CHICAGO | General Discussions

[rlw777]

Anyone else thinking the economic effects of the coronavirus might profoundly impact current / future developments? I'm thinking a project like 1000M that hasn't gotten financing for full construction yet might be particularly vulnerable to this economic downturn. Any thoughts?

[Handro]

Originally Posted by rlw777

Anyone else thinking the economic effects of the coronavirus might profoundly impact current / future developments? I'm thinking a project like 1000M that hasn't gotten financing for full construction yet might be particularly vulnerable to this economic downturn. Any thoughts?

Maybe, but I suspect (and just read an article that also suspects, with more evidence) that this will be a short downturn. Some of the bigger projects might be able to weather the storm. This doesn't have the makings of the year+ Great Recession.

https://www.fool.com/investing/2020/...-2009-202.aspx

What's more, lengthy corrections have been particularly rare over the past 36 years. As noted, the rise of computers and the internet has made it easier than ever to disseminate information to Wall Street and Main Street. This has the effect of keeping the rumor mill at bay and allows investors to focus on facts. Although periods of panic do occur, as we're witnessing at this very moment, emotional trading tends to be short-lived.

In fact, dating back 38 years, we've only had three instances of a correction taking longer than six months to find a bottom. It took roughly 10 months in 1983-1984, 929 calendar days during the dot-com bubble, and 517 calendar days during the Great Recession.

But what can be rightly argued here is that we don't have a failure of any of the financial pillars that led to such events as the financial crisis. Rather, we have panic surrounding the spread of COVID-19. Correcting investors' perspective and response to this illness will likely prove considerably easier than trying to prop up financial markets, which leads me to believe this downturn will be on the shorter side.

[VivaLFuego]

Counterpoint: It's not only a fear of Covid-19, it's a fear that major developed world governments (comprised of national Treasuries and Central Banks) will no longer be able to prop up ever-increasing asset prices as they have for the past ~20 years with a blip in the middle.
If people thought this was a short-term thing that would pass somewhat quickly and be back to normal, that would already be priced in to the market.

[marothisu]

Originally Posted by VivaLFuego

Counterpoint: It's not only a fear of Covid-19, it's a fear that major developed world governments (comprised of national Treasuries and Central Banks) will no longer be able to prop up ever-increasing asset prices as they have for the past ~20 years with a blip in the middle.
If people thought this was a short-term thing that would pass somewhat quickly and be back to normal, that would already be priced in to the market.

People should expect it to last longer than they think. We were 10 years into a bull market (RIP) when they normally last 2 or 3 years. There are some people who were looking for an excuse to end it - oil war + COVID-19 = excuse to end it.

[Chi-Sky21]

It is going to hit harder than you think. Airlines, hotels, cruises, disney, conventions and all the sporting events. That is A LOT of people supported by that and if these companies do not pay out during these shutdowns these are the workers who do not exactly have a rainy day virus fund to keep it all going. Not to mention when all these major companies go to report revenue next......market is not exactly going to jump. And that is not even mentioning what is about to happen to the fracking companies.

[Bonsai Tree]

^^And the whole idea that this will be over by summer is still wishful thinking. We really don't know how long this could last but most estimates say this could go on for months even into the summer and beyond. I wouldn't say that this is a temporary thing by any stretch.

[the urban politician]

While the repercussions will last longer than just a few weeks, I don’t think this will spur on some sort of big, lasting downturn.

Major reason being that most recessions are due to a market correction—we overvalued something (an industry, real estate, etc) and now we are determining that its value is lower and everybody wants to dump it at the same time.

In our present case people are still confident about their jobs and the economy. We are just taking steps to prevent the spread of a virus, which means we have to slow down commerce. Industries will suffer, but the overall confidence in the economy, real estate prices, etc are there. Furthermore, lots of companies and people have stockpiled cash to burn through these light times or perhaps even to buy more stocks now that prices are down.

I see a strong rebound a few months from now.

[Vlajos]

Originally Posted by the urban politician

While the repercussions will last longer than just a few weeks, I don’t think this will spur on some sort of big, lasting downturn.

Major reason being that most recessions are due to a market correction—we overvalued something (an industry, real estate, etc) and now we are determining that its value is lower and everybody wants to dump it at the same time.

In our present case people are still confident about their jobs and the economy. We are just taking steps to prevent the spread of a virus, which means we have to slow down commerce. Industries will suffer, but the overall confidence in the economy, real estate prices, etc are there. Furthermore, lots of companies and people have stockpiled cash to burn through these light times or perhaps even to buy more stocks now that prices are down.

I see a strong rebound a few months from now.

I think this is probably the most likely thing to happen.

[Handro]

Originally Posted by Vlajos

I think this is probably the most likely thing to happen.

I know I'm postponing a couple trips, I'm sure htere are millions of people doing the same. Once this craziness lifts people will be spending again.

The trouble is all the people that will be out of work and small businesses that won't be able to survive a few months. That might have a big impact... hoping it's not the case and jobs come back online quickly.

The federal government should do something to float some people and businesses...

[marothisu]

Originally Posted by the urban politician

While the repercussions will last longer than just a few weeks, I don’t think this will spur on some sort of big, lasting downturn.

Major reason being that most recessions are due to a market correction—we overvalued something (an industry, real estate, etc) and now we are determining that its value is lower and everybody wants to dump it at the same time.

In our present case people are still confident about their jobs and the economy. We are just taking steps to prevent the spread of a virus, which means we have to slow down commerce. Industries will suffer, but the overall confidence in the economy, real estate prices, etc are there. Furthermore, lots of companies and people have stockpiled cash to burn through these light times or perhaps even to buy more stocks now that prices are down.

I see a strong rebound a few months from now.

There are numerous models for recession this week that tipped over 50% for "we are in a recession now." It's not guaranteed - I don't think - but signs could be pointing that way.

I do personally think the market was overvalued, and this was brought on by a few major events, but now people are a lot more cautious. It might be different - this time it's people not wanting to spend money even though they can. But the result is businesses losing revenue either way.

Honestly in the business community too it should be in everyone's best interest to make sure COVID-19 doesn't spread fast which it could if we aren't careful but time is running out to take action that way.

[moorhosj1]

Originally Posted by the urban politician

I see a strong rebound a few months from now.

You may be correct, but it's important to point out that the bond market does not agree with you. Specifically, yields under 1% around the world and a flat curve for the next year in the US imply they expect slow/no growth around the world.

About people having stockpiles. That might be true on an individual basis, but corporations have record debt levels. Anything that is a shock to their cash flows (like no customers for a month or oil at $35/gallon) will cause defaults and a credit crunch.

Economic/consumer confidence is a lagging indicator, the release today which showed falling confidence was all conducted in February. Back when politicians were still making jokes about this virus. Those numbers will be far worse when the March reading is released in a month.

[jtown,man]

Originally Posted by Handro

I know I'm postponing a couple trips, I'm sure htere are millions of people doing the same. Once this craziness lifts people will be spending again.

The trouble is all the people that will be out of work and small businesses that won't be able to survive a few months. That might have a big impact... hoping it's not the case and jobs come back online quickly.

The federal government should do something to float some people and businesses...

Yep.

I feel like there will be a cascade of spending as soon as this calms down but for right now I am worried about people's jobs.

[marothisu]

Originally Posted by jtown,man

Yep.

I feel like there will be a cascade of spending as soon as this calms down but for right now I am worried about people's jobs.

The $1.5T the fed gave was essentially for the whole "job" thing and keeping some companies in trouble out of trouble for a little bit. Companies are shedding money now that their revenue is way down. It was actually kind of a progressive thing to do but a lot of people who don't understand economics don't really understand this. It's actually kind of shocking to see how many companies just after a few weeks are hurting really badly. Funny thing is that my org has been gearing up for a 2020 or 2021 recession for the last 1.5 years LOL.

[Via Chicago]

I don't see any way this isn't way worse than 08. This is gonna be a bloodbath. I know people getting laid off left and right and were only really a week into this thing

[marothisu]

Originally Posted by Via Chicago

I don't see any way this isn't way worse than 08. This is gonna be a bloodbath. I know people getting laid off left and right and were only really a week into this thing

This is definitely not worse than 2008. Back then was an issue with actual parts of the system. The majority of this is a global pandemic and oil price war. One if not both will be short term. A lot is panic selling. Not even close to the same thing. Not that the current system is without its faults, but it's definitely not the same. The fact that VIX this time was higher than 2008 shows you how little people truly understand IMO.

What worries me more right now is how little margin some companies are operating on. The thing is that it should be in the country's best interest to end the pandemic as soon as possible.for economic reasons. The longer this goes on, the worse. So in that case: STAY HOME for a little bit.

[Via Chicago]

Originally Posted by marothisu

This is definitely not worse than 2008. Back then was an issue with actual parts of the system. The majority of this is a global pandemic and oil price war. One if not both will be short term. A lot is panic selling. Not even close to the same thing. Not that the current system is without its faults, but it's definitely not the same. The fact that VIX this time was higher than 2008 shows you how little people truly understand IMO.

What worries me more right now is how little margin some companies are operating on. The thing is that it should be in the country's best interest to end the pandemic as soon as possible.for economic reasons. The longer this goes on, the worse. So in that case: STAY HOME for a little bit.

this is going to absolutely decimate small businesses which will ripple throughout the economy. how does any restaurant or bar survive without customers for a few months to a year? even in 08 the economy didnt completely grind to a halt, you could still go out and support your local shops or whatever. if theyre straight up being told by the government they cant even open, where does that leave us? and that dosent take into account how leveraged many of these larger corporations are now which are about to take massive hits to their balance sheets. the airlines didnt cut back this much after 9/11. people didnt stop traveling entirely. tv shows didnt stop shooting. people didnt stop going to concerts entirely. or staying in hotels. or going to plays. i dont think most people understand how dire this is going to get. I'm sorry but you're extremely naive if you think this isn't going to be worse. There is a very very real chance of a global depression IMO

You cant stock market your way out of a health crisis

[SIGSEGV]

Service workers will be decimated. Probably most restaurants will become pickup/delivery only, in which case much of the staff will be redundant. On the plus side, GrubHub is likely to come out of this looking good... maybe I should buy some stock...

[SIGSEGV]

Hmm Pritzker has the Illinois Restaurant Association President with him at his briefing. Probably not a good sign for restaurants?

edit: yes, dining in will be banned starting tomorrow night for at least two weeks.

[the urban politician]

Originally Posted by Via Chicago

this is going to absolutely decimate small businesses which will ripple throughout the economy. how does any restaurant or bar survive without customers for a few months to a year? even in 08 the economy didnt completely grind to a halt, you could still go out and support your local shops or whatever. if theyre straight up being told by the government they cant even open, where does that leave us? and that dosent take into account how leveraged many of these larger corporations are now which are about to take massive hits to their balance sheets. the airlines didnt cut back this much after 9/11. people didnt stop traveling entirely. tv shows didnt stop shooting. people didnt stop going to concerts entirely. or staying in hotels. or going to plays. i dont think most people understand how dire this is going to get. I'm sorry but you're extremely naive if you think this isn't going to be worse. There is a very very real chance of a global depression IMO

You cant stock market your way out of a health crisis

I agree with this, but I think we can mitigate the shock if we make it as short term as possible. That’s why I’m very unhappy so far with how the Government is handling this in a sort of half ass, piecemeal approach.

I think we need action at the federal level to do the following:

1. Complete shutdown of everything. No trips anywhere except to necessary jobs (healthcare, etc), grocery, pharmacy for 14 days
2. Get as many ventilators as possible to American hospitals and require them to all come up with an emergency overflow plan
3. Cut a check to each adult American commensurate with their prior year’s tax contributions based on a very simple sliding scale (ie a small tax refund)

[marothisu]

Again, the faster this thing peaks, the better off. Dow Futures peaked at 5% down again tonight. Investors have stated that they don't want to take on investment again until we've peaked and/or started to decrease for COVID-19 cases. Unfortunately we are in the beginning period of exponential growth. With the lack of testing, it's hard to tell exactly how many there are but indications at least here in NYC I would put a lot of money down on thousands of cases. As far as restaurants, bars, etc closing - I sure hope there's some aid coming to those people somehow.