COVID-19 impacts on the Australian economy & housing market

Your predictions sound right to me. I think Sydney and Melbourne are going to get the biggest wake-up. Brisbane, GC and Perth construction industry have already been suffering and been through all it’s buffers in 2019. I haven’t been following the other Capitals/states to comment! I think interest rates are going to go down real quick!

 

I doubt that this is going to be over in a "few weeks" as many are predicting. Hopefully we come out of this at the end of winter with minimal deaths and a healthcare system still intact. The Spanish flu of 1918 was also a novel virus (new strain) and as it circulated through the population it mutated making the second and third waves far more lethal, especially for younger people. Thankfully scientists tell us that is highly unlikely with Covid-19, fingers crossed. The economic fall-out of this is likely going to be huge and a prolonged rise in unemployment numbers is really going to hurt. (welfare groups already calling for rental assistance and eviction freezes). Stay safe all.

 

There will be plenty money for you to be made with $400k in cash on hand (don’t have it all in 1 account)

but This is unprecedented times , right now the coming weeks are a time to sit on your hands , what upside are you afraid to miss out on ? Can’t see anything any day soon

shares pick up ? You don’t need at expert to tell you cba $25 in 2008 and this is bigger than 2008 and currently $65

I’d watch and wait

I know cba went up 20% the other day , and people will make money on these day trades and so on but there is risk attached , do you want the risk of depleting some cash in these times

sit and wait , the dominos of the big construction company and developers falling over hasn’t even started this will take down listed developers and infrastructure companies .

 

An early observation from someone in the front line of employment. I work in recruitment and we predominantly work in the white collar sector with a considerable number of employees in large call centers.

Whilst it’s very early and a lot still has to play out We are seeing some positive initiatives from our clients. Just one example is we recruit for Telstra and they have already enabled 200+ of their temp staff to now operate indefinitely from home.

Several other clients are also now following suit and at THIS STAGE their has actually been an increase in business as particular clients have new requirements (e.g we have a huge recruit for call center staff in private health).

I think over the years around these parts I have sounded like a broken record at the need for business to allow work from home. Admittedly it has been regarding allowing work/life balance and the cost/benefit of that against wage increase. A lot of business is able to do this but a lot still don’t have the systems in place and these are the ones that will likely go under.
If I can try and take one positive from all this is that once the dust settles, business will finally understand that in 2020 we don’t need offices anymore! We can work from home and be as productive.

 

Do you have a secure job? Are you going to live in the property?
People make a lot of money in times like this. You just need to assess your risk profile

 

Relatively secure I would say (multinational company).
Yes we intend to live in and renovate but may divert those funds to shares and other investments when it all shakes out and hold off on the renos. It's a bit of an unknown atm

 

Hopefully news outlets and all media companies are forced to stay home and cant report on anything. Watch how fast corona will become a thing of the past.
They don't report on influenza because its boring. Corona makes them money

 

As an employer .
Staff never work as hard from home. Also your job is not just to sit in front of computer all day.
Having other humans around creates conversation among other things creativity. Sitting at home by your self is not a conducive environment .

Humans are not a silo animal which sits in cave my itself. Its ****ing depressing.

You keep banning on about working from home.You are looking at it from a micro perspective.
This will come to this but its a horrible thing that will stifle growth and business in general.

Business we end up having less staff.

This event will take years to recover from,

I hope im wrong . I hope you a right.

Many of my friends are working from home and are lonely miss the social nature of the office and comradery.

 

I agree. I think we should be quarantining those who are elderly or vulnerable, not the whole freakin workforce. This is the greatest own goal in history. Totally reckless.

 

do 2 searches in google,
Italian spread rate
Australia spread rate.

 

I expected this all the way & issued serial warnings all the time.

On a side note. This was very much needed for the world to be saved from capitalism and what some cash from governments can do to bring back demand which was all unnecessary to begin with.

 

Are you being sarcastic?

 

That doesnt bode well for commercial.

 

100% agreed

 

I have no idea what measures governments need to take to manage the health crisis.

I do know that there are many many extremely skilled advisers who are far far far smarter than me are advising the government on how to best mitigate the spread of this. I also am on the view that containment is essential (but history can determine this in time)...so much so, any measure that may help should be on the table (regardless of its impact on the economy). I'm quite thankful that Australian authorities are so well skilled, trained and determined to do whatever it takes here and can mobilise quickly.

The message ScoMo will be telling Treasury as the ramp up of social distancing measures continue: Design me packages that keeps the lights on for as many businesses, households, etc as possible.

It's time to go massive on the fiscal stimulus plan. Our budget will be blown, that will need to be paid for later via higher taxes/lower spends...but those are all problems for another day.

Loans for businesses, rental credits for households, mortgage payments for homeowners, direct intervention, household cash payments, small business grants, wage subsidies, bail outs, equity packages...whatever it takes will be the mantra. All currently on the treasury white board as very real options.

The whole world is about to embark on what will likely be the largest ever fiscal stimulus plan. Australia will need to come up with absolutely massive measures, that could run into the 100bn+ size range. IMO, its far far far better to spend more than required than less.

ScoMo's morning presser also noted that aggregate demand measures will be difficult, and its all about 'cushioning the blow'. In other words, its about keeping as may lights on as possible, as many jobs as possible, etc once this blows over.

 

@Redom interesting you mention the "whatever it takes". Ray Dalio has the same message. Have you read this?

The Implications of Hitting the Hard 0% Interest Rate Floor

 

Agreed. However it bodes well for so much of what we have discussed in the past regarding the requirement for humanity to not live 20km within a CBD and everything that goes with that.

 

https://www.smh.com.au/business/com...rents-lew-s-premier-says-20200316-p54amz.html

"Retail landlords are already under extreme pressure to reduce rents with the amount of vacant space available in shopping centres climbing significantly in the months before the devastating coronavirus outbreak when sluggish sales prompted the collapse of multiple retailers.

In the calendar year so far, according to Macquarie Equities analysts Stuart McLean and Darren Leung, nine retail groups have entered voluntary administration or announced store closures".

Frank Lowy got out of the game in time.

 

Always a ple

Great post.

My thinking is that because we cannot comprehend how big the damage is and how fundamentally challenging it is that the discussions around any solution is at-best a bandaid approach which will have a tiny/ limited impact and might be redundant within days. With the fast-moving semi-curfew approaching, how long before most of the companies cannot operate with no CF.

This just in from the Fin Review:
Shutdown sparks solvency fears for investors

"100 person ban will sweep through the ASX
James Thomson

The latest stage of the lockdown of the Australian economy should send a brutal message for Australian investors.

Your models for estimating a company’s value have been smashed up. Solvency is suddenly a real concern in the growing number of sectors where cash is drying up.

The government’s ban on non-essential gatherings over 100 people in indoor spaces will sweep through the ASX.

Consider a business like Crown Resorts. Its casinos may now have to shut down completely, or else chief executive Ken Barton needs to find some way of keeping patronage below 100 across a complex that spans several city blocks.

It’s the same story for the hundreds of hotels operated by Woolworths’ booze and pokies subsidiary, Endeavour Drinks. And the pubs owned by ASX-listed Redcape and listed pub landlords ALH and Hotel Property Investments....."

 

The solutions to this crisis may not even seem simple in hindsight. Heard Roger Montogomery on the radio last night saying we may see a liquidity crisis if this virus lasts longer than expected. Highly indebted American companies in the good times of QE and low interest rates suddenly having to subsist on months of very low earnings and not being able to access debt markets to continue opertaing. I must say that Roger entertained this is a the worst outcome but by no means a certain one and still had a 'this to will pass' attitude about things.