Yep, we all are certainly under siege! This is the closest any of us have been to a war-like situation. Scott Morrison has described this saga as the ‘gravest test since World War II’.
We are all bunkering in (well, really, no choice!). We are all in this together. The coronavirus impact is proving to be severe on both people’s health practices as well as their wealth status. No one foresaw the rapid extent of what has become known as the ‘lockdown’ and restricted social activity. And, this situation is evolving and well in progress as we well know, and it will likely continue for a while as we also well know.
Regarding the spread of the virus we are told it will get worse i.e. more infection cases and more death, before it gets better. There is no coronavirus vaccine yet but there will be. In the meantime, containment of the virus has become the ‘main game in town’.
As with many countries now, the Australian Federal Government and the State Governments have decided that unprecedented travel bans and border controls, along with social distancing and growing isolation measures, are the best way to tackle the virus until a vaccine or something similar beforehand comes to the fore.
These such containment measures for the virus transmission are completely new to all of us, and are hard to fathom. The strict measures are creating a growing and concerning economic shutdown. They have also hurt our investments. Yet, we know we must all adhere to the imposed measure to ‘flatten the infection cases curve’, as it has become termed, in this biosecurity led environment we are now enveloped in. These tough containment measures will no doubt cause short-term pain but are for the longer-term gain, and they will help avoid larger long-term consequence of a multiplying virus.
However, we definitely must also remember that these containment measures are temporary measures (unless ridiculous situations were to happen again such as letting coronavirus affected people off cruise ships at Circular Quay; or crowds flaunting an ‘I’m too cool for school’ attitude to follow containment rules, such as happened Bondi Beach; or people hosting 21st birthday parties or dinner parties for 12 besties). This containment and its consequential fallout is tough on all but let’s do what we really can to reduce the virus spread threat and contain it and manageable levels.
The sooner this is done, the sooner responsible behaviour is the norm, we should see a relaxation on these containment policies and see the unprecedented economic handcuffs being loosened. We want to get back to where we should be with the economy i.e. having these handcuffs off!
You have to pinch yourself really to believe what has just happened. If we cast our minds back to only early last month, the world economy was chugging along pretty well. However, within only a few weeks’, this has spiralled to a serious downturn with the potential to see a recessionary economic state of affairs ahead. In short, the brakes have been slammed on to prevent having an all-in crash. A health crisis has also become a financial crisis. The markets have borne the brunt of it as we know.
To help mitigate on what will be a rapid economic slowdown, the Government and the RBA are ‘throwing in the kitchen sink’ responses with policies of extreme monetary easing and quantitative easing programmes, cash handouts, tax relief initiatives, financial support measures, etc. And, yes, so too are many other countries unrolling similar types of aggressive monetary and fiscal policies in this global effort to reduce the adverse consequences of the economic slowdown and its job losses, etc.
These actions will be both good and necessary to create improved flows of money and credit into the financial system. It is meant to instil more confidence for individuals and businesses in these sudden hard times. It is aimed to avert something greater than what appears at least to be a short economic recession ahead. These measures, unfortunately, cannot be released (because of legislative and logistic reasons) as fast as the virus can spread, but the rollout of these measures is happening and should accelerate from now. This timing delay has been a frustration. Yet, I believe, and hope, that this all will help bolster the economy while on its enforced partial ‘hibernation’.
We must remember that no individual or business wants this ‘lockdown’ nor have the social isolation to last beyond what is absolutely necessary. Once we are free of this frustrating crisis, we should see a very positive response by all and a bounce back in the economy and the markets. Although, markets often tend to lead before the actual event happens! No bell will ring! We can hope and pray this ‘awakening’ is in the coming months rather than longer.
Our battered investment portfolios should improve back to their true value levels. As investors, it has been a very hard month to go through. Will it get harder, maybe? We may well see some more pain before gain, but we must believe in long term investment fundamentals. These principles, discussed in my previous commentaries, have not changed despite the current extreme volatility.
The forces of good versus the forces of bad! We should become the forces of good in our habits and having a long-term outlook. The financial initiatives being rolled out are good too. The forces of bad includes the virus itself; the people not following explicit medical advice; market short-sellers and those institutions that lend them the stocks to short-sell and also the hedge funds just causing market havoc for greed in these times of personal despair; and, of course, the media with its non-stop, one-sided alarmist output. I do question how some reporters/editors can enjoy being purveyors of continual bad news aimed at fear mongering that seriously impacts people’s health and wealth. They know what they are doing but simply do not care.
While all this economic lockdown and restricted social intercourse is happening, we are seeing many people and businesses facing the challenge with innovation. This whole situation is changing all of our lives but let it not dictate our lives. Necessity brings out innovation! Taxis are becoming courier services. Restaurants and cafes are converting to preparing meals and groceries for delivery rather than simply shutting down. An example to point is our local golf club has chosen not to shut down its kitchens; it now offers pre-prepared meals and goods, wines, pantry items, and, yes, hens teeth aka toilet rolls! We can just send in our order and it can be delivered or picked up.
Many people are successfully adapting to the challenge of working from home. There is a sense of rallying for the cause of good, through adaptation. Generations before ours have done so in such times of war and other adversity. The generations post-WWII have been the lucky ones, but now it is a test of our mettle.
When we emerge from this hard and uncertain time period, I do think that there are many positives about how we as people and in business all do things. This forced upon us now situation that is challenging us to thinking are there better ways ahead in how we operate our lives. Technology and remote working are now allowing businesses to gauge how they can make this work in size. Had the coronavirus situation not happened we may not have considered or discovered these such possibilities. There will no doubt be more to come. We have also seen that with global travel restrictions in place, and home isolation reducing internal travel, how the reduced pollution and traffic have cleaned up rivers, lakes and air. Climate changers’ will be happy!
We may be thinking smarter and therefore more about the how things could and maybe should happen, not for just during this difficult coronavirus time but also for when this crisis is overcome. The world will move on. And, importantly, so we can get some live sport happening again!!
As there is no live sport to watch at present, my daughter showed me this excellent 20-minute Netflix documentary hosted by Bill Gates on pandemics and viruses. The program is on Netflix’s TV Explained series (Season 2), and the edition to watch is entitled ‘The Next Pandemic’. It was released in November last year before the coronavirus situation even existed. This documentary is so on the money and very informative. A must see!
In the meantime, keep the safe social distancing! Keep the faith!
As always, should you have any queries or wish to talk about what is going on, please do not hesitate to contact us.