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I think it has the potential, to put global warming on the back page for a while.This is ominous. It was a different situation but this feels like the time I started watching the attack on the twin Towers as it unfolded
So literally over a few hours one saw the hits on the towers, the attack on the Pentagon, the other plane that was hijacked , the collapse of the towers.
This is not as quick but the rapidly escalating infection and death rates across multiple sites is unnerving. Also having checked out Chris site there seems far more evidence of widespread infections than we might realise at first glance.
Please read the story above .
I think the markets are in for another beating tomorrow.
It would have to be rebuilt and would come with a period of disruption.Its an interesting thesis Smurf but i wonder if countries have the basic industrial infrastructure to go back to pre China days ?
Like we said early in this thread, those companies waiting for their furniture, T.V's, Aliexpress and ebay stuff to arrive, will be running out of lies, the two month wait will already be up and a lot of customers will be asking for their money back.It would have to be rebuilt and would come with a period of disruption.
Without wanting to derail the thread to an oil one, I'll post this chart of oil production however to illustrate what I'm on about:
https://upload.wikimedia.org/wikipedia/commons/4/4a/World_Oil_Production.png
As a short explanation, from about 1958 onwards oil rapidly gained market share as fuel for industry, power generation, heating and so on primarily at the expense of coal which by the 1960's was on the way out. That plus rising use of petrol, diesel and aviation fuel drove the huge increase in oil consumption.
Now look what happened after 1973. There was a brief resurgence but ultimately the previous trend never returned and almost certainly never will now. By the end of the 70's the oil consumption boom had given way to a boom in anything but oil - pick up any publication relating to energy from that era and it's a given that it'll be all about "the oil problem" and focused on anything and everything that produces heat or keeps the lights on so long as it's not oil. Meanwhile sales of smaller cars were booming and those without suitable models were struggling big time.
For a more recent example, just start looking at long term charts of random ASX listed companies using whatever your normal charting software is. Look at charts going back 20+ years. Just quickly look at them, company after company, say a couple of hundred with a few seconds looking at each.
You'll find no shortage of companies that are still not even remotely close to recovering their pre-GFC highs more than a decade after the event. Indeed if your charts go back far enough then you'll be able to find stocks which still haven't recovered from the 1987 crash either.
With all those examples have in common is that a single event produced a permanent change such that the previous trend never returned.
Once countries like Japan and France, or closer to home WA, saw the danger in having their electricity supply dependent on oil shipped from the Middle East they decided they'd better change that quickly and permanently so they did.
Likewise once the GFC occurred plenty of companies either went under themselves, survived but badly bruised, or survived as such but investors are far more wary of the underlying business and its inherent risks than they were previously and have valued the stock accordingly.
I'm seeing this virus in that context. Made in China is all of a sudden much like oil-fired electricity or low doc loans. All of a sudden it looks awfully risky to be relying on it as a major component of your own business with no plan B. There's no putting that genie back in the bottle once it's out.
So I'm foreseeing something akin to the response to the 1973 oil crisis. Nothing happened in the blink of an eye but ultimately oil stopped gaining market share and the focus shifted to alternatives.
Made in China won't disappear tomorrow but if someone's building a factory, well I expect they're going to be thinking long and hard about this risk now and contemplating where it ought to be located. End result is the growth of manufacturing in China will never return to what it previously was, the trend line will be permanently broken.
Just my thoughts on it all assuming it does get worse in terms of numbers of infected people etc.
(PS: Off-topic note for those with an interest in oil itself. That chart is for crude oil only - it doesn't include natural gas liquids, natural bitumen etc hence won't add up to the same figure as some other statistics which do include these).
YES. I was thinking along a similar line but I like the way you said it @Smurf1976It would have to be rebuilt and would come with a period of disruption.
Without wanting to derail the thread to an oil one, I'll post this chart of oil production however to illustrate what I'm on about:
https://upload.wikimedia.org/wikipedia/commons/4/4a/World_Oil_Production.png
As a short explanation, from about 1958 onwards oil rapidly gained market share as fuel for industry, power generation, heating and so on primarily at the expense of coal which by the 1960's was on the way out. That plus rising use of petrol, diesel and aviation fuel drove the huge increase in oil consumption.
Now look what happened after 1973. There was a brief resurgence but ultimately the previous trend never returned and almost certainly never will now. By the end of the 70's the oil consumption boom had given way to a boom in anything but oil - pick up any publication relating to energy from that era and it's a given that it'll be all about "the oil problem" and focused on anything and everything that produces heat or keeps the lights on so long as it's not oil. Meanwhile sales of smaller cars were booming and those without suitable models were struggling big time.
For a more recent example, just start looking at long term charts of random ASX listed companies using whatever your normal charting software is. Look at charts going back 20+ years. Just quickly look at them, company after company, say a couple of hundred with a few seconds looking at each.
You'll find no shortage of companies that are still not even remotely close to recovering their pre-GFC highs more than a decade after the event. Indeed if your charts go back far enough then you'll be able to find stocks which still haven't recovered from the 1987 crash either.
With all those examples have in common is that a single event produced a permanent change such that the previous trend never returned.
Once countries like Japan and France, or closer to home WA, saw the danger in having their electricity supply dependent on oil shipped from the Middle East they decided they'd better change that quickly and permanently so they did.
Likewise once the GFC occurred plenty of companies either went under themselves, survived but badly bruised, or survived as such but investors are far more wary of the underlying business and its inherent risks than they were previously and have valued the stock accordingly.
I'm seeing this virus in that context. Made in China is all of a sudden much like oil-fired electricity or low doc loans. All of a sudden it looks awfully risky to be relying on it as a major component of your own business with no plan B. There's no putting that genie back in the bottle once it's out.
So I'm foreseeing something akin to the response to the 1973 oil crisis. Nothing happened in the blink of an eye but ultimately oil stopped gaining market share and the focus shifted to alternatives.
Made in China won't disappear tomorrow but if someone's building a factory, well I expect they're going to be thinking long and hard about this risk now and contemplating where it ought to be located. End result is the growth of manufacturing in China will never return to what it previously was, the trend line will be permanently broken.
Just my thoughts on it all assuming it does get worse in terms of numbers of infected people etc.
(PS: Off-topic note for those with an interest in oil itself. That chart is for crude oil only - it doesn't include natural gas liquids, natural bitumen etc hence won't add up to the same figure as some other statistics which do include these).
US down over 3% - not the end of the world but a significant drop in a single trading session which isn't finished yet.Sea of red everywhere on the markets
Quick question.
How would people who are quarantined for weeks on end and unable to go to work financially survive ? The realty is that most people do live from pay to pay. There was a dreadful example of a Chinese family who became homeless and left their child at an orphanage in the extended quarantine in Hubei.
Chris Martensen made this point and said governments need to be prepared to basically keep people solvent in this crisis. It is in no ones interest to see widespread instant homelessness and incapacity to buy food, pay bills.
Ahhh the left ..... @SirRumpole, they refuse to pay because they will have no cashflow leftI guess that's what sick leave is for if people have it.
If a business refuses to pay up, then yes there should be some government assistance or regulation that businesses must pay, in line with the back pay issue.
I would disagree as if it gets worse...as it seems now, people will not care about getting their amart furnitures or solar installed/ebay delivery arrivingJust my thoughts on it all assuming it does get worse in terms of numbers of infected people etc.
These are the times when I think the wad of cash, lets me sleep at night, it isn't making anything but it isn't losing either.Sea of red everywhere on the markets.
Might be better to build that wall after all
And if big enough, the wad of cash can be a nice pillowThese are the times when I think the wad of cash, lets me sleep at night, it isn't making anything but it isn't losing either.
That is as long as the Banks don't go belly up.
It looks as though it is already starting to kick in.Like we said early in this thread, those companies waiting for their furniture, T.V's, Aliexpress and ebay stuff to arrive, will be running out of lies, the two month wait will already be up and a lot of customers will be asking for their money back.
Travel agents will start and have trouble selling a trip to anywhere, I read that Israel has put a two week quarantine on people arriving from Australia, so how many people are going to risk travelling, when they could end up in a holding pen somewhere in the World.
Interesting times.
@Smurf1976 about the analogy with oil crisis, i think this is only valid if the virus stays confined to China, basically if everything get sorted next week and the damages are limited to what has been done so far.
You say
I would disagree as if it gets worse...as it seems now, people will not care about getting their amart furnitures or solar installed/ebay delivery arriving
They will care about staying alive or having an hospital bed for their wife
Actions speak louder than words.And the next cab off the rank, with supply problems.
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