Economic implications of a SARS/Coronavirus outbreak

[over9k]

@macca here's some food for thought:

Another musing:

The fed doesn't use the CPI, it uses the PCE index. That's absolutely plummeted in response to omicron. Consumer discretionary is the worst sp500 sector at the moment. Might cause some kind of policy pivot (might).

Classic case of superior goods getting pounded first when money actually gets tight. With that being said, when energy et al prices shoot up, PCE numbers might shoot up anyway on account of consumers having no choice but to pay big money for some things (like heating oil).

There's also the simple fact that a lot of the stuff like laptops, furniture, kids' toys etc that were flying off the shelves and on back order for weeks/months at the start of the pandemic have already been bought now, so there's not a great deal left for consumers to actually spend their money on if they can't go out & do things.

Forward guidance and minutes suggests they've already committed to tapering etc but that was before omicron hit the worst numbers of the pandemic we are now seeing.

Point is, a policy pivot isn't totally out of the question with this omicron variant now. It kind of depends on the drop in discretionary spending vs what will undoubtedly be a huge bump in consumer staples/core inflationary goods (like energy). I need to look into the weighting of the PCE to have a better idea of what to expect.


If anyone knows the weightings of the PCE off the top of their head then post them up because that'll save me some time finding them.

Nasdaq down another 1.8% as of this posting.

 

[over9k]

NDX, after bottoming at -2.8% in the session, closed flat:



VERY encouraging sign.

 

[SirRumpole]

Let it rip policies are destroying the economy, opinion.

Healthy humans drive the economy: we’re now witnessing one of the worst public policy failures in Australia’s history

Some political and business leaders have, from the outset of COVID-19, downplayed the economic costs of mass illness. We’re now seeing the result.

theconversation.com

 

[mullokintyre]

Let it rip policies are destroying the economy, opinion.

Healthy humans drive the economy: we’re now witnessing one of the worst public policy failures in Australia’s history

Some political and business leaders have, from the outset of COVID-19, downplayed the economic costs of mass illness. We’re now seeing the result.

theconversation.com

Classic case of putting the cart before the horse.
No matter how good your logistics are, if there are no orgs manufacturing, growing or mining stuff, the logistics are worthless.
In regional Victoria, you could live extremely well bypassing the logistics and JIT principles by going to local markets, or even, as we do, buying directly from the farm gate, or even go pick yourself seeing as how difficult it is to get ag workers.
No middle man, guaranteed fresh, and almost invariably cheaper.
We even have a bit of a bartering system - I have lots of strawberries, watermelons, and mulberries that I can swap for anything from wallnuts to garlic.
The only thing we are starved of this year, is tomatoes. Been a bad year for all of us.
Nothwithstanding that, two kms away is a massive hydroponic setup growing trussed tomatoes that has a guard dog that would lick you to death.
mick

 

[qldfrog]

Let it rip policies are destroying the economy, opinion.

Healthy humans drive the economy: we’re now witnessing one of the worst public policy failures in Australia’s history

Some political and business leaders have, from the outset of COVID-19, downplayed the economic costs of mass illness. We’re now seeing the result.

theconversation.com

Whereas the last 3y were a dream...
Just coming 3y too late IMHO

 

[frugal.rock]

After the last 2 nights, it would seem the Fed is on ice again.
I consider that "transitory" though... consumers will always consume. ?

 

[SirRumpole]

Classic case of putting the cart before the horse.
No matter how good your logistics are, if there are no orgs manufacturing, growing or mining stuff, the logistics are worthless.
In regional Victoria, you could live extremely well bypassing the logistics and JIT principles by going to local markets, or even, as we do, buying directly from the farm gate, or even go pick yourself seeing as how difficult it is to get ag workers.
No middle man, guaranteed fresh, and almost invariably cheaper.
We even have a bit of a bartering system - I have lots of strawberries, watermelons, and mulberries that I can swap for anything from wallnuts to garlic.
The only thing we are starved of this year, is tomatoes. Been a bad year for all of us.
Nothwithstanding that, two kms away is a massive hydroponic setup growing trussed tomatoes that has a guard dog that would lick you to death.
mick

Good for you.

I don't think that your solutions are available to the vast majority though.

 

[over9k]

After the last 2 nights, it would seem the Fed is on ice again.
I consider that "transitory" though... consumers will always consume. ?

 

[mullokintyre]

Let it rip policies are destroying the economy, opinion.

Healthy humans drive the economy: we’re now witnessing one of the worst public policy failures in Australia’s history

Some political and business leaders have, from the outset of COVID-19, downplayed the economic costs of mass illness. We’re now seeing the result.

theconversation.com

I find it interesting that the article when talking about the poor political response to the pandemic it says

That some political and business leaders have, from the outset of COVID-19, consistently downplayed the economic costs of mass illness, reflects a narrow, distorted economic lens. We’re now seeing the result – one of the worst public policy failures in Australia’s history.

The Omicron variant is tearing through Australia’s workforce, from health care and child care, to agriculture and manufacturing, to transportation and logistics, to emergency services.

The result is an unprecedented, and preventable, economic catastrophe. This catastrophe was visited upon us by leaders – NSW Premier Dom Perrotet and Prime Minister Scott Morrison in particular – on the grounds they were protecting the economy. Like a Mafia kingpin extorting money, this is the kind of “protection” that can kill you.

I would not argue with the above except for the fact that it has targeted two coalition leaders, and left the labour leaders untouched.
Victorian premier Andrews, Qld Premier Palaszczuk, and the lockout king Wa Premier MacGowan somehow were not guilty in any of the above.
Partisan Politics, nothing more, nothing less.
Mick

 

[over9k]

I find it interesting that the article when talking about the poor political response to the pandemic it says

I would not argue with the above except for the fact that it has targeted two coalition leaders, and left the labour leaders untouched.
Victorian premier Andrews, Qld Premier Palaszczuk, and the lockout king Wa Premier MacGowan somehow were not guilty in any of the above.
Partisan Politics, nothing more, nothing less.
Mick

Remember me saying how they were going to get to a certain point and just give up?

This is it.

 

[SirRumpole]

I find it interesting that the article when talking about the poor political response to the pandemic it says

I would not argue with the above except for the fact that it has targeted two coalition leaders, and left the labour leaders untouched.
Victorian premier Andrews, Qld Premier Palaszczuk, and the lockout king Wa Premier MacGowan somehow were not guilty in any of the above.
Partisan Politics, nothing more, nothing less.
Mick

The National Cabinet agreed to the measures so they are all to blame in the end.

Whether the Feds put financial pressure on the States to tow the line is another issue.

No better example of Partisan politics than Friedburger kicking Victoria in Parliament while letting Gladys off the hook.

 

[mullokintyre]

The National Cabinet agreed to the measures so they are all to blame in the end.

Whether the Feds put financial pressure on the States to tow the line is another issue.

No better example of Partisan politics than Friedburger kicking Victoria in Parliament while letting Gladys off the hook.

Quite correct Sir Rumpole, but they are after all merely politicians, so partisan politics is standard issue.
Its when supposedly independent analysis descends into partisan politics is where things get a little questionable.
Mick

 

[over9k]

In today's issue of "only in the pandemic", inflation hits 7%, is actually lower than expected and causes a rally in stocks, especially tech.

10 year yield drops nearly 5 basis points in 20 minutes on the news.

 

[wayneL]

In today's issue of "only in the pandemic", inflation hits 7%, is actually lower than expected and causes a rally in stocks, especially tech.

10 year yield drops nearly 5 basis points in 20 minutes on the news.

It's been the same for 20 years, bad news is good news.

 

[divs4ever]

It's been the same for 20 years, bad news is good news.

well it works that way for contrarians

 

[Smurf1976]

Victorian premier Andrews, Qld Premier Palaszczuk, and the lockout king Wa Premier MacGowan somehow were not guilty in any of the above.

I don't follow WA politics but to my understanding the government there could hardly be accused of supporting a "let it rip" approach and is at the opposite end of the spectrum? If so then they're not guilty of doing so.

That said, most news and commentary has some underlying bias, the key is to identify what that bias is and view the content in that context.

Central banks do it routinely and nobody takes their comments literally I hope. They're to be interpreted and usually amount to a real situation with incomplete details provided.

Yes there is inflation.

Yes it is transitory.

Note that they haven't defined "transitory" and have left that open to any interpretation anyone chooses to apply. It could mean anything from days to decades.

That's the usual approach. The thing is real but some of the details are omitted. Politics, media, central banks etc all do it. One side did something bad - just don't mention that the other side did the same thing. No actual lie has been told, just be aware of the missing information.

 

[over9k]

Oh, and remember me talking about a permanent shift to working from home? Maybe only doing one day a week in the office, living hours and hours away if you could agree to such an arrangement with your employer?



People are so keen to get out of the cities/not compete in the rat race that they're taking pay cuts (counteracted with commuting budgets) to do it.

I'm not an accountant but this would likely come under fringe benefits here somehow. Nonetheless, I wouldn't hesitate to live in a completely different state/city and once a week take the 6am redeye flight to sydney or whatever if I could have such an arrangement too.

Combine this with the massive wave of boomers selling up in the cities and retiring to the country and it's easy to see why rural house prices have had the fastest growth (by miles) since the pandemic began.

I'd like to say this would give the coalition the impetus they need to just build the full fibre to premises NBN that krudd promised forever ago but I'm not holding my breath.


This is a 200 year long urbanisation trend now in the process of not just stopping but actually reversing. Cool huh?

 

[over9k]

Energy & stuff.

 

[divs4ever]

Oh, and remember me talking about a permanent shift to working from home? Maybe only doing one day a week in the office, living hours and hours away if you could agree to such an arrangement with your employer?

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People are so keen to get out of the cities/not compete in the rat race that they're taking pay cuts (counteracted with commuting budgets) to do it.

I'm not an accountant but this would likely come under fringe benefits here somehow. Nonetheless, I wouldn't hesitate to live in a completely different state/city and once a week take the 6am redeye flight to sydney or whatever if I could have such an arrangement too.

Combine this with the massive wave of boomers selling up in the cities and retiring to the country and it's easy to see why rural house prices have had the fastest growth (by miles) since the pandemic began.

I'd like to say this would give the coalition the impetus they need to just build the full fibre to premises NBN that krudd promised forever ago but I'm not holding my breath.


This is a 200 year long urbanisation trend now in the process of not just stopping but actually reversing. Cool huh?

indeed an unexpected twist ( in 2019 and earlier ) in infrastructure needs ( lighter traffic jams , less need for office space , but upgraded communication needs )

interesting that you mentioned accountants ( and i assume tax agents ) having worked for a guy that had a 'home office ' i assume the needs for accountants and tax agents might rise a little as well as there MIGHT be a trend towards low level office workers becoming sub-contractors

one share that caught my eye today was GNP with an extended contract to REMOVE TLS copper cables

DYOR

 

[over9k]

indeed an unexpected twist ( in 2019 and earlier ) in infrastructure needs ( lighter traffic jams , less need for office space , but upgraded communication needs )

interesting that you mentioned accountants ( and i assume tax agents ) having worked for a guy that had a 'home office ' i assume the needs for accountants and tax agents might rise a little as well as there MIGHT be a trend towards low level office workers becoming sub-contractors

one share that caught my eye today was GNP with an extended contract to REMOVE TLS copper cables

DYOR

My mrs is an accountant. She's been doing 70-80 hour weeks since the pandemic began.

(She's completely burnt out but different discussion).