Sunday, March 8, 2020

Healthcare crisis - Global Recession 2020

This time it is different.
2000 - we had the tech bubble burst
2008 - we had the housing crisis which led to financial crisis
2020 - we will have the healthcare crisis which will lead to a financial crisis

Here are the factors playing into the recession

  1. Healthcare crisis due to Coronavirus will impact ~10% of the world population
  2. Supply side pressure due to reduced workforce, factory shutdowns due to coronavirus
  3. Business and pleasure travel will reduce by 80% due to coronavirus scare
  4. Demand side pressure 
  5. Coronavirus will become a global epidemic
  6. The world is already slow to react and has lost valuable time to prevent this crisis
  7. Supply and demand side shocks will take at least two quarters and will lead to quarter over quarter contraction
  8. Oil prices will drop precipitously due to supply and demand shock
  9. Situation may be exacerbated by health crisis -> job loss -> insurance loss -> financial loss -> depression -> health loss. This could be a vicious loop. 
Trends
  1. This will lead to new work from home trends and companies that support it
  2. Several startups which have been fueled by cheap capital in the past decade will have a existential crisis and will need to expedite path to profitability
  3. Steep valuation cuts in travel stocks - it is bad, it will get much worse before it gets better
References
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16 comments:

  1. faangMarch 16, 2020 at 6:23 PM

    Gavin Baker(ex PM of Fidelity OTC fund) recession thoughts aloud - tweet thread from March 15 https://twitter.com/GavinSBaker/status/1239320054858162183

    ReplyDelete
  2. faangMarch 16, 2020 at 11:46 PM

    Why we need cash now ? Economic time has been stopped, but the financial time has not stopped :
    https://twitter.com/TheStalwart/status/1239283043132682240

    ReplyDelete
  3. faangMarch 18, 2020 at 5:21 PM

    13.19 million Americans (about 9% of the total US labor force) work in the restaurant industry.

    15 million Americans (about 10% of the total US labor force) work in tourism/hospitality.

    The two industries that represent about 20% of the US labor force are being decimated.

    - Austin Allred(CEO, Lambdaschool) tweet from March 17
    https://twitter.com/Austen/status/1240103058308100096

    ReplyDelete
  4. faangMarch 23, 2020 at 2:14 AM

    https://medium.com/@tomaspueyo/coronavirus-act-today-or-people-will-die-f4d3d9cd99ca - this is a post backing the exponential growth of coronavirus backing the recession call

    ReplyDelete
  5. faangMarch 23, 2020 at 2:19 AM

    US job less rates may soar to 30%, FEDs bullard says : https://www.bloomberg.com/news/articles/2020-03-22/fed-s-bullard-says-u-s-jobless-rate-may-soar-to-30-in-2q

    ReplyDelete
  6. faangMarch 23, 2020 at 2:58 AM

    Goldman sachs predicts 2.25mn americans filed for jobless claims this week : https://www.cnn.com/2020/03/19/economy/unemployment-benefits-goldman-sachs/index.html

    ReplyDelete
  7. faangMarch 23, 2020 at 5:01 PM

    7 day average of unemployment in california increased from 2500 to 106000. https://www.facebook.com/CAgovernor/videos/1767561873386933/?v=1767561873386933

    ReplyDelete
  8. faangMarch 25, 2020 at 6:11 PM

    https://www.cnbc.com/2020/03/25/california-sees-one-million-unemployment-claims-in-less-than-two-weeks.html

    ReplyDelete
  9. faangMarch 30, 2020 at 2:04 AM

    Rob Lovelace of American Funds group about how the recovery could look like

    https://www.capitalgroup.com/advisor/insights/articles/rob-lovelace-looks-ahead.html

    ReplyDelete
  10. faangApril 7, 2020 at 2:26 PM

    Howard Marks latest memo from Oaktree capital shows waxing and waning through the crisis : https://www.oaktreecapital.com/docs/default-source/memos/calibrating.pdf

    ReplyDelete
  11. faangApril 7, 2020 at 2:37 PM

    Sequoia funds Q1 2020 investor letter showing more losses than s&p500 : https://t.co/UUH2CQkJpi?amp=1 .

    ReplyDelete
  12. faangApril 8, 2020 at 1:41 AM

    Myriad data sets suggest contraction is set to be one of the deepest recessions since 1900 - The UK economic fallout from coronavirus in numbers https://www.ft.com/content/33c03dc6-ceab-40e5-b61f-66829c5b9b2c

    ReplyDelete
  13. faangApril 14, 2020 at 5:12 AM

    https://www.reuters.com/article/us-jpmorgan-results/jpmorgan-profit-plunges-on-coronavirus-loan-provisions-idUSKCN21W1BW - quarterly profit slumped by more than two-thirds

    ReplyDelete
  14. faangApril 16, 2020 at 3:00 AM

    https://www.cnbc.com/2020/04/16/coronavirus-imf-forecasts-zero-growth-for-asia-economy-in-2020.html

    ReplyDelete
  15. faangApril 16, 2020 at 3:01 AM

    Asia has been among the fastest-growing regions in the world. During previous crises such as the Asian financial crisis in 1997 and the global financial crisis around 2008-2009, the region still managed to grow, said the International Monetary Fund.
    But for the first time in 60 years, Asia as a region will not register any economic growth this year because of the coronavirus pandemic, according to IMF forecasts.
    “While there is huge uncertainty about 2020 growth prospects, and even more so about the 2021 outlook, the impact of the coronavirus on the region will — across the board — be severe and unprecedented,” Chang Yong Rhee, director of IMF’s Asia and Pacific Department, wrote in a blog post.

    ReplyDelete
  16. faangApril 16, 2020 at 8:33 PM

    https://www.crescat.net/crescat-capital-quarterly-investor-letter-q1-2020/

    ReplyDelete

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