Economy ahead - Thoughts

Just had a briefing from an economist from a leading bank.

In Summary

• Cash is cheap, and will stay cheap for atleast next 5 years (start borrowing), but lending might be your issue
• Technically a recession is ahead of us in this and next quarter, but then bouncing right back up the following once China cash injections are in place and our economy will reap in the award
• Property market will have a short term dip followed by growth this and next year (apparently Melb by 10%?)
• Certain industry will lose and some will gain (eg: renovations vs new purchases, travel vs health care industries

Thoughts?

 

Sounds balanced and likely.

Lots of unknowns with an economic/health shock like this though, so I think the degree of certainty of balanced viewpoints is much lower now.

 

Agree with the general shape, but how long until the bounce back? And what indicators would suggest whether the bounceback is soon or delayed?

 

I'm going by masks on flights, at the moment it's about 5 people per flight wearing a mask. Soon more people will start wearing them like China.
Once it starts a reversal then that's my indicator.

 

Shane Oliver news.... article from amp

 

Yep I'd concur with this.
Economy will sharply pick up once coronavirus is contained, just like it did after sars. No cure for sars, none needed for the economy to strongly rebound; just needs to be contained where it has limited influence. It might take a little bit longer this time because Australia isn't as strong as what we were during sars, but it will still rebound. It will also depend on China. Australian economy doesn't have the strength nor complexity nor sophistication to stand up well on its own without China (people might disagree but there is a fair amount of data to back this up..e.g. 40% of our exports are straight to China...).

 

I’ve worked , lived , developed and invested through 2 recessions , we haven’t seen once since the early 90’s and I’ll give you one bit of advice , all the so called experts will call it wrong

Wait for phrases such as “soft landing” “ rebound” and “solid fundamentals “ which the above basically is

all bets with the banks are about to be off .
Massive opportunities for those with cash tho ,

 

What opportunities in what stocks?

 

wouldn’t have a clue , don’t know about stocks and don’t profess to

 

Depends if the west contains the virus. Let’s say some of the bad predictions come true - 50% of people get infected- there’ll be an economic shock which will lead to financial shock.

 

The Hk economy took a long time to rebound post SARS. Property remained depressed for a long time in HK post SARS. Also Hk was a beneficiary of a substantial concerted effort to get Chinese tourists and investors into the city, and it happened while the world’s supply chain (China) and financial systems (US/Europe) were in tact.

 

In short term an absolute bloodbath , particularly those who have used property as security on developments

also those who have done same for business but to a lesser extent

huge opportunities in buying industrial equipment plant machinery that kind of thing
For those with actual cash notes even more , the amount of stuff that will be bought on paper for one thing and balance in cash will be huge

No time like a recession to make money (if you have it )

massive problems in the north lakes Springfield and west end type areas and equivalent of same in other cities

 

West end? Mostly tightly held, low leverage suburb where migrant families have held for generations. You're right about the ops in industrial/machinery. I remember a mining services company that did something similar during the resources slump. Like all investing, you never really know if the timing is right...but reward doesn't exist without risk

 

it was the units I was referring to in west end , those houses will be fine over medium term and possible even Short term

Oppurtunities in these times in every sector that people work in that has physical assets , if you have physical assets in your sector and you know the industry and have The cash now is going to be a great time

 

The US is a shambles. They will be hit hard. Once that happens and a few airlines go under...