Economic implications of a SARS/Coronavirus outbreak

[Dona Ferentes]

US are Limit Down (again)



Thx joules

 

[MrChow]

I feel at these levels around -25% alot of the downside is already priced in.

Consider:
The market is -25% after 41 people have died from Coronavirus in the U.S and Australia
To get another -25% is going to require 1000s to die from Coronavirus in the U.S and Australia

So you'd be essentially taking an even money bet from here -50% or not? With the 2nd half task much harder than the sunk cost of the 1st half.

 

[Tyler Durden]

I feel at these levels around -25% alot of the downside is already priced in.

Consider:
The market is -25% after 41 people have died from Coronavirus in the U.S and Australia
To get another -25% is going to require 1000s to die from Coronavirus in the U.S and Australia

So you'd be essentially taking an even money bet from here -50% or not? With the 2nd half task much harder than the sunk cost of the 1st half.

It's not solely about deaths though, it's more about the disruption that this virus causes, eg. travel bans, store closures/limitations, self quarantines etc.

 

[Tyler Durden]

Seems like market across the board is being slaughtered, but what type of businesses would flourish in these situations?

 

[Smurf1976]

I'll stick my head on the chopping block and ponder the unthinkable.

Could Boeing go broke?

My basic thinking as a few dot points:

1. With the economy tanking in pretty much every country and travel and airlines being hit harder than most, the world now has significantly more aircraft than it needs. Quite a few planes are sitting on the ground going nowhere.

2. Travel demand will likely bounce back quite slowly given the broader economic impacts of the crisis, that is consumers won't be in a rush to spend on travel since they've lost money etc, so it is likely to be some time before there's an actual need for new aircraft which can't be met by simply returning parked planes to service.

3. Airlines are being particularly hard hit and will be looking for every possible opportunity to cut costs. Fleet renewal becomes secondary to survival.

4. At least some airlines with existing orders will likely default in practice indeed the airlines themselves could well go broke.

5. Boeing already has a major problem with the 737 MAX planes.

6. Boeing share price is now down 63% from its peak.

It's a bit far fetched I suppose but major market declines and crises do usually claim someone big and this company did come to mind at the global level.

At the local level, well no coincidence that the one that comes to mind is Virgin. It's shares are worth just 6 cents now, down from a high over $2 and down 50% in the past fortnight.

Am I being too radical in this thinking? Too bearish?

 

[Smurf1976]

Being reported now that the Grand Prix will be cancelled.

We seem to have reached the point of major disruption now. Can't fly from Europe to the US, everything from car races to arts festivals being cancelled, etc. It's starting to meaningfully shut down normal activity.

If it keeps up at this rate then by next weekend there won't be much left running.

Oh, and the Dow's down over 2000 points.

 

[ducati916]

I'll stick my head on the chopping block and ponder the unthinkable.

Could Boeing go broke?

My basic thinking as a few dot points:

1. With the economy tanking in pretty much every country and travel and airlines being hit harder than most, the world now has significantly more aircraft than it needs. Quite a few planes are sitting on the ground going nowhere.

2. Travel demand will likely bounce back quite slowly given the broader economic impacts of the crisis, that is consumers won't be in a rush to spend on travel since they've lost money etc, so it is likely to be some time before there's an actual need for new aircraft which can't be met by simply returning parked planes to service.

3. Airlines are being particularly hard hit and will be looking for every possible opportunity to cut costs. Fleet renewal becomes secondary to survival.

4. At least some airlines with existing orders will likely default in practice indeed the airlines themselves could well go broke.

5. Boeing already has a major problem with the 737 MAX planes.

6. Boeing share price is now down 63% from its peak.

It's a bit far fetched I suppose but major market declines and crises do usually claim someone big and this company did come to mind at the global level.

At the local level, well no coincidence that the one that comes to mind is Virgin. It's shares are worth just 6 cents now, down from a high over $2 and down 50% in the past fortnight.

Am I being too radical in this thinking? Too bearish?

Boeing's commercial division issues are significant. Re. bankruptcy, they could be saved by their military division which is still profitable.

jog on
duc

 

[tinhat]

What's wrong with sticking a pair of shoes on a school kid as an economic stimulus? Who cares about metal birds? They are not grey butcher birds, if they were, then I would be concerned. Shoes for school kids.

 

[Humid]

Being reported now that the Grand Prix will be cancelled.

We seem to have reached the point of major disruption now. Can't fly from Europe to the US, everything from car races to arts festivals being cancelled, etc. It's starting to meaningfully shut down normal activity.

If it keeps up at this rate then by next weekend there won't be much left running.

Oh, and the Dow's down over 2000 points.

Hopefully they shut the market

 

[Humid]

“The economic impacts of coronavirus will be made worse by the casualisation of the workforce and the decades-long freeze on Newstart and other welfare payments.“

 

[basilio]

It seems everything is unwinding at a rapid rate around the world.
A few thoughts

1) If/when the virus gets into residential care homes it will be a disaster all around the block. It is clear now that hospitals will be unable and unwilling to aggressively treat older patients with severe symptoms. In fact it seems unclear what will happen to these people. But I can see the mortality in these homes rising rapidly

2) Almost all the homes are for profit institutions. I would be concerned about their stability if/when many people die rooms are left empty staff fall away as well. I would be particularly concerned about the status and security of the bonds they hold from clients.

3) I will be reviewing my affairs and financial arrangements ASAP. If this all goes pear shaped people in their 60's and 70's will face the highest risks and IMV the pressure on hospitals will result in some very serious triaging of resources. Making sure everything is well ordered "just in case" while I can at least ensures it can happen with a minimum of fuss .

4) I don't have confidence in the legal system to take care of the dead clients interest ahead of their own. If there is a big spike in deaths amongst older people bottlenecks in admin and self interest could make things very difficult for intended will recipients. Dragged out admin costs and related party transactions will soar.

 

[banco]

Hopefully they shut the market

How does that help though? If you are insolvent the fact that your shares aren't trading isn't going to change that.

As for boeing if any manufacturer is too big to fail it's boeing.

 

[Knobby22]

Is anyone looking at or seen an article as to whether there will be money supply liquidity problems? I saw the Fed were printing money yeaterday? You know GFC type issues?

 

[Dona Ferentes]

All of this is a Minsky Moment par excellence.

In fact it is likely to redefine the concept, which refers to the onset of a market collapse brought on by the reckless speculative activity that defines an unsustainable bullish period. Minsky Moment is named after economist Hyman Minsky and defines the point in time where the sudden decline in market sentiment inevitably leads to a market crash.

And Covid-19 is the grain of sand dropped onto the heap that rendered the system unstable. And down she came

 

[Humid]

How does that help though? If you are insolvent the fact that your shares aren't trading isn't going to change that.

As for boeing if any manufacturer is too big to fail it's boeing.

I'm not insolvent

 

[basilio]

And Covid-19 is the grain of sand dropped onto the heap that rendered the system unstable. And down she came

Grain of sand ?? Che ? Bloody big boulder I would have thought !

 

[basilio]

This piece of news could cause some consternation.

There is heightened concern at the White House after a picture emerged of a top Brazilian government aide, who has tested positive for coronavirus, standing right next to Donald Trump at Mar-a-Lago last weekend.

Mar-a-Lago possibly infected with Corona Virus ? Donald Trump having close contact with someone who has tested positive ?

https://www.theguardian.com/world/2...photo-brazilian-aide-bolsonaro-contact-latest

 

[MrChow]

XAO -31.9%

Imagine if this doesn't peak until Europe / U.S Winter 9 months away.

 

[basilio]

If you can't see them do they exist ?

Anger grows at Trump administration's coronavirus testing failures
Donald Trump claimed ‘We have tested heavily’ but in fact just eight tests were carried out on Tuesday, as even allies speak out
Anger is mounting in the US over the Trump administration’s failure to test for coronavirus on a scale that could contain the outbreak and mitigate its most devastating impacts.

On Thursday the lack of testing capacity for Covid-19 was recognised in blunt terms by one of the top US officials dealing with the crisis. Dr Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, described the current state of affairs as “a failing” at a hearing of the House oversight committee.

From Congress to state capitals across the country, politicians of both main parties have shown rare bipartisan agreement that the pace of federal testing is woefully inadequate. Congress members who were given private briefings by Trump administration officials on Thursday expressed shock and outrage that so far only 11,000 tests have been conducted in a country of 327 million people.
https://www.theguardian.com/world/2020/mar/12/coronavirus-us-testing-failures-trump-administration

 

[Smurf1976]

1) If/when the virus gets into residential care homes it will be a disaster all around the block. It is clear now that hospitals will be unable and unwilling to aggressively treat older patients with severe symptoms. In fact it seems unclear what will happen to these people. But I can see the mortality in these homes rising rapidly

2) Almost all the homes are for profit institutions. I would be concerned about their stability if/when many people die rooms are left empty staff fall away as well. I would be particularly concerned about the status and security of the bonds they hold from clients.

This is my biggest concern in the whole thing actually since my mother is permanently in one of these homes. If the virus gets in well then I'm realistic as to the likely outcome. In her case it's somewhat worse in that the reason she's there relates to physical health but mentally she's fully alert and aware of what's going on with all this via the news. Those who aren't fully functioning mentally are perhaps better off in a sense.

As for the bond, well that's less of a concern than life obviously but supposedly it's government guaranteed.