Economic implications of a SARS/Coronavirus outbreak

[wayneL]

Still some folks with integrity.

 

[over9k]

Alright so we're exactly one month from the absolute bottom of the last dip and check things out since:



As we can see, megacaps/tech and microcaps, so the barbell spread, was once again the winning play if you weren't running the swing plays (of which there were MANY).

Hopefully this should surprise absolutely nobody because there hasn't been any kind of fundamental shift in how things have been operating - in fact, if anything, the data tells us that the problems like shipping choke points or the microchip shortage have actually gotten more pronounced, not less.

It's still full steam ahead from here

 

[over9k]

Crypto is still your number 1 swing play with tech:

 

[over9k]

Ok so here's one for the new guys/econ students out there:

There's been a lot of talk about how airlines, cruise ships and so on have a tremendous amount of pent up demand and are going to see a huge rebound post-pandemic. This is true.

What there isn't a lot of talk about is the inverse - what products/services are going to fall off a cliff?

One of them is peloton, the exercise bike manufacturer. It just missed estimates hugely and plummeted over 35% in a single day:




Think about this logically - a lot of these things were only bought because people couldn't go to the gym or for a real road cycle or what have you. We know this because sales pre-pandemic were nothing like once the pandemic started. People have only bought these things to ride indoors because they've had no other choice. Lift the lockdowns, and they can actually engage in their preference again.

In short, the pandemic has had a huge spike in substitute goods.

Ergo, whilst things like airlines or cruise ships shoot up once lockdowns are lifted, all the substitute goods like peloton fall off a cliff. We can see this in the sales numbers that have sent the stock plummeting.

I've mentioned quite a bit about how things like furniture will see a big drop on account of a couch being a very infrequent purchase, but couches aren't really a substitute good. Peloton IS.



So the challenge now is to try & think "What other substitute goods have shot up in sales through the pandemic but are going to plummet now on account of them being substitutes?".

For bonus points, try to think of something tangible (i.e a physical good) like peloton bikes that people simply will not use again once lockdowns are over. Why? Because if people are never going to use them again, they will sell them, so we are very likely to see a HUGE flood of second hand peloton bikes hit the market now, only exacerbating peloton's problem further - you'll have both a huge drop in demand for new ones on account of second hand models being so cheap (so we're talking a substitute of a substitute now) and whatever hugely reduced number of new models sold will have to be sold at a huge discount (so lower margin) in order to convince prospective buyers to actually buy a new one vs getting a second hand model dirt cheap.

This has already happened over here in australia with gym products (squat racks, barbells, weights and so on) where the massive amounts of gear bought to set up home/garage gyms flooded the market the second lockdowns were lifted, but there are undoubtedly going to be other examples.

If you can think of another one, then it's probably an excellent stock to bet against, especially considering the fact that nobody is talking about this

 

[Smurf1976]

If you can think of another one

Whilst just about everyone needs some sort of online device for personal use, there'd be a lot of people who've bought IT equipment or "proper" office furniture that they'll have zero ongoing need for if they don't continue doing paid work at home. That won't be everyone but there'd be some at least I'd expect.

At the other end of the spectrum is entertainment. They might not sell the hardware but if someone was going to buy a new TV or subscribe to whatever online streaming service then they'll have done it during the lockdowns. So I'm thinking reduced sales going forward and at least some subscriptions etc get cancelled now that people are back outside in the real world.

Funny you mention exercise bikes though. A couple of weeks ago was the first time in my life I've ever thought of buying one. No lockdowns but I'm not at all keen on riding real bikes on roads these days, far too dangerous for my liking, so I was thinking it might be good exercise.

 

[over9k]

Whilst just about everyone needs some sort of online device for personal use, there'd be a lot of people who've bought IT equipment or "proper" office furniture that they'll have zero ongoing need for if they don't continue doing paid work at home. That won't be everyone but there'd be some at least I'd expect.

At the other end of the spectrum is entertainment. They might not sell the hardware but if someone was going to buy a new TV or subscribe to whatever online streaming service then they'll have done it during the lockdowns. So I'm thinking reduced sales going forward and at least some subscriptions etc get cancelled now that people are back outside in the real world.

Funny you mention exercise bikes though. A couple of weeks ago was the first time in my life I've ever thought of buying one. No lockdowns but I'm not at all keen on riding real bikes on roads these days, far too dangerous for my liking, so I was thinking it might be good exercise.

Quite a few people have managed to kit out home gyms for absolute peanuts buying all the gear that went on firesale once the lockdowns were lifted, so you might be able to score yourself a bargain 2nd hand

 

[sptrawler]

Quite a few people have managed to kit out home gyms for absolute peanuts buying all the gear that went on firesale once the lockdowns were lifted, so you might be able to score yourself a bargain 2nd hand

Spot on 9k, exercise bikes and treadmills usually end up on gumtree, as a clothes dryer, or on the verge for the pickup.

Central Australia tourism is feeling the pinch, I don't think it is due to the pandemic though.
I think since people can't climb it, it just becomes a hell of a long way to go, to look at a rock.

Tour operator forced to scale back business to Uluru

An outback travel company is halting their tours to Uluru over exceptionally low tourist numbers, staff shortages and the global pandemic.

www.abc.net.au

 

[Smurf1976]

Spot on 9k, exercise bikes and treadmills usually end up on gumtree, as a clothes dryer, or on the verge for the pickup.

Me being me, I'll probably end up connecting a generator to it.....

Central Australia tourism is feeling the pinch, I don't think it is due to the pandemic though.
I think since people can't climb it, it just becomes a hell of a long way to go, to look at a rock.

In the specific case of Uluru they didn't want people going there and closed the walk up it so there was going to be a huge drop in visitors even without the pandemic. It was by far the most well known attraction in the entire region.

 

[qldfrog]

Me being me, I'll probably end up connecting a generator to it.....




In the specific case of Uluru they didn't want people going there and closed the walk up it so there was going to be a huge drop in visitors even without the pandemic. It was by far the most well known attraction in the entire region.

I would rephrase:
"In the specific case of Uluru they didn't want people going there."
And they succeeded...

 

[over9k]

In case I hadn't already explained why peloton was not a "buy the dip" moment, it's down another 10% today:



I also showed in a previous post how over the last month it has been big tech that's been the star of the show, sector wise, but check this out:



That's 3x what even the triple levered ETF has run.

 

[over9k]

Russia to the rescue with gas, so gas is back in backwardation:



So companies like hallador have plummeted:



But they'd already been on a pretty serious melt anyways:



Might be a bit of an overcorrection but you'd have to be brave to buy now. It's a buy & flip, not a hold.

 

[over9k]

CPI numbers in. 6.2% year on year. Massacre expected in response.

More swing plays will abound!

 

[sptrawler]

Due to lockdowns and people learning to live within their means, a new norm is developing.

Worker drought: Job ads soar but no one’s applying

The power pendulum has clearly swung post-pandemic from employers towards employees - a recipe for wage inflation.

www.smh.com.au

 

[Smurf1976]

CPI numbers in. 6.2% year on year

One thing I've noticed isn't so much about price increases on a particular item at full retail price but it's more about the disappearance of cheaper options. Cheaper brands that have quietly disappeared, specials that aren't as deep a discount on the full price, things like that.

There's been more than one case lately where I've looked at a product and in short the cheapest option is to buy the big brand product in a physical shop.

For example I very recently bought some shoes. I knew exactly what I wanted and looked online. Cheapest option? Well I bought them from a physical store which was the exact same one I'd have bought them from if I hadn't looked around. The nearest shop was the cheapest. Similar story with quite a few things I've checked lately. The cheapest option ended up being the brand name product bought locally.

For those who buy the cheapest, true inflation's a fair bit higher than the headline figure simply due to that drying up of cheaper options.

One exception though is paper. Toilet paper that is. It's being sold at a fire sale price at a local supermarket. I guess everyone's either bought a decade's supply or they can't afford food so don't need it anyway.

 

[over9k]

Altcoins like ether, litecoin etc are beating bitcoin, but bitcoin's still on an absolutely screaming run.

Crypto's still your swing play with tech

 

[over9k]

One thing I've noticed isn't so much about price increases on a particular item at full retail price but it's more about the disappearance of cheaper options. Cheaper brands that have quietly disappeared, specials that aren't as deep a discount on the full price, things like that.

There's been more than one case lately where I've looked at a product and in short the cheapest option is to buy the big brand product in a physical shop.

For example I very recently bought some shoes. I knew exactly what I wanted and looked online. Cheapest option? Well I bought them from a physical store which was the exact same one I'd have bought them from if I hadn't looked around. The nearest shop was the cheapest. Similar story with quite a few things I've checked lately. The cheapest option ended up being the brand name product bought locally.

For those who buy the cheapest, true inflation's a fair bit higher than the headline figure simply due to that drying up of cheaper options.

One exception though is paper. Toilet paper that is. It's being sold at a fire sale price at a local supermarket. I guess everyone's either bought a decade's supply or they can't afford food so don't need it anyway.

If the products have disappeared completely it might be more of a supply chain issue than inflation?

Especially if they're the cheap goods sold on tiny margin. Spike shipping etc prices and the margin on said goods gets wiped out completely. Combine this with the shipping choke point problems and your volume goes as well, making your product completely unprofitable.

 

[over9k]

One trade all week:



Inflation fears not gone. More news at 11. (not actually).

 

[noirua]

A look inside Wuhan quarantine ward for seriously ill

Get Sharri Markson’s book ‘What Really Happened in Wuhan’ here: https://linktr.ee/WhatReallyHappenedI... This Sky News Australia special investigation into the origins of COVID-19 reveals what really happened in Wuhan in the early days of the pandemic.

Award-winning journalist Sharri Markson spent more than a year investigating the potential leak of the virus from a top-secret laboratory in Wuhan.
Ms Markson uncovered evidence of a widespread cover-up and unpacks the new theory that “patient zero” worked in the Wuhan lab.
Sky News Australia anchor and Investigations Writer at The Australian, Sharri has been at the forefront of investigating the origins of COVID-19 since early in 2020 when the virus spread globally.
Since that time, the precise genesis of COVID-19 has been hotly contested, with scientists, government officials, the World Health Organization, and the Chinese authorities releasing conflicting reports.
In a coup for Australian television, Sharri secures the first sit-down interview for an Australian broadcast media outlet with Donald Trump since he was elected president in 2016.
Sharri also speaks with a range of Chinese whistle-blowers, scientists, and high-ranking intelligence officials to bring us closer to discovering the truth of what happened in Wuhan.
These include John Ratcliffe, the U.S. Director of National Intelligence from 2020 to 2021, and former head of British intelligence service, Mi6, Sir Richard Dearlove.



SHOW LESS

 

[over9k]

Just in case anyone's wondering why I'm such a bull on crypto long term.

 

[rederob]

Get Sharri Markson’s book ‘What Really Happened in Wuhan’ here: https://linktr.ee/WhatReallyHappenedI... This Sky News Australia special investigation into the origins of COVID-19 reveals what really happened in Wuhan in the early days of the pandemic.

Award-winning journalist Sharri Markson spent more than a year investigating the potential leak of the virus from a top-secret laboratory in Wuhan.
Ms Markson uncovered evidence of a widespread cover-up and unpacks the new theory that “patient zero” worked in the Wuhan lab.
Sky News Australia anchor and Investigations Writer at The Australian, Sharri has been at the forefront of investigating the origins of COVID-19 since early in 2020 when the virus spread globally.
Since that time, the precise genesis of COVID-19 has been hotly contested, with scientists, government officials, the World Health Organization, and the Chinese authorities releasing conflicting reports.
In a coup for Australian television, Sharri secures the first sit-down interview for an Australian broadcast media outlet with Donald Trump since he was elected president in 2016.
Sharri also speaks with a range of Chinese whistle-blowers, scientists, and high-ranking intelligence officials to bring us closer to discovering the truth of what happened in Wuhan.
These include John Ratcliffe, the U.S. Director of National Intelligence from 2020 to 2021, and former head of British intelligence service, Mi6, Sir Richard Dearlove.



SHOW LESS

I think it's sad that almost 2 years on someone as intellectually handicapped as Markson can make money out of a con.
Or is that a conspiracy.
Such are the economic implications of the outbreak.

The politicisation of covid continues to cost America thousands of lives every week.