Economic implications of a SARS/Coronavirus outbreak

[over9k]

Where do ya reckon rates have to go before everything blows the @#£& up?

....and where do y'all thing the Aussie peso is heading? Of particular interest to me at the moment, especially against GBP.

Most pundits are pretty bearish and that plays in my favour of true, but most pundits are always fracking wrong.

GBP is done for but that's not actually a great deal to do with the virus (though the virus isn't exactly helping) but because of brexit.

AU's hard to say as there's far more variables, so much of this country depends on trade with china, which whilst going to hell in a handbasket, the powers that be have been manoeuvring away from for a while now. Twiggy forest has been moving FMG into renewable energy etc for a reason

AU to stagnate, GBP to drop IMO.


90% of my assets are denominated in USD and have been for quite some time now. I'm still as bullish as ever on america.

 

[over9k]

Still going:

 

[sptrawler]

Everywhere.

The extent of the upwards move in markets without a decent correction combined with so much automated trading and public participation is such that in my opinion the correction when it arrives will be hard and fast and with basically everything caught up in it.

Timing I won't pretend to know but when it arrives it'll be a panic "sell everything" moment is my expectation with many good assets dumped along with the froth. This will be a buying opportunity for those prepared.

Just my crystal ball gazing. (Be warned it's a cheap one and is actually acrylic not crystal.... )

I agree with you regarding a correction, however I'm a great believer in trends returning to the long term average, if you take the all odds long term graph we aren't that fat above the long term average.
When you add to that the underlying growth in the underlying economy, from increased mining capacity etc over the last 10 years, I really don't see Australia as being massively overvalued.
The U.S on the other hand, well it is looking like a house of cards ATM being propped up by its ability to write its own cheques IMO.
So if they implode there is nothing surer than we will follow, which as you say will present a buying opportunity, if you have funds available.
Just my opinion.

 

[sptrawler]

It will be interesting to see if workforce participation rates in the U.S, return to the pre pandemic levels, the Trump administration had halted and reversed the long slow slide prior to the pandemic.
It would be interesting to see if it becomes a worldwide trend post pandemic, where people are not returning to the workforce, or if it is just a hangover period.

 

[sptrawler]

I agree with you regarding a correction, however I'm a great believer in trends returning to the long term average, if you take the all odds long term graph we aren't that fat above the long term average.
When you add to that the underlying growth in the underlying economy, from increased mining capacity etc over the last 10 years, I really don't see Australia as being massively overvalued.
The U.S on the other hand, well it is looking like a house of cards ATM being propped up by its ability to write its own cheques IMO.
So if they implode there is nothing surer than we will follow, which as you say will present a buying opportunity, if you have funds available.
Just my opinion.

I thought it best to include a chart with the above post, so here it is, now I'm on a pc.

 

[qldfrog]

I thought it best to include a chart with the above post, so here it is, now I'm on a pc.


View attachment 135437

but we did not get the trillions of QE that the US got so that explains a lot.
Not saying that PE are justified in the US but the US got that money, we only got breadcrumbs and the Chinese reserve bank is actually deflating the bubble and we pay the price via reduced exports..not even mentioning political pressure or the complete shamble and costs of Covid elimination wet dreams we had to endure...when wall street falls 35% so will we maybe even worse; what it will mean is our bargain will be more valuable

 

[Smurf1976]

I really don't see Australia as being massively overvalued.
The U.S on the other hand,

I should have clarified that my comments are in relation to markets generally. That is, they're far more about the US than they are about Australia given the relative dominance of the US.

The post March-2020 run in the US' major indices just seems incredibly extended to me. The biggest alarm bell of the lot is seeing those ads from trading platforms marketed at novices which say something to the effect of "in a period of major volatility, if it gets really bad, you could even go as far as reducing the amount of leverage used". Um..... So lots of inexperienced traders and they're trading with leverage as the "normal" thing to do and they've only ever traded this bull run and nothing else? What could possibly go wrong.....

Then add in the more experienced traders who grasp that stocks can indeed go down and who have stop losses set either as such or they've got a firm line in the sand for a manually activated sell.

Then add in algorithmic trading.

Hence my thought that whenever a correction comes, it'll be hard and fast as humans rush for the exits and machines do likewise.

 

[divs4ever]

Then add in the more experienced traders who grasp that stocks can indeed go down and who have stop losses set either as such or they've got a firm line in the sand for a manually activated sell.

Then add in algorithmic trading.

Hence my thought that whenever a correction comes, it'll be hard and fast as humans rush for the exits and machines do likewise.

​

you seem to have great faith in the trading infrastructure at times like that , just in the past week i have seen signs Commsec ( or the ASX ) were not coping well at high volume moments ( in the relative calm of post New Year trading , for goodness sake NOT a $20 billion turnover day )

some other members were having issues with Westpac

now at one stage we ( Australia ) had a 'circuit breaker ' where trading is paused at certain drop levels , now maybe that is still in place , and maybe it isn't

i think if the rush to the exit is big enough the system will snarl , and stop-losses will not work as well as they should

add in panicked novices trying for phone support trying the understand ASX/CHESS glitches ( nave been guilty of that at least twice ) ( at least one was a stock sold but NOT credited , while a different stock was bought at a non-confirmed price ( have i enough funds in the right place , and if not can i get those funds there in a timely manner .. not a problem at Bell you have to have the funds there FIRST , but i digress )

of course i would love to just blame ASX/CHESS/Comsec but there is every chance the internet will be VERY busy as well trading platforms, news feeds , etc etc etc

those who were trading through March 2020 had a realistic taste of what MIGHT go wrong

now ME sitting on some cash already ( like i was in February 2020 ) did NOT make me immune from complications , it did give me less to worry about i could stop buying stocks and cover the bills for a year or more ,( even without dividends )

i am half expecting a BIG rush to the door to be nasty and messy ( say the retail traders get stalled while the whales get to untangle their web of liabilities , ala the US GameStop saga )

 

[Smurf1976]

you seem to have great faith in the trading infrastructure at times like that

Whilst I've no doubt that the infrastructure struggles to cope in some situations, in practice history shows it can process enough transactions to cause a price drop.

Eg March 2020. Despite infrastructure constraints, enough transactions went through in practice to crash the price.

 

[sptrawler]

@Smurf1976 I think you nailed it with the inexperienced traders, the house prices rises, the $230billion in extra savings over the pandemic period, the V shaped recovery, what can go wrong?
IMO what can keep it going right, China a mess the EU and UK a mess, the U.S a mess and the threat of the printing presses stopping.
It all sounds like the recession we have to have, I certainly hope not, but I cant see what is going to prop up these markets when the printers shut down.
Which I think is closely linked to employment numbers, there is no better time to put the brakes on, than when people are able to pay their bills.

 

[over9k]

The U.S running is actually precisely because of the absolute state of the rest of the world in comparison.

Any port in a storm

 

[divs4ever]

Whilst I've no doubt that the infrastructure struggles to cope in some situations, in practice history shows it can process enough transactions to cause a price drop.

Eg March 2020. Despite infrastructure constraints, enough transactions went through in practice to crash the price.

i was hoping ( many international ) governments would have seen infrastructure investment as their way out of the entanglement they were in , and led to economy out of trouble , you had reduced road and air traffic , ports seem to be messed up am not sure if improvement at good value could be achieved there

am totally stunned a Sydney-Newcastle high-speed rail project is higher priority than a Sydney-Canberra one . i still think Canberra should be the primary hub of it , but obviously others still think Australia revolves around Sydney ( Newcastle and Woolongong )

Canberra is nicely placed to service Sydney , Melbourne and Adelaide , but then again what is the pollies favorite perk ( access to the Qantas executive lounge )

 

[over9k]

i was hoping ( many international ) governments would have seen infrastructure investment as their way out of the entanglement they were in , and led to economy out of trouble , you had reduced road and air traffic , ports seem to be messed up am not sure if improvement at good value could be achieved there

am totally stunned a Sydney-Newcastle high-speed rail project is higher priority than a Sydney-Canberra one . i still think Canberra should be the primary hub of it , but obviously others still think Australia revolves around Sydney ( Newcastle and Woolongong )

Canberra is nicely placed to service Sydney , Melbourne and Adelaide , but then again what is the pollies favorite perk ( access to the Qantas executive lounge )

Bingo. Nobody lives in canberra because they want to.

 

[divs4ever]

@Smurf1976 I think you nailed it with the inexperienced traders, the house prices rises, the $230billion in extra savings over the pandemic period, the V shaped recovery, what can go wrong?
IMO what can keep it going right, China a mess the EU and UK a mess, the U.S a mess and the threat of the printing presses stopping.
It all sounds like the recession we have to have, I certainly hope not, but I cant see what is going to prop up these markets when the printers shut down.
Which I think is closely linked to employment numbers, there is no better time to put the brakes on, than when people are able to pay their bills.

i see it as more of a K-shaped recovery , and am wondering if some of those 'savings ' figures haven't been 'recalculated ' ( just like the GDP figures, and 'inflation' numbers )

now maybe it is where i reside currently , but it looks more like were are currently in a recession ( unofficially of course ) , desperately trying to avoid an official depression ,

China can fix it's problems , Xi is quite capable of being as brutal as it takes ( Xi's father was one of Mao's generals ) , now the others THAT is the question , i am still trying to get a handle on Modi , i see India as another key player ( and we should probably glance at Nigeria from time to time )

 

[divs4ever]

Bingo. Nobody lives in canberra because they want to.

well my two stops there ( on the way to somewhere else ) didn't impress me .. but both were after dark maybe the glitter of fancy watches lights it up

 

[noirua]

England is playing a gamble on the omicron variant. However:
There were 313 new deaths within 28 days of a positive test for coronavirus reported on 8 January 2022, and 1,271 people in the last 7 days. This shows an increase of 352 compared to the previous 7 days.
A confirmed case is someone who has tested positive for coronavirus. There were 146,390 new people with a confirmed positive test result for coronavirus on 8 January 2022, and 1,227,288 people in the last 7 days. This shows an increase of 117,724 compared to the previous 7 days.
Some people with coronavirus have to go into hospital. There were 2,434 new people people with coronavirus who were admitted into hospital on 3 January 2022, and 15,812 people in the last 7 days. This shows an increase of 5,783 compared to the previous 7 days.

So will England be right as it takes no additional measures gambling on the omicron variant causing only 30% of the hospitalisations compared to the third wave?

This will surely be a test as economies feel the strain as they increase the money supply and bank on interest rates remaining low.

Next post will show why disaster to some economies is yet to happen!

 

[noirua]

THE NEW FRENCH VARIANT named 'IHU': https://www.marca.com/en/lifestyle/2022/01/05/61d5a15fca4741185c8b457d.html

French researchers have detected a new COVID-19 variant, named IHU, which reportedly contains 46 mutations - more than any other coronavirus strain discovered since the virus outbreak.

The danger for economies is that each variant may combine in an Omicron Delta Super Variant ODSV. The reason China and Australia are doing the right thing.

The new variant is believed to be more contagious than Omicron, which has been the most infectious COVID-19 variant ever detected.

 

[noirua]

 

[qldfrog]

THE NEW FRENCH VARIANT named 'IHU': https://www.marca.com/en/lifestyle/2022/01/05/61d5a15fca4741185c8b457d.html

French researchers have detected a new COVID-19 variant, named IHU, which reportedly contains 46 mutations - more than any other coronavirus strain discovered since the virus outbreak.

The danger for economies is that each variant may combine in an Omicron Delta Super Variant ODSV. The reason China and Australia are doing the right thing.

The new variant is believed to be more contagious than Omicron, which has been the most infectious COVID-19 variant ever detected.

If you get omicron: are you ptotected from that new variant or other near future variants?
that is the KEY question and that will transform your sentence:
"The reason China and Australia are doing the right thing" into
"The reason China and Australia are doing the right thing ..or the worst possible deadly mistake "
It is high time for bringing real science..but it will not happen..
For France, there are elections in May and campaign is in full mode so anything coming from there till June has to be taken with a serious amount of suspicion

 

[Belli]

French researchers have detected a new COVID-19 variant, named IHU, which reportedly contains 46 mutations - more than any other coronavirus strain discovered since the virus outbreak.

I understand WHO have presently classified it as a "variant of interest" rather than a "variant of concern."

Some amusing comments to this pre-print.

Emergence in Southern France of a new SARS-CoV-2 variant of probably Cameroonian origin harbouring both substitutions N501Y and E484K in the spike protein

SARS-CoV-2 variants have become a major virological, epidemiological and clinical concern, particularly with regard to the risk of escape from vaccine-induced immunity. Here we describe the emergence of a new variant. For twelve SARS-CoV-positive patients living in the same geographical area of...

www.medrxiv.org