POTUS can lift the rhetoric away from social distancing and isolation as soon as he wants after the 15 day period, but realistically people will continue to stay inside, depriving the economy of a lot of transaction for a very long time. I believe this will go even as far as large employers having to bend over to their workforce’s wills. What is a small HR team going to do if the majority of employees feel unsafe to return to desk work, especially since working from home just proved possible and a success? What happens then? Families may not go to restaurants all year or longer, employees may band together and keep offices dark and shut down, all of that stimulus Washington wants to send individuals is supposed to be a stop-gap, but what are the chances we go back to 100% as-is before this all happened even within 2 or 3 years? I would argue life has changed as we know it for a very long time and the lawmakers are mistakenly creating a bailout plan that assumes otherwise.
Consider the medium term permanent reduction in air travel for both business and leisure from the lingering effects of this and what to do with the laid off employees in that massive industry. Are you really hopping on a plane in 2020 if you don’t really have to? Consider the huge reduction in restaurant visits and frankly physical restaurant locations for possibly years and the fallout from the reduction in jobs there (unique jobs where you can make quite a bit over minimum wage through tips). Consider a cruise industry that may get bailed out now and then need another bail out down the road from lack of business for the next few years because who the hell would go into an environment that proved itself as a perfect proliferation cesspool for the virus to spread. What do we do with the tens of thousands to be laid off from Boeing because the demand for new planes just isn’t at a pace where they can pay back their bailout even a few years out? Washington is coming up with stop-gaps by delaying mortages and cutting people a month’s rent but industry “right-sizing” of headcount has barely begun. How many more checks will they cut?
If you think this game is over with a vaccine or a cure, I would argue it’s just the beginning of the next chapter. Once the second wave hits (if we are lucky to even drop the case rate enough to really call it a second wave soon) what will our governments do after they saw the economic fallout from the first shutdown and spent so much of their ammo trying to save us from that? I doubt there will be a second official social distancing/stay at home campaign, we will probably just keep doing it though on our own which is my point. I see a scenario where we are all told to carry on as normal when we don’t really want to. It was only in the last few days where we saw this virus kill people in their 30’s with no pre-existing conditions in the United States. It’s quickly going from “boomer-remover” to “oh shit I don’t want to get that.” The reality of the severity of the virus will only get more intensified as we start to each know someone that contracts it and falls ill. That experience will keep you home for a very long time if you’re lucky enough not to get it.
You can take this as bearish and buy index puts if you want but my personal takeaway right now is cash is king if only because you’ll need it if you get laid off. Expect wage depression, long term social unrest and entire industries to never recover until the latter half of the decade.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.