Interesting thoughts relevant to re-opening - Printable Version
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Interesting thoughts relevant to re-opening - stupac2 - 04-13-2020
It's not the nominal purpose of the article, but I found these quotes to be pretty relevant to the talk about re-opening (emphasis mine):
Quote:Alternatively, even in the absence of formal orders, people could still behave responsibly and prevent the spread of the virus. But if white-collar workers stay home, that’s still crippling to the business models of dry cleaning shops and downtown lunch spots. If 70 percent of the population dines out 70 percent less frequently, that’s a 50 percent drop in restaurant traffic, and everyone’s businesses will fail.
A modern service economy relies on lots and lots and lots of people doing stuff in person that isn’t strictly necessary. Absent a vaccine, won’t business stay depressed at hair and nail salons, gyms and yoga studios, bars and theaters, and all kinds of shopping malls and retailers more or less indefinitely? And if that’s the case, how well will the rest of the economy hold up given the large economic losses incurred by service-sector workers and business owners?
There’s a strong possibility here, in other words, that investors simply aren’t thinking this through very clearly. People may not be indefinitely stuck indoors and largely unable to even sporadically see friends and family, but it doesn’t follow that the economy will be “back to normal” any time soon. Worst of all, a large minority of incautious people going out on the town and gathering in large groups is enough to potentially generate new outbreaks but isn’t enough to generate a healthy business climate. For the majority of people to resume the pre-virus pace of life would require not just some good news on epidemic mitigation but breakthroughs of the sort that we simply aren’t seeing.
I'd love for things to be able to be back to normal in a couple weeks, but I just don't see how it happens in the absence of a vaccine or a very robust test-and-trace system, no matter what the government does about SiP and other regulations.
RE: Interesting thoughts relevant to re-opening - JustAnotherFan - 04-13-2020
(04-13-2020, 11:36 AM)stupac2 Wrote: It's not the nominal purpose of the article, but I found these quotes to be pretty relevant to the talk about re-opening (emphasis mine):
Quote:Alternatively, even in the absence of formal orders, people could still behave responsibly and prevent the spread of the virus. But if white-collar workers stay home, that’s still crippling to the business models of dry cleaning shops and downtown lunch spots. If 70 percent of the population dines out 70 percent less frequently, that’s a 50 percent drop in restaurant traffic, and everyone’s businesses will fail.
A modern service economy relies on lots and lots and lots of people doing stuff in person that isn’t strictly necessary. Absent a vaccine, won’t business stay depressed at hair and nail salons, gyms and yoga studios, bars and theaters, and all kinds of shopping malls and retailers more or less indefinitely? And if that’s the case, how well will the rest of the economy hold up given the large economic losses incurred by service-sector workers and business owners?
There’s a strong possibility here, in other words, that investors simply aren’t thinking this through very clearly. People may not be indefinitely stuck indoors and largely unable to even sporadically see friends and family, but it doesn’t follow that the economy will be “back to normal” any time soon. Worst of all, a large minority of incautious people going out on the town and gathering in large groups is enough to potentially generate new outbreaks but isn’t enough to generate a healthy business climate. For the majority of people to resume the pre-virus pace of life would require not just some good news on epidemic mitigation but breakthroughs of the sort that we simply aren’t seeing.
I'd love for things to be able to be back to normal in a couple weeks, but I just don't see how it happens in the absence of a vaccine or a very robust test-and-trace system, no matter what the government does about SiP and other regulations.
I can only see one explanation for the stock market doing as well as it is doing -- investors expect large corporations to consolidate power in their various markets as middle market and small businesses are forced to close. In the short and medium term earnings will be depressed, but longer term there will be more concentrated power at the top. Well, that or investors are largely clueless about the severity of the situation.
(04-13-2020, 02:35 PM)JustAnotherFan Wrote:(04-13-2020, 11:36 AM)stupac2 Wrote: It's not the nominal purpose of the article, but I found these quotes to be pretty relevant to the talk about re-opening (emphasis mine):
Quote:Alternatively, even in the absence of formal orders, people could still behave responsibly and prevent the spread of the virus. But if white-collar workers stay home, that’s still crippling to the business models of dry cleaning shops and downtown lunch spots. If 70 percent of the population dines out 70 percent less frequently, that’s a 50 percent drop in restaurant traffic, and everyone’s businesses will fail.
A modern service economy relies on lots and lots and lots of people doing stuff in person that isn’t strictly necessary. Absent a vaccine, won’t business stay depressed at hair and nail salons, gyms and yoga studios, bars and theaters, and all kinds of shopping malls and retailers more or less indefinitely? And if that’s the case, how well will the rest of the economy hold up given the large economic losses incurred by service-sector workers and business owners?
There’s a strong possibility here, in other words, that investors simply aren’t thinking this through very clearly. People may not be indefinitely stuck indoors and largely unable to even sporadically see friends and family, but it doesn’t follow that the economy will be “back to normal” any time soon. Worst of all, a large minority of incautious people going out on the town and gathering in large groups is enough to potentially generate new outbreaks but isn’t enough to generate a healthy business climate. For the majority of people to resume the pre-virus pace of life would require not just some good news on epidemic mitigation but breakthroughs of the sort that we simply aren’t seeing.
I'd love for things to be able to be back to normal in a couple weeks, but I just don't see how it happens in the absence of a vaccine or a very robust test-and-trace system, no matter what the government does about SiP and other regulations.
I can only see one explanation for the stock market doing as well as it is doing -- investors expect large corporations to consolidate power in their various markets as middle market and small businesses are forced to close. In the short and medium term earnings will be depressed, but longer term there will be more concentrated power at the top. Well, that or investors are largely clueless about the severity of the situation.
Okay, reading the article they seem to have hit all the points that I mentioned.
"One way of looking at the recent market surge is that emergency actions undertaken by Congress and the Federal Reserve seem very generous to the kind of big companies whose shares are likely to be listed on the stock exchange. Individual workers and smaller companies are getting arguably less generous treatment, so it’s possible that owners of financial capital will weather the pandemic storm more easily than the rest of the country [and rake in outsized profits in a winnowed marketplace when growth returns]."
RE: Interesting thoughts relevant to re-opening - 82lsju - 04-13-2020
poll on expected consumer behavior, page 13 shows results for how respondents expect to change their behavior
https://www.beautiful.ai/player/-M4jW8GMaKqTT1l4Zo71/R2X-Report-Final-April-10
yes, small sample size (500 people) and single snapshot in time but interesting (at least to me)
RE: Interesting thoughts relevant to re-opening - 2006alum - 04-13-2020
(04-13-2020, 02:43 PM)82lsju Wrote: poll on expected consumer behavior, page 13 shows results for how respondents expect to change their behaviorDefinitely interesting, though as someone who has worked with survey data, I find it odd that this slide depends entirely on what one thinks is meant by "following the end of the pandemic." Does this mean when we start to "re-open the economy"? Or once there is widespread testing? Or once there's a vaccine? I doubt most respondents were thinking of the date in the future in which the WHO declares the pandemic over, but without a precise definition, I suspect these results have a relatively low level of validity.
https://www.beautiful.ai/player/-M4jW8GMaKqTT1l4Zo71/R2X-Report-Final-April-10
yes, small sample size (500 people) and single snapshot in time but interesting (at least to me)
Well, I never thought I'd live to see the Pope become a communist...
[tweet]https://twitter.com/CNBCi/status/1249812446874931211?s=20[/tweet]
Seriously though, I really think an Andrew Yang style direct cash transfer is the most effective, least disruptive, and fairest way to get us through the next few months. I'm totally baffled by why there hasn't been more political momentum for it.
As for the stock market, I think much of it can be explained by the fact that institutional investors don't have many other better places to move their capital. Bond yields are practically negative and this hardly seems like the time to start moving asset offshore. Personally, I'd like to see the federal government issue Corona Bonds that promise a reasonable return and go to support SBA loans to small businesses. It would be a feel good story and would provide mom and pop investors with a way to feel like they could use their excess savings to help the wider economy. It would also eliminate one negotiating point in the increasingly partisan congressional negotiations over future bailouts/stimulus, because Congress wouldn't need to allocate more direct expenditures to the SBA.
But of course, why pursue a win-win-win?
RE: Interesting thoughts relevant to re-opening - 82lsju - 04-13-2020
(04-13-2020, 02:53 PM)2006alum Wrote:(04-13-2020, 02:43 PM)82lsju Wrote: poll on expected consumer behavior, page 13 shows results for how respondents expect to change their behaviorDefinitely interesting, though as someone who has worked with survey data, I find it odd that this slide depends entirely on what one thinks is meant by "following the end of the pandemic." Does this mean when we start to "re-open the economy"? Or once there is widespread testing? Or once there's a vaccine? I doubt most respondents were thinking of the date in the future in which the WHO declares the pandemic over, but without a precise definition, I suspect these results have a relatively low level of validity.
https://www.beautiful.ai/player/-M4jW8GMaKqTT1l4Zo71/R2X-Report-Final-April-10
yes, small sample size (500 people) and single snapshot in time but interesting (at least to me)
agreed, slide 19 shows what events make people more confident that the crisis has passed, the WHO declaring the end of the pandemic was #4 with over 30%
RE: Interesting thoughts relevant to re-opening - Mick - 04-13-2020
(04-13-2020, 02:35 PM)JustAnotherFan Wrote: I can only see one explanation for the stock market doing as well as it is doing -- investors expect large corporations to consolidate power in their various markets as middle market and small businesses are forced to close. In the short and medium term earnings will be depressed, but longer term there will be more concentrated power at the top. Well, that or investors are largely clueless about the severity of the situation.
It's a great time for investors. This economy will be particularly harsh upon companies with very unique, very competitive technologies -- and little cash flow, sometimes with big cash drain. There are a fair number of private equity bargains. There will be consolidation all up and down verticals. Very large companies will acquire smaller companies for their talent and technologies, but so will smaller companies that want to execute a roll-up.
Not-so-secret secret is that large companies for the past few decades have been spending less and less on original R&D, rather, they acquire companies that appear to have the better developed, more saleable technologies. They've outsourced their R&D, so to speak, by acquiring companies with technologies complementary to their own. Markets like these make those acquisition targets cheaper for the acquirer which makes those larger companies more attractive, and safer investments to buyers.