Economic implications of a SARS/Coronavirus outbreak

bk1 said:

Rubbish, widen your field of view..

https://www.commsec.com.au/market-news/the-markets.html : Reports

Job bonanza
Consumer confidence strongest since 2010
Business conditions hit record high

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Consumer confidence strongest since 2010
You all know my high skepticism of the so called Covid vaccines, I wonder what that confidence will become when people will realise that the Astrazeneca vaccine we are supposed to ..one day..make here and use is actually
NOT working against the south african and some UK trends.
So far ,people focus on the clot issues..which scientifically is not a big deal in term of risk vs benefit if you are at risk with covid..aka older.The vaccine makes sense then...as long as it works
I suspect that consumer confidence might start going down once people realize this vaccine is not the final answer
Months ago, I was of the opinion that as per historic experiences in the last 40y of research, a vaccine could not be developed against a coronavirus..as per common cold, and for covid as per HIV
I am afraid we will probably have to take the astra zeneca shot as we were doing for the flu vaccine for year: reducing risk but nowhere near as effective as a polio or tetanus vaccine.
So that let us with the mRNA large scale experiment, and while there is probably not much risk getting it at 80+, I know I will abstain for the time being .
So either the optimism crashes (and so the market?) or the scare tactic from the government will have to be tuned down, and some people will die from Covid even if vaccinated.
No economic disaster actually as the % are actually very low and most often associated to already existing diseases: dying with Covid or dying from Covid?
But once you raise a fear, the genie is out of the bottle and I am not sure it will be easy for the government to control it back.
I think what we need to check is the number of astrazeneca- SA/Brazilian mutation effectiveness articles on the popular australian media, any surge and we could see a fall in confidence and tightening of the purse, and obviously some hysteric reactions from some premiers...

At least , but for a few reelection plays here, the government has not been using this too much to take control whereas some European countries are turning in de facto dictatorships.

Everyone has a pocketful of cash and nothing to spend it on because shipping is still sht.

Here's a great little piece by the wall st journal on the shipping situation:



(also, haven't forgotten about this thread, just busy renovating one house and moving another)

Hobby farms, backyard zoos and other family friendly attractions are having their time again. It's a return to the 70s-80s.

Ok so markets have taken a bit of a beating lately on account of all these vaccine blood clot scares etc but IMHO, it's all kind of overblown.

The economic data has actually been phenomenal lately:





And all the reopening indicators like stay at home stocks, energy, oil, flight numbers etc are all fantastic:



In fact the economic data has been so good that it's actually been inflation/overheating fears that have been giving markets the jitters, but as we can see, even that is all in the rear view mirror now (i.e it was temporary just like I said it was going to be):

Even powell was all "yeah we want to see sustained inflation and we aren't going to be on account of this just being a supply side issue" (just like I've been saying all along):



And so we get stuff like this:



playing tug-of-war with this:



So really, we're about at a peak that we're going to bounce around at for a while as everyone bicker about whether the market's gotten ahead of itself or not, and so to be honest, this screencap really says everything:



In short, the play is now to trade chop, so just hold about a third in things like banks which run on inflation etc fears, a third in tech which runs on the complete opposite, and a third in the reopening plays.

All you need to do is hold the reopening stuff/don't touch it and then buy/sell the banks and move into tech (or vice-versa) whenever something happens that makes one run and the other plummet. They both move in opposite directions to each other and we can be confident of a fair bit of chop so all you have to do is sell A and buy B on one day and then sell B and buy A on another, e.g:



There are obviously plenty of other examples, but you get the idea. Look at just how close to vertical/close in time (inversely correlated) these gaps are.



It really is that simple.

Oh and just in case it wasn't obvious, I should point out that if you're a newbie not confident bouncing your positions back & forth between the two, you can see how just simply holding onto both and doing nothing would have you WELL into the green anyways. That should not be overlooked

On a completely unrelated note, I'm sorry I've been so slack updating this thread lately guys. I've moved one house, renovated another, and spent a fortnight bedridden sick with the mother of all head colds so I've just been either absolutely flat out or half dead for the last month or so.

over9k said:

On a completely unrelated note, I'm sorry I've been so slack updating this thread lately guys. I've moved one house, renovated another, and spent a fortnight bedridden sick with the mother of all head colds so I've just been either absolutely flat out or half dead for the last month or so.

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Look after yourself, markets aren't going anywhere.

Here's the cliff notes of what's going on at the moment, it's no longer interest rates vs growth, it's virus numbers vs growth:



Some countries like the USA are fine on account of the vaccine rollout but india, brazil etc are getting absolutely pounded:



You can see how the yanks are beating the virus with their vaccine rollout (otherwise the curve would look more like india's) whereas india is getting smashed.

Globally, numbers are rising in quite a few countries, india just being the worst. As I pointed out earlier, the economic data has been waaaay better than expected, with the question now being how much global supply lines etc are going to be hit again. Microchips, basically the only thing the USA relies on an external source for in any meaningful capacity, are not under threat (even though there's the shortage, the world's semiconductor manufacturers are actually running at maximum capacity) and so we aren't going to see way more car factories getting mothballed etc.

As horrible as it is, there's a lot of countries for which their lockdowns and/or time off work sick doesn't actually make much economic difference.

If Taiwan shut down? Big problem.

Brazil or India? Not so much.

Looking at longer term "real economy" changes, as distinct from the financial markets, I'm noticing what seems to be a broad pushback against things which have been common over the past 20+ years and lamented by many during that period.

Leaving politics out of it and looking at the "what's happening" aspect:

Pushback against China: https://www.theage.com.au/politics/...-deal-with-china-torn-up-20210421-p57l9q.html

The Australian government has torn up Victoria’s controversial Belt and Road agreement with the China, saying it falls foul of the country’s national interest

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A push toward local production in Australia seems to be gathering pace with all sides of politics at least somewhat backing the idea: https://www.theage.com.au/national/...oon-be-made-in-melbourne-20210421-p57kzc.html

Funding of $50 million should be enough to establish serious mRNA vaccine manufacturing in Melbourne

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Prime Minister Scott Morrison backed Victoria’s decision to invest in developing an mRNA facility.

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Meanwhile seemingly less serious economically but nonetheless another indication of a pushback against the thinking of the past 20 years: https://www.theage.com.au/national/...se-pollution-complainers-20210421-p57l0t.html

Live music venues in Melbourne’s inner south could get council backing to keep the volume pumping, even if the blow-ins next door kick up a fuss about sleepless nights.

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So we're pushing back against China, pushing back against those who move to a place they don't like and then whinge about it and we're trying to bring at least some return of local production.

The specifics are just examples though, there seem to be quite a few signs of the same broad thinking emerging that change is needed and that returning to what prevailed prior to the pandemic really isn't the way forward. It seems to have acted as a bit of a catalyst there.

Climate change and electric cars is another one that seems to have gained a huge push. Another is that the 1980's and 90's "government debt is bad" thinking seems to have abruptly reversed and not just in Australia.

I intend all that as an economic comment far more than a political one. Basic thinking being that there's a turning point here beyond the pandemic itself in much the same way that the 1970's - early 80's saw turning points on pretty much everything economic including the role of governments which then remained essentially unchanged through to 2020. If that is indeed the case then as with the 70's, the full implications will take years to become apparent to the masses.

So 18 month after covid arrived, how many of the mask used are NOT made in China?
How many extra icu beds do we have?
Si if covid with a mortality rate negligeable, well below 1pc is NOT historically high, can put us to our knees yet is not enough to add to our response capabilities..and this is the whole west, not only Australia, what is the hope for either domestic production or the next Ebola
Locally on the sunshine coast, strong push for local food etc , great .but local strawberry vs victorian ones etc..we are not replacing imports...and last time i looked the coles and woolies corn cans were still using o/s corn
As for mr @Smurf1976 news extract:
50 millions to enable mRNA local production?
You will not build a warehouse for that cost here,let alone finding the staff for it or the machinery
In 2021 australia, $50m is a pedestrian bridge or 2, or an overpass...i wish i was kidding/. exaggerating
A lot of talking, no action.facade dressing

qldfrog said:

So 18 month after covid arrived, how many of the mask used are NOT made in China?
How many extra icu beds do we have?
Si if covid with a mortality rate negligeable, well below 1pc is NOT historically high, can put us to our knees yet is not enough to add to our response capabilities..and this is the whole west, not only Australia, what is the hope for either domestic production or the next Ebola
Locally on the sunshine coast, strong push for local food etc , great .but local strawberry vs victorian ones etc..we are not replacing imports...and last time i looked the coles and woolies corn cans were still using o/s corn
As for mr @Smurf1976 news extract:
50 millions to enable mRNA local production?
You will not build a warehouse for that cost here,let alone finding the staff for it or the machinery
In 2021 australia, $50m is a pedestrian bridge or 2, or an overpass...i wish i was kidding/. exaggerating
A lot of talking, no action.facade dressing

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But not all negative, we can now say what Pauline was saying 20y ago and be mainstream left..the irony...

qldfrog said:

As for mr @Smurf1976 news extract:
50 millions to enable mRNA local production?
You will not build a warehouse for that cost here,let alone finding the staff for it or the machinery
In 2021 australia, $50m is a pedestrian bridge or 2, or an overpass...i wish i was kidding/. exaggerating
A lot of talking, no action.facade dressing

Click to expand...

I've no doubt the cost will end up very much higher but it's the concept I'm interested in.

These things take time, they don't happen overnight and I'm thinking in terms of a turning point of the kind that to most will be apparent only many years after the event. I'm not expecting to see anything dramatic next week etc.

Much like Australian state politicians generally didn't acknowledge any decline of manufacturing until well into the 1990's. Prior to that, they were still going to elections talking up the prospects of someone building a factory - never mind that the sector had been declining for 20 years by that point, it took a very long time to sink in.

Or for a less serious example, Rock music peaked in 1983 and outright fell off the cliff after 1989. Factually correct from a commercial perspective as a % of music sales but I expect there'd be more than a few who took the next 20 years to realise that such a fundamental shift had taken place. Most would've been thinking in terms of individual bands having passed their peak, not grasping that the entire genre was headed to oblivion so far as the mainstream is concerned. That's US data but would be much the same in Australia.

I may well be wrong but I do get a definite impression that a turning point has occurred of that nature. Won't be noticeable for a while but the political language does seem to have shifted away from the whole 1970's - 2019 thinking of "free trade", "there is no such thing as society", "government debt is always bad" and so on and toward "need to make things here" and "need to focus on lifestyle not just money" and "government needs to invest" etc. That's a profound change that, if continued, will ripple through pretty much everything over time just as the changes in the 70's - 80's did.

The examples I've given are just to illustrate really, it's the sentiment I'm looking at and pondering where that leads more broadly?

Noted that's of zero relevance to traders so apologies to those in that group. It may have relevance to longer term investment though, that's my thinking here.

One of the more obvious implications is inflation. Government borrows heavily and inflates it away meanwhile a shift of at least some production to developed countries with higher production costs. The ideas in the US of increasing tax rates are another one that goes against the paradigm of recent decades.

Individually each can be dismissed, but not if there's a pattern forming.

Smurf1976 said:

I've no doubt the cost will end up very much higher but it's the concept I'm interested in.

These things take time, they don't happen overnight and I'm thinking in terms of a turning point of the kind that to most will be apparent only many years after the event. I'm not expecting to see anything dramatic next week etc.

Much like Australian state politicians generally didn't acknowledge any decline of manufacturing until well into the 1990's. Prior to that, they were still going to elections talking up the prospects of someone building a factory - never mind that the sector had been declining for 20 years by that point, it took a very long time to sink in.

Or for a less serious example, Rock music peaked in 1983 and outright fell off the cliff after 1989. Factually correct from a commercial perspective as a % of music sales but I expect there'd be more than a few who took the next 20 years to realise that such a fundamental shift had taken place. Most would've been thinking in terms of individual bands having passed their peak, not grasping that the entire genre was headed to oblivion so far as the mainstream is concerned. That's US data but would be much the same in Australia.

I may well be wrong but I do get a definite impression that a turning point has occurred of that nature. Won't be noticeable for a while but the political language does seem to have shifted away from the whole 1970's - 2019 thinking of "free trade", "there is no such thing as society", "government debt is always bad" and so on and toward "need to make things here" and "need to focus on lifestyle not just money" and "government needs to invest" etc. That's a profound change that, if continued, will ripple through pretty much everything over time just as the changes in the 70's - 80's did.

The examples I've given are just to illustrate really, it's the sentiment I'm looking at and pondering where that leads more broadly?

Noted that's of zero relevance to traders so apologies to those in that group. It may have relevance to longer term investment though, that's my thinking here.

One of the more obvious implications is inflation. Government borrows heavily and inflates it away meanwhile a shift of at least some production to developed countries with higher production costs. The ideas in the US of increasing tax rates are another one that goes against the paradigm of recent decades.

Individually each can be dismissed, but not if there's a pattern forming.

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The pattern forming is not new: socialism a la european due to leftist teachers and media, and an aging population..money is not everything..sharing, etc as long as you can feed yourselves properly.
My guess is we are in for a serious shock, and real, not Covid style or climate change.the world population is still ticking with roughly 50% of the world now hating the west..and i mean the essence of the west: muslim/china in my mind
For me , it means shifting long term investment toward asia, and real estate assets ASAP out if the west mainstream countries.
Life will still be good in Switzerland or the Bahamas in 50y, not so sure west europe or USA

Smurf1976 said:

I've no doubt the cost will end up very much higher but it's the concept I'm interested in.

These things take time, they don't happen overnight and I'm thinking in terms of a turning point of the kind that to most will be apparent only many years after the event. I'm not expecting to see anything dramatic next week etc.

Much like Australian state politicians generally didn't acknowledge any decline of manufacturing until well into the 1990's. Prior to that, they were still going to elections talking up the prospects of someone building a factory - never mind that the sector had been declining for 20 years by that point, it took a very long time to sink in.

Or for a less serious example, Rock music peaked in 1983 and outright fell off the cliff after 1989. Factually correct from a commercial perspective as a % of music sales but I expect there'd be more than a few who took the next 20 years to realise that such a fundamental shift had taken place. Most would've been thinking in terms of individual bands having passed their peak, not grasping that the entire genre was headed to oblivion so far as the mainstream is concerned. That's US data but would be much the same in Australia.

I may well be wrong but I do get a definite impression that a turning point has occurred of that nature. Won't be noticeable for a while but the political language does seem to have shifted away from the whole 1970's - 2019 thinking of "free trade", "there is no such thing as society", "government debt is always bad" and so on and toward "need to make things here" and "need to focus on lifestyle not just money" and "government needs to invest" etc. That's a profound change that, if continued, will ripple through pretty much everything over time just as the changes in the 70's - 80's did.

The examples I've given are just to illustrate really, it's the sentiment I'm looking at and pondering where that leads more broadly?

Noted that's of zero relevance to traders so apologies to those in that group. It may have relevance to longer term investment though, that's my thinking here.

One of the more obvious implications is inflation. Government borrows heavily and inflates it away meanwhile a shift of at least some production to developed countries with higher production costs. The ideas in the US of increasing tax rates are another one that goes against the paradigm of recent decades.

Individually each can be dismissed, but not if there's a pattern forming.

Click to expand...

I will try to find you the figure of new western business in china last year: and not to sell there,90% are to import from china or build there.
It is still incredibly high, and during Covid

Smurf1976 said:

I've no doubt the cost will end up very much higher but it's the concept I'm interested in.

These things take time, they don't happen overnight and I'm thinking in terms of a turning point of the kind that to most will be apparent only many years after the event. I'm not expecting to see anything dramatic next week etc.

Much like Australian state politicians generally didn't acknowledge any decline of manufacturing until well into the 1990's. Prior to that, they were still going to elections talking up the prospects of someone building a factory - never mind that the sector had been declining for 20 years by that point, it took a very long time to sink in.

Or for a less serious example, Rock music peaked in 1983 and outright fell off the cliff after 1989. Factually correct from a commercial perspective as a % of music sales but I expect there'd be more than a few who took the next 20 years to realise that such a fundamental shift had taken place. Most would've been thinking in terms of individual bands having passed their peak, not grasping that the entire genre was headed to oblivion so far as the mainstream is concerned. That's US data but would be much the same in Australia.

I may well be wrong but I do get a definite impression that a turning point has occurred of that nature. Won't be noticeable for a while but the political language does seem to have shifted away from the whole 1970's - 2019 thinking of "free trade", "there is no such thing as society", "government debt is always bad" and so on and toward "need to make things here" and "need to focus on lifestyle not just money" and "government needs to invest" etc. That's a profound change that, if continued, will ripple through pretty much everything over time just as the changes in the 70's - 80's did.

The examples I've given are just to illustrate really, it's the sentiment I'm looking at and pondering where that leads more broadly?

Noted that's of zero relevance to traders so apologies to those in that group. It may have relevance to longer term investment though, that's my thinking here.

One of the more obvious implications is inflation. Government borrows heavily and inflates it away meanwhile a shift of at least some production to developed countries with higher production costs. The ideas in the US of increasing tax rates are another one that goes against the paradigm of recent decades.

Individually each can be dismissed, but not if there's a pattern forming.

Click to expand...

Love your history, patterns and sentiment, I too have a natural fondness for patterns and cycles which keeps life interesting.
I was an industrial contractor during the 80s & 90s and I watched sadly as one big industry after another in Melbourne fell and thousands of smaller ones too which at the time was due to old-fashioned, tariff-protected manufacturers being sliced and diced by mostly Japanese and Taiwan based industries who had incredibly efficient factories. They had just decimated the Swiss watch industry, the USA electronics and steel industries and had mostly done the same to the auto industry. Cheap manual labour overseas saw them take over textiles too. Singapore was big at that time.
We struggled to find niches in manufacturing, mostly toying with the latest CNC centres for specialized machining during the 2000s as China's cheap, innovative and lightning fast manufacturing took over almost everything. I am an observer from a distance, not an industry data specialist so this is a broad-brush recall.
When WWII hit we lacked many products including I believe ball bearings. Being so small in population we lacked efficient, very specialized manufacturing and large scale manufacturing for tanks, trucks and planes. Shipping supply lanes were vital to us as well as defending our North. Things changed during the two decades after the war and we had an abundance of manufacturing due to demand and the desire for self sufficiency which is almost non-existent again now.
I see that change about to happen again. We have a very small storage capacity for petroleum products at present and members here could name many more products we have a short supply of, so if there was a conflict in the oceans around us it might quickly bring us to our knees. We have lots of sun and wind plus coal so maybe electric vehicles would be a safer option for self sufficiency.
The pandemic I believe has made us aware of our isolation with advantages and disadvantages and China's influence has heightened that awareness. So perhaps the phase of buying everything from overseas has past and we are more willing to become self-reliant and look for Aussie manufactured products again. There is another interesting development too with more people spreading out to regional areas due to the attractive cost of housing and the ability for many to work remotely and travel long distances on our roads when required. That increases the workforce availability in regional areas too so if manufacturing began again it may be in those regions. I am not sure what that means for investing and forecasting, but I feel a definite shift towards Aussie-made.
Family growth during the baby boomer era was huge and it fueled a booming economy, but now we have two problems where couples are not wanting to have large families and there is almost an epidemic of infertility affecting those who do want a family, not to mention the older age of would-be parents. I believe it is going to reverse at some point probably in 10 years and we will have another baby boom even if it is much smaller than the 50s. Then it will be fun times at the stock exchange. If not, there might be a massive boom in pets-related industries.

Smurf1976 said:

I've no doubt the cost will end up very much higher but it's the concept I'm interested in.

These things take time, they don't happen overnight and I'm thinking in terms of a turning point of the kind that to most will be apparent only many years after the event. I'm not expecting to see anything dramatic next week etc.

Much like Australian state politicians generally didn't acknowledge any decline of manufacturing until well into the 1990's. Prior to that, they were still going to elections talking up the prospects of someone building a factory - never mind that the sector had been declining for 20 years by that point, it took a very long time to sink in.

Or for a less serious example, Rock music peaked in 1983 and outright fell off the cliff after 1989. Factually correct from a commercial perspective as a % of music sales but I expect there'd be more than a few who took the next 20 years to realise that such a fundamental shift had taken place. Most would've been thinking in terms of individual bands having passed their peak, not grasping that the entire genre was headed to oblivion so far as the mainstream is concerned. That's US data but would be much the same in Australia.

I may well be wrong but I do get a definite impression that a turning point has occurred of that nature. Won't be noticeable for a while but the political language does seem to have shifted away from the whole 1970's - 2019 thinking of "free trade", "there is no such thing as society", "government debt is always bad" and so on and toward "need to make things here" and "need to focus on lifestyle not just money" and "government needs to invest" etc. That's a profound change that, if continued, will ripple through pretty much everything over time just as the changes in the 70's - 80's did.

The examples I've given are just to illustrate really, it's the sentiment I'm looking at and pondering where that leads more broadly?

Noted that's of zero relevance to traders so apologies to those in that group. It may have relevance to longer term investment though, that's my thinking here.

One of the more obvious implications is inflation. Government borrows heavily and inflates it away meanwhile a shift of at least some production to developed countries with higher production costs. The ideas in the US of increasing tax rates are another one that goes against the paradigm of recent decades.

Individually each can be dismissed, but not if there's a pattern forming.

Click to expand...

There's been an awful lot of what you might call "quiet talk" about just what to do about national debt(s) virtually all across the world really.

There's a bit of a tug-of-war between what policymakers want to do and what the public will accept. Most of the talk is basically about a steady monetisation of it (i.e inflate it away).

qldfrog said:

I will try to find you the figure of new western business in china last year: and not to sell there,90% are to import from china or build there.
It is still incredibly high, and during Covid

Click to expand...

Obviously to take with a grain of salt especially the number in yuan as conversion of money amount from chinese is a bit tricky.
But based on this, 100 western funded..who else? Per day in 2020..
I so doubt there is much substance behind the facade, and expect more made in NZ, Malaysia, Vietnam etc for the Chinese made products...
there is the talk, and there is the fact
Now, put a real crisis, homelessness, hunger and yes, this could move to a real shift