Economic implications of a SARS/Coronavirus outbreak

frugal.rock said:

What can you tell me about Zinc?

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My top two tips are jump when leaving the cell room if you don't want a shock and don't bash your head on the beam when going up the steps under it behind the power control center.

The next issue IMO will be the young people with the threat of unemployment, changing their super to cash and also requesting cash out of their super, my guess is it will leave some super funds in an embarrassing situation.
It could also result in the market taking another step down, as funds have to sell to get liquidity, just my guess.

sptrawler said:

The next issue IMO will be the young people with the threat of unemployment, changing their super to cash and also requesting cash out of their super, my guess is it will leave some super funds in an embarrassing situation.
It could also result in the market taking another step down, as funds have to sell to get liquidity, just my guess.

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A lot of the funds have iliquid infrastructure and private equity investments that would be very hard to unwind in a hurry.

banco said:

A lot of the funds have iliquid infrastructure and private equity investments that would be very hard to unwind in a hurry.

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Good point, that will cause an interesting situation, for the members.

I am guessing that if one was to withdraw super now, expect $0.50 for every $1 previously held...
My advice, leave it alone for 6 months if you can, you may get $0.75 per dollar...
I guess a lot depends on the investment spread chosen at some stage in the past, if any was chosen at all.... who knows what they do with our money, apart from charging ridiculous fee's for something that they apparently do.

F.Rock

Interesting article, showing problems in the ETF market.
https://www.theage.com.au/business/...demic-spurs-rush-to-cash-20200323-p54czs.html
Financial regulators have been concerned but uncertain about the implications of the growth of passive investing and of the ETF sector, particularly about the more exotic ETFs that are highly leveraged or that invest in physical commodities, junk bonds and even other ETFs. The regulators have been worried that there could be value or liquidity mismatches that could exacerbate a future financial crisis.

Those fears have been increased by the search for yield. With banks being forced by the post-crisis regulatory environment to become more conservative in their lending, asset managers have become the main source of higher-risk funding and the search for yield in a low-rate environment has drawn them further along the risk spectrum.

That search for yield and the low-cost access ETFs provide to markets has also seen the funds’ investor bases increasingly institutionalised. Pension funds, hedge funds and insurers are heavily exposed to the performance of the big index-investing and ETF managers.
The crisis is now upon us but, so far, the index funds and ETFs are performing as advertised, providing secondary market liquidity even when the liquidity in the underlying securities they hold has dried up.

That doesn’t mean they haven’t been impacted. The headlong scramble by investors for cash last week that caused the yields on three-month and six-month Treasury bills to dive into negative territory has also seen a flood of redemptions from ETFs and other funds.

Last week, Black Rock and Vanguard quadrupled the costs for large investors wanting to cash out their investments in some of their fixed-interest funds. Big investors have had the ability to exchange their shares in ETFs for the fund’s underlying investments. That abruptly became far more expensive as the managers moved to protect the liquidity of their funds.

Asset managers shouldn’t pose systemic risks. They are, or at least should be, purely middlemen, with their investors the ones exposed to movements in the value of the underlying securities they hold.


Given that there are funds with leveraged exposures to high-yield, or junk, bonds and volatile commodity prices, some funds – and their investors – may well see the value of those underlying assets implode.

It will be interesting to see how peer to peer lenders go, throughout this turmoil.

basilio said:

So do we see a silver lining in terms of less pressure on electricity grids and less risk of them falling over ?
On the other hand I'm sure this is not good news for the power companies..

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I'll avoid taking the thread too far off topic and just say that short term there's no problem, with lower consumption and everything working there's an abundance of supply.

Longer term though well the power industry has the same basic problems that everyone's got.

First on the supply side, having only essential staff present for operation does limit the virus risk. Downside is it also limits maintenance work and is inherently unsustainable for that reason. So the risk is that if it continues long enough then we end up with rather a lot of machinery in a precarious state and things breaking down and so on. That's not a problem yet and it won't be for a while but as an ultimate outcome it's a concern.

The other concern is about financial viability of the companies. For the small players in particular, the overall disturbance to financial markets combined with falling sales volume and the prospect that a portion of customers don't (can't) pay the bills on time could plausibly send someone broke. Details are anyone's guess but it seems plausible it could happen.

Just posted this on the below thread. I hope it is for real.

https://www.aussiestockforums.com/t...eld-to-account-what-do-you-think.35297/page-3

COVID-19 test could return results in under an hour

Australian regulators have approved another rapid diagnostic test for COVID-19.

As the ABC's national science reporter Michael Slezak explains, it promises to give results in just 45 minutes, without requiring the sample to be sent to a specialised lab.

The new test has received expedited approval by the Therapeutics Goods Administration (TGA).

Earlier today, it was revealed the TGA had approved the another rapid test for diagnosing COVID-19, which could produce results in just 15 minutes.

Smurf1976 said:

I'll avoid taking the thread too far off topic and just say that short term there's no problem, with lower consumption and everything working there's an abundance of supply.

Longer term though well the power industry has the same basic problems that everyone's got.

First on the supply side, having only essential staff present for operation does limit the virus risk. Downside is it also limits maintenance work and is inherently unsustainable for that reason. So the risk is that if it continues long enough then we end up with rather a lot of machinery in a precarious state and things breaking down and so on. That's not a problem yet and it won't be for a while but as an ultimate outcome it's a concern.

The other concern is about financial viability of the companies. For the small players in particular, the overall disturbance to financial markets combined with falling sales volume and the prospect that a portion of customers don't (can't) pay the bills on time could plausibly send someone broke. Details are anyone's guess but it seems plausible it could happen.

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Sad.. Not surprised though.

Perhaps this is the time to renationalise the network for one dollar. Get it off their hands.

barney said:

Just posted this on the below thread. I hope it is for real.

https://www.aussiestockforums.com/t...eld-to-account-what-do-you-think.35297/page-3

COVID-19 test could return results in under an hour

Australian regulators have approved another rapid diagnostic test for COVID-19.

As the ABC's national science reporter Michael Slezak explains, it promises to give results in just 45 minutes, without requiring the sample to be sent to a specialised lab.

The new test has received expedited approval by the Therapeutics Goods Administration (TGA).

Earlier today, it was revealed the TGA had approved the another rapid test for diagnosing COVID-19, which could produce results in just 15 minutes.

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Excellent !! The capacity to quickly test people for the virus an make informed decisions is brilliant.

Smurf1976 said:

Posting this here since it's intended as comment on the overall economic situation rather than the underlying industry.

Electricity consumption

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I should emphasise that my point in that post is using electricity consumption as a proxy for economic activity. Whilst far from perfect, it's data that's available.

Now I'm thinking of what other data might be available?

Anyone know of any publicly available data for things like public transport trips taken or freight volumes or anything else that relates to all or at least a substantial portion of the economy?

There's monthly data for fuel sales (petrol, diesel etc) but the latest one out is for January and that doesn't show anything of significance.

My thought is trying to quantify the extent of the contraction. I mean we all know it's happening but trying to put some figures on it.

For those here whose job or business has collapsed and will need some financial support. Please note this also includes uni students. They say the system has been substantially streamlined because of the crisis. Hope it works for you if you need it.

Am I eligible for Centrelink payments? How to apply for the coronavirus supplement
The government has doubled unemployment benefits to assist people and businesses losing work. Here’s how you can apply

https://www.theguardian.com/world/2...s-how-to-apply-for-the-coronavirus-supplement

I reckon in a months time the unemployment rate will be at least 25%. In fact with 10s of thousands of self employed and sole traders also eligible who knows how high it will go. Any other thoughts ?

I can understand why the Government postponed the budget until October. The opposition is in lock step as well so the only criticisms will be implementation rather than policy.

Totally uncharted waters here.

basilio said:

I reckon in a months time the unemployment rate will be at least 25%. In fact with 10s of thousands of self employed and sole traders also eligible who knows how high it will go. Any other thoughts ?

I can understand why the Government postponed the budget until October. The opposition is in lock step as well so the only criticisms will be implementation rather than policy.

Totally uncharted waters here.

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definitely possible, now there is no hiding behind under-employment, clothes are off lights about to be flicked on

basilio said:

I reckon in a months time the unemployment rate will be at least 25%. In fact with 10s of thousands of self employed and sole traders also eligible who knows how high it will go. Any other thoughts ?

I can understand why the Government postponed the budget until October. The opposition is in lock step as well so the only criticisms will be implementation rather than policy.

Totally uncharted waters here.

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While I do not disagree, I am hoping it is more around 15% which is still very very bad, given the RBA chased lower IR's to decrease unemployment.

But lets say you are correct. 25% unemployment would see property crash at least the same amount, resulting in a death spiral of even higher unemployment rates.

End result, anarchy. Only the strong and those willing to fight for survival will get through this.

My words might be strong, but we only minutes away in the global time clock from this happening. But we must be thankful that we live in Oz, where most people do not have guns.

Unlike the US, the second amendment is going to be the downfall of the US govnuts.

basilio said:

Any other thoughts ?

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Main one is about the long term.

With so much uncertainty there aren't going to be many willing to spend on anything not essential. So even things which haven't been directly affected and which are still open will, if they aren't some sort of essential product or service, likely see a decline in sales volume.

I doubt there'd be too many people thinking of renovating the bathroom using paid traides (as distinct from DIY) or getting a new car right now for example. There's going to be a reluctance to spend given all this.

Really worth reading this overview of how our political parties are coping with this crisis.

Our politicians scramble for hope as Australia, one of the most gregarious nations on earth, folds in on itself
Katharine Murphy
This pandemic has stolen their certainty, and yet they must lead. They are called to make decisions guided by expertise that is contested minute by minute

https://www.theguardian.com/austral...mble-for-hope-as-australia-folds-in-on-itself

A report on the expected unemployment numbers, probably being a bit conservative.

https://www.smh.com.au/politics/fed...-face-unemployment-queue-20200323-p54d14.html
From the article:
The Sydney Morning Herald and The Age have spoken to senior sources in the banking and the forecasting sectors who said their analysis showed Australia was headed for an unemployment rate of 15 per cent or more. It currently stands at 5.1 per cent.
In the Sydney CBD more than 15,000 hospitality jobs are set to go under the shutdown of pubs and clubs and the implementation of takeaway-only restrictions on cafes and restaurants. A further 11,000 hospitality jobs in the Melbourne CBD are also on the line.

Across Melbourne's suburbs, St Kilda, Richmond, and Brunswick will be among the hardest hit, with 3000 hospitality jobs in each set to disappear under the shutdown measures. In Sydney, Pyrmont and Ultimo could lose 4900 jobs, while a further 3000 could go in each of Redfern, Chippendale, Strathfield and Surry Hills.

ANZ senior economist Catherine Birch said unemployment would climb rapidly and in much greater numbers than Australia experienced during the global financial crisis, when the jobless rate lifted from 4 per cent to 5.9 per cent over a 15-month period.

At current rate we run out of ICU beds estimated April 8th




https://sites.google.com/view/aucovid-19outbreak