How bad will the global recession be?

BrokenArrows · 02-04-2020 5:38pm #1

This is obviously the biggest collapse in the global economy since WW2, but even in WW2 industry was producing.
Right now almost everything is shutdown to an extent globally.
The entire hospitality industry is shutdown globally.

The amount of businesses that will go under is unimaginable.

The only upside i can see is that anyone who retains their jobs will be saving a fortune staying at home and not spending money on anything but essentials. So potentially, there will be a lot of cash to splash once this is over.

I think how bad it is will depend on the banks at the end of the day and how it affects credit.

manonboard · 02-04-2020 8:09pm

BrokenArrows wrote: »

This is obviously the biggest collapse in the global economy since WW2, but even in WW2 industry was producing. etc

I personally am still just shocked the markets are currently this good. A green day? today? with 10 million new jobless in US? Madness.
Its ok, i pull my money out and i haven the courage to short yet.

I see another 20-40% drop in prices. I think although money is pumping for a V shape recovery. I cant see how THAT much money can be pumped in since this is all likely to last a long time. A month? 2? No problem.. but 4-6.. Thats alot of free money.
We would be mad not to take it though at current rates.

The airline and hotel industry is going to be a sloooowww recovery though. Different countries allowing different flight numbers/areas to manage the next peak of infections after lock down ends..
I can myself imagine getting on a plane in the next 6-10 months.. unless i've got a vaccine in me.

I just cant imagine planes/travel not being a nightmare for infection control

Happy4all · 02-04-2020 8:10pm

People that have just got over the last one will struggle to keep going.

Thargor · 02-04-2020 9:02pm

manonboard wrote: »

I personally am still just shocked the markets are currently this good. A green day? today? with 10 million new jobless in US? Madness.

Im struggling to understand this aswell, is it just the stimulus propping it up?

bizidea · 02-04-2020 9:17pm

Thargor wrote: »

Im struggling to understand this aswell, is it just the stimulus propping it up?

Its the chinese buying

Thargor · 02-04-2020 9:23pm

bizidea wrote: »

Its the chinese buying

Any source for that?

bizidea · 02-04-2020 10:09pm

Read it on forbes or the economist not sure which.only country back up running while the rest of the world is falling apart now if you were into conspiracy theories

Mantis Toboggan · 02-04-2020 10:49pm

Trump is single handedly keeping the stock market up. If he gets turfed out in the Autumn it will be interesting to see how the markets react.

4068ac1elhodqr · 02-04-2020 10:59pm

This event will be very similar to the next (more gradual) automation (human asset) based worker replacement recession.
e.g. 3.5m Truck Drivers are at high risk in the US alone, of redundancy by 2030-35, with no labour re-access point.

The big difference is this is an elastic situation, with a bounce back expected at some point in the near future.

Diarmuid · 03-04-2020 7:31am

Mantis Toboggan wrote: »

Trump is single handedly keeping the stock market up. If he gets turfed out in the Autumn it will be interesting to see how the markets react.

lol.

daheff · 03-04-2020 8:22am

bizidea wrote: »

Read it on forbes or the economist not sure which.only country back up running while the rest of the world is falling apart now if you were into conspiracy theories

And in Jan Feb China were the only country in shutdown.

Absolute BS conspiracy theory. Next!

daheff · 03-04-2020 8:23am

The current economic problems is a supply problem rather than a demand problem.

The sooner the outbreak is over the sooner we get back to where we were.

Downside is the longer it goes on the more likely job losses become permanent.

BrokenArrows · 03-04-2020 8:49am

daheff wrote: »

The current economic problems is a supply problem rather than a demand problem.

The sooner the outbreak is over the sooner we get back to where we were.

Downside is the longer it goes on the more likely job losses become permanent.

The problem is that we wont be back to normal for a very long time.

Even if for example Ireland managed to get to a point that there are zero infected people, everything cant return to normal until thats the case globally.
Other countries like India are just getting started. India is going to be a ****show.

I dont see the world getting back to normal until a vaccine is made available which is 12 months away at best.

Mantis Toboggan · 03-04-2020 9:14am

Diarmuid wrote: »

lol.

:rolleyes:

1 Tweet from Trump and oil prices jump 33%

bizidea · 03-04-2020 9:20am

daheff wrote: »

And in Jan Feb China were the only country in shutdown.

Absolute BS conspiracy theory. Next!

No other country in the world will be out of lockdown as fast as china they will be the only country back up at full manufacturing capability for id say the next 6 months.we just dropped them a handy 200m and thats probably only the start for ppe that the people who need it aren't happy with and we are only one very small country on the edge of europe .
this virus is going to rip the US to absolute shreds. I reckon they'll be the worst effected first world country the financial and human cost over there will be unprecedented
Now I was just saying if you were into conspiracy theories which im not by the way it would have you thinking

Gman1987 · 03-04-2020 9:38am

bizidea wrote: »

Its the chinese buying

If it is the Chinese buying would then not be better off withdrawing from the market for a few weeks and then they could re-enter at a much lower entry point?

bizidea · 03-04-2020 9:53am

I'd say there is well over a 50% discount on the majority of stocks out there compared to a month or so ago

Cute Hoor · 03-04-2020 9:53am

Restrictions will have to be lifted at some stage although it's difficult to see how that can happen until a vaccine is found, a viable vaccine is at least a year away, economies won't accept a lockdown til then so some mechanism will have to be found, people with a certified antibody test might be allowed back to work in the short term to kickstart the economy a bit. The States obviously is a big issue but if this takes hold in parts of Asia and particularly in Africa the outcome will be devastating.

Challenging year ahead

Bigus · 03-04-2020 9:58am

Ger1987 wrote: »

If it is the Chinese buying would then not be better off withdrawing from the market for a few weeks and then they could re-enter at a much lower entry point?

Depends on what they’re buying , if you’ve your eye on something in particular, you snap it up when you can, even at a “discounted premium “.

In more general terms , the world will never get back to the old norms , no way , never.

This is not a complete negative either , it’s a matter for investors to figure out the new norms.

It’s be interesting to see the long term effects on certain industries over others after 1929 , some never returned some flourished.

In Ireland I’d say we’re very exposed to aviation and aviation finance amongst others, but steeped with having massive Pharma, I also think hospitality and tourism will not bounce back worldwide, inc here ,so there will be large thinning out, oversupply and unemployment.

I can’t see any obvious opportunities yet, as there is too much in play at the moment and the risk of unseen collateral damage on unlikely unconnected industries.

So hold on to your hats and smell the roses for a while yet.

Jim2007 · 03-04-2020 11:24am

Cute Hoor wrote: »

Restrictions will have to be lifted at some stage although it's difficult to see how that can happen until a vaccine is found, a viable vaccine is at least a year away, economies won't accept a lockdown til then so some mechanism will have to be found, people with a certified antibody test might be allowed back to work in the short term to kickstart the economy a bit. The States obviously is a big issue but if this takes hold in parts of Asia and particularly in Africa the outcome will be devastating.

Challenging year ahead

That remains to be seen... many of the Europe countries have sufficient stock piles of essential goods to last several months or longer, based on old WW2 legislation.

For instance here in Switzerland, with a complete close down of local industry and no imports, there is sufficient stocks to feed the entire population for up to at least six months. And these stocks are regularly verified by the federal authorities. That is why there has been no panic buying here, everyone knows we have plenty of stocks. Hell, we even have a complete stock of seeds to plan new crops if necessary.

Ironically we were just about to have a national referendum on reducing the coffee stock to a three month supply, when this virus struck....

I used to think they were way OTT with their preparations here, but suddenly it is not so OTT at all.

Mach 3 · 03-04-2020 12:13pm

How long before the "If you are not a Citizen, GTF out" brigade starts? (Worldwide)

This is a breeding ground for the hard left and hard right. I cannot understand how people expect things to fall back into place as if nothing changed.

daheff · 05-04-2020 1:06pm

bizidea wrote: »

this virus is going to rip the US to absolute shreds. I reckon they'll be the worst effected first world country the financial and human cost over there will be unprecedented

agreed. unfortunately this is a function of their leadership and general low levels of common sense (anti vac/flat earth etc). They don't believe their leaders and their leaders (DT as a prime example) are very slow reacting to the problem. Its more a blame game than a looking at solving the issue.

Fred Cryton · 05-04-2020 1:36pm

manonboard wrote: »

I personally am still just shocked the markets are currently this good. A green day? today? with 10 million new jobless in US? Madness.
Its ok, i pull my money out and i haven the courage to short yet.

I see another 20-40% drop in prices. I think although money is pumping for a V shape recovery. I cant see how THAT much money can be pumped in since this is all likely to last a long time. A month? 2? No problem.. but 4-6.. Thats alot of free money.
We would be mad not to take it though at current rates.

The airline and hotel industry is going to be a sloooowww recovery though. Different countries allowing different flight numbers/areas to manage the next peak of infections after lock down ends..
I can myself imagine getting on a plane in the next 6-10 months.. unless i've got a vaccine in me.

I just cant imagine planes/travel not being a nightmare for infection control

The markets are the present value of the stream of expected corporate profits into the infinite future.

In that context even a 6 month shutdown is small cheese. It will largely be a V shaped recovery without a doubt. There won't be 10 million umeployed at end of year, that's for sure. People will want to go to restaurants, hotels, bars and get their hair done.

Thee will only be a bigger downward shift in the markets if there's an expectation of permanent damage. I don't see much evidence of permanent damage. Vaccine may be available within a year.

BrokenArrows · 07-04-2020 2:44pm

What could possibly be causing the raise in the markets the last few days.

Things are not really looking great globally. Just a couple of days of less reported COVID-19 cases and the markets raise by 10% over 3 days?

Surely they will come crashing back down once we have just 1 bad day again with the cases?

garrettod · 08-04-2020 2:06am

manonboard wrote: »

I personally am still just shocked the markets are currently this good. A green day? today? with 10 million new jobless in US? Madness.
Its ok, i pull my money out and i haven the courage to short yet.

I see another 20-40% drop in prices. I think although money is pumping for a V shape recovery. I cant see how THAT much money can be pumped in since this is all likely to last a long time. A month? 2? No problem.. but 4-6.. Thats alot of free money.
We would be mad not to take it though at current rates.

The airline and hotel industry is going to be a sloooowww recovery though. Different countries allowing different flight numbers/areas to manage the next peak of infections after lock down ends..
I can myself imagine getting on a plane in the next 6-10 months.. unless i've got a vaccine in me.

I just cant imagine planes/travel not being a nightmare for infection control

There are lots and lots of good profitable businesses, that deserve continued investment support...

People still need to eat, have light and heat in they homes or places of work, fuel they cars, trucks, public buses, buy medicens, etc etc. If they are staying in more, then the likes of Netflix, Diageo may benefit to an extent. The list goes on...

There's still lots of pension money being invested, alternative asset classes are giving very poor returns so investment managers will probably still favour equities.

There's also a belief that governments will act quickly to invest in economies and get people back to work quickly, once coronavirus has been dealt with.

So, is it really time to go live in that bunker underground and stay there for the next 7 years, or is it possible that your being overly negative here ?

I do agree with you on the likes of the airline sector btw, I expect consolation and some airline companies to go bust over the next 12 months, unfortunitely.

NSAman · 08-04-2020 2:28am

Fred Cryton wrote: »

The markets are the present value of the stream of expected corporate profits into the infinite future.

In that context even a 6 month shutdown is small cheese. It will largely be a V shaped recovery without a doubt. There won't be 10 million umeployed at end of year, that's for sure. People will want to go to restaurants, hotels, bars and get their hair done.

Thee will only be a bigger downward shift in the markets if there's an expectation of permanent damage. I don't see much evidence of permanent damage. Vaccine may be available within a year.

You think this will be a V shaped recovery?

Small business owners are literally going to be swamped with bills. Rent, Property Tax (rates), utility bills etc. Here in the States I can see many people loosing their homes and having massive bills to pay after this.

Many of those small businesses are not going to open after this. Thankfully, people are keeping restaurants going by buying takeout and vouchers and things here. Adapt or die.

Unless, rent and bills are included in ay stimulus packages issued by governments, (like they are here in the States) this is going to be a U shaped recovery at best and even that is being optimistic.

Jim2007 · 08-04-2020 7:39am

Fred Cryton wrote: »

The markets are the present value of the stream of expected corporate profits into the infinite future.

Total nonsense! The vast majority of people buying and selling stocks could not value a stock using simple methods if their lives depended on it, never mind do a DCF. The daily noise on this forum is just representative of that.

The current prices are just the most recent poll of the "chancers".

manonboard · 08-04-2020 3:32pm

garrettod wrote: »

So, is it really time to go live in that bunker underground and stay there for the next 7 years, or is it possible that your being overly negative here ?

I mean with all respect, I think you've made up some pretty unusual conclusions from my post and interpreted them as mine?

Keeping my money out of the market because i believe there will be another 20%+ price dip, along with some industries being severely slow to recover is all I've said.

Geuze · 09-04-2020 12:10am

Fred Cryton wrote: »

In that context even a 6 month shutdown is small cheese. It will largely be a V shaped recovery without a doubt. There won't be 10 million umeployed at end of year, that's for sure. People will want to go to restaurants, hotels, bars and get their hair done.

http://econbrowser.com/

A few of the recent posts discuss why a V-shaped rebound may not happen.

4068ac1elhodqr · 09-04-2020 1:18pm

Two daily drops, followed by two daily increases (+85k global yesterday), shows it's very much up in the air.
The US makes 1/3rd of all confirmed cases now, which wil impact any market recovery.

Prediction is for Central & West Africa (along with x4 NA areas) to take off numbers wise in a couple of weeks, to even overtake the US 1/2m figure, during May.
This assuming that heat/UV won't slow it as expected, after all Spain (Madrid) has been totally tropical for the last month.

Gman1987 · 09-04-2020 4:03pm

Handy website for tracking Covid by country. It looks to be really getting going in the USA

https://www.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

Mantis Toboggan · 09-04-2020 9:10pm

Best week for the S&P since 1974! Markets extremely volatile and the rebound has been unprecedented.

feargale · 09-04-2020 9:29pm

daheff wrote: »

And in Jan Feb China were the only country in shutdown.

Absolute BS conspiracy theory. Next!

Would people please cut out this "next" cliché. You are not a shop assistant. Or are you?

BrokenArrows · 14-04-2020 8:04pm

I just don't understand the markets right now.

Day after day of stock market increases but the papers are filled with warnings of GDP hits of 30+% globally. The sort of stuff that only happened after world wars.

Is this all because governments are pumping money j to the economies on a massive scale? What's going to happen when they stop?

4068ac1elhodqr · 14-04-2020 8:29pm

BrokenArrows wrote: »

Day after day of stock market increases but the papers are filled with warnings of GDP hits of 30+% globally. The sort of stuff that only happened after world wars.

The (-)30% GDP is for Q2 only. There is an expectation of some normalisation during the summer, and maybe beyond (wave2 factor won't be known until around November).

Any WW is perma-damage, this event is simply a shutters down on the business world, but a press of a button will bring those shutters back up again ready for trading, as before.

BrokenArrows · 14-04-2020 11:08pm

Gerardo Quick Wiretap wrote: »

The (-)30% GDP is for Q2 only. There is an expectation of some normalisation during the summer, and maybe beyond (wave2 factor won't be known until around November).

Any WW is perma-damage, this event is simply a shutters down on the business world, but a press of a button will bring those shutters back up again ready for trading, as before.

But it's not just for q2. This problem is not going anywhere soon. The lockdowns will be extended multiple time and nothing is returning to normal until a vaccine

Jim2007 · 14-04-2020 11:24pm

Gerardo Quick Wiretap wrote: »

Any WW is perma-damage, this event is simply a shutters down on the business world, but a press of a button will bring those shutters back up again ready for trading, as before.

That is just wishful thinking. First of all the lockdown doe not solve anything it is simply a means of buying some time and right now it looks we are going to need a lot more time probably about five years before we get it under control. So some things will remain in lock down over the long run, some restrictions will be relaxed only to be reintroduced and new outbreaks of the virus are likely and this will have impacts on manufacturing processes.

If we find the lockdowns because a regular feature then things automation, robotics and universal income all come into play. That combined with people’s experience of living under lockdown will impact people’s behavior, values and expectations.

And of course we can’t ignore the vast amounts of money being pumped into the economies that is not matched with a similar growth in production....

I expect the new normal will be different to the old one.

Mach 3 · 15-04-2020 12:58am

BrokenArrows wrote: »

I just don't understand the markets right now.

Day after day of stock market increases but the papers are filled with warnings of GDP hits of 30+% globally. The sort of stuff that only happened after world wars.

Is this all because governments are pumping money j to the economies on a massive scale? What's going to happen when they stop?

Have a of this:
https://www.blackrockblog.com/2020/04/13/uncertainty-and-investment-opportunities/

It never seems to work out straight away, with positioning and the usual market shake outs, but the big guys are going to follow the Fed and other Central banks. Implies old models are out the window.

JMMCapital · 15-04-2020 1:41am

FYI.
Source: IMF

Jim2007 · 15-04-2020 7:06am

BrokenArrows wrote: »

I just don't understand the markets right now.

Day after day of stock market increases but the papers are filled with warnings of GDP hits of 30+% globally. The sort of stuff that only happened after world wars.

Is this all because governments are pumping money j to the economies on a massive scale? What's going to happen when they stop?

Did you ever? Or did you just think you did because some of equations, graphs or charts seemed to bring simple order for a short period to something that is essentially complex and chaotic?

If you want to try and understand what is going on right now, then go study the history of depressions and financial crisis and human behavior....

What is happening now is not that unusual, in any crisis most money is not lost at the point of impact, but in the days, weeks, months and even years immediately after the event. The smart money is already gone into defensive positions, the traders continue to gamble adding momentum and the dumb money is just starting to enter the market....

Zenify · 15-04-2020 8:16am

Jim2007 wrote: »

Did you ever? Or did you just think you did because some of equations, graphs or charts seemed to bring simple order for a short period to something that is essentially complex and chaotic?

If you want to try and understand what is going on right now, then go study the history of depressions and financial crisis and human behavior....

What is happening now is not that unusual, in any crisis most money is not lost at the point of impact, but in the days, weeks, months and even years immediately after the event. The smart money is already gone into defensive positions, the traders continue to gamble adding momentum and the dumb money is just starting to enter the market....

I agree.

I was having a look on the investment forum and there was people saying buy this stock it's only x price right now. That's a bargain compared to what it was 3 months ago. Nothing about value or the future.

Never underestimate the stupidity of people.

Mad_maxx · 15-04-2020 11:16am

No one knows if this is going to be a "depression", we won't know for a long time

Not even Jim and he knows more than your average bear

FernandoTorres · 15-04-2020 11:29am

Mach 3 wrote: »

Have a of this:
https://www.blackrockblog.com/2020/04/13/uncertainty-and-investment-opportunities/

It never seems to work out straight away, with positioning and the usual market shake outs, but the big guys are going to follow the Fed and other Central banks. Implies old models are out the window.

This reads like a fantasy piece. If you want an impartial view, do not look to the blog of the worlds largest asset manager!

Mach 3 · 15-04-2020 1:14pm

FernandoTorres wrote: »

This reads like a fantasy piece. If you want an impartial view, do not look to the blog of the worlds largest asset manager!

Your critique implies you would do the opposite.

Is this the case?

Mantis Toboggan · 15-04-2020 1:27pm

Will be Interesting to see how bad the quarterly reports are.

Jim2007 · 15-04-2020 2:44pm

Mach 3 wrote: »

Your critique implies you would do the opposite.

Is this the case?

Pay attention to what you are being told... you're basically posting links to advertisements!

Stop listening to talking heads, these guys are not there for your benefit, they are basically trying to talk their clients out of moving their funds....

Mach 3 · 15-04-2020 3:18pm

Jim2007 wrote: »

Pay attention to what you are being told... you're basically posting links to advertisements!

Stop listening to talking heads, these guys are not there for your benefit, they are basically trying to talk their clients out of moving their funds....

Yes Jim, and you will note there was a healthy dollop of skepticism in my assessment of the piece.

Nobody knows yet which companies are going to survive or be bailed out. look at JC Penny.
One depression in the last century does not pass as empirical evidence neither does the small amount of recessions. All I can do is measure what I am going to do and what central banks are doing and model from there.

BrokenArrows · 15-04-2020 4:22pm

a healthy dose of realism in the global markets today.

Mach 3 · 16-04-2020 11:18pm

"Open America Again"....

dotsman · 17-04-2020 5:37pm

A lot of cynical views here! Yes, a lot of small business in the service industry are going to have a tough time, as well as the tourist industry in general.

The real question, that nobody can answer right now, is how things pan out over the next year. If we are able to get back to "relative normal" in a month or two. Then most businesses will be fine; a bad year, but they can get back on their feet no problem. However, if we are stuck in "relative lockdown" for the next year, then some will go to the wall.

But that is only those industries. Tech, Finance, Pharma, Legal etc will plough on. Some will take a temp dent to their 2020 profits, others will get a temp boost to profits.

As of today, my investment portfolio is up 8% this year.

Mach 3 · 21-07-2020 7:14pm

Jim2007 wrote: »

That is just wishful thinking. First of all the lockdown doe not solve anything it is simply a means of buying some time and right now it looks we are going to need a lot more time probably about five years before we get it under control. So some things will remain in lock down over the long run, some restrictions will be relaxed only to be reintroduced and new outbreaks of the virus are likely and this will have impacts on manufacturing processes.

If we find the lockdowns because a regular feature then things automation, robotics and universal income all come into play. That combined with people’s experience of living under lockdown will impact people’s behavior, values and expectations.

And of course we can’t ignore the vast amounts of money being pumped into the economies that is not matched with a similar growth in production....

I expect the new normal will be different to the old one.

How do you see things playing out from here Jim?

How bad will the global recession be?

Comments