, even if it's a large chunk of U.S GDP.

It is until it isn't. We all know in economics that step changes occur.

 

[over9k]

It is until it isn't. We all know in economics that step changes occur.

True. But:




The yanks don't have the demographic inversion that everyone else do. Don't get me wrong, things aren't great, but they're a hell of a lot better than quite literally everyone else except india. When money obviously follows an "any port in a storm" approach, well, the yanks have the best port by miles. There's a reason why all this chinese money is pouring in and overpaying for everything - even if you overpay, you still keep more of your money than if you left it where it was.

Until confidence is lost in the USD (and demographics mean it simply can't for at least a generation) the debt can keep piling up, and that confidence isn't going to go away because this chicken is going to come home to roost far, far sooner for everyone else. Remember that it's not just the debt:gdp that's at play, it's how difficult to pay it off that matters as well. I'd much rather twice the debt if it was 3x as easy to pay off (or whatever) for example as that's only effectively 2/3rds of the burden. But everyone else are actually going to find their higher debt:gdp ratio harder to pay off on a per-dollar basis as well as having more of it to pay off. It's a double-whammy in the americans' favour.

Confidence in the USD is so high that several trillion bucks actually flooded into the united states during the GFC for example, and the next shitshow isn't even going to be centred there. Where you want your cash post-virus isn't even going to be in doubt. The rest of the world soon effectively won't have an economy outside of whatever it can export, and the only export (read: young people who buy all the stuff) market left is america.

Translation: Convert your money now.

 

[over9k]

 

[over9k]

End of year selloff might have begun. Will obviously keep posting the numbers.

 

[over9k]

The next day:



Futures are green too. Looks like the week might end up about flatlined. I sold off last week expecting a drop so time to deploy some cash again.

 

[over9k]

Coronavirus Has Thrown Around 100 Million People Into Extreme Poverty, World Bank Estimates

The coronavirus pandemic has thrown between 88 million and 114 million people into extreme poverty, according to the World Bank’s biennial estimates of global poverty.

www.wsj.com

 

[over9k]

Ok so here's the week, only the r2k ended down:



But considering the run that's had lately, I suspect it's a lot of froth being taken off:



Growth is still the place to be:



USD is still loooooow, so great time to convert your cash:



And we got some better than expected jobs info too:



All in all, with the vaccines rolling out, things should be up & up from here unless we get some other curveball (which does have a very realistic likelihood of occurring).

 

[over9k]

Alright looks like the snoozefest might be over, here's the futures, I'll obviously update at close as well again. |

 

[over9k]

YEAH SO THAT ENDED WELL DIDN'T IT?

Everything even opened well into the green. Apparently a lot of profit taking in the new financial year occurred. Makes sense. First negative open to the year since 2016.

Meanwhile: