WhiteSites Blog
WhiteSites Blog
One thing I have learned is whatever the TV talking heads are pushing as part of their fear agenda, almost never happens. They simply state theoretical bad case senerios in an attempt to keep viewers engaged. But the truth is COVID-19 is not like anything they have ever seen before, and what they are predicting is not going to happen. Here is my prediction for what will happen.
The truth is people did not stop spending, until they were forced to by local governments shutting down any business that operates in a congested foot traffic environment. Restruants, Bars, Even retail stores that didn't sell stables like food, were all forced to close. The result is those stores that are still open continue to thrive. If anything they are enjoying record sales due to being the only places in down where consumers can spend. The spending is not just limited to Stables like Food, and cleaning supplies. Recreational gear is also sold out.
My Son who has out grown his current bike, needs a new one. Every time I have gone to Walmart or Target in the past they always had plenty of bikes in stock. So we drove down to Walmart expecting their online inventory to be someone accurate to in-store stock. What we found was a bike rack empty with the exception of some kiddie disney themed bikes, and a couple of those big tire bikes. Anything we actually would even remotely consider buying was gone.
For years the routine has been for people to join mega gyms, where they can run, swim, lift and even relax. But with all gyms closed, people took to the trails and streets for excercise. I have never before seen so many people on MOPAC trail, or even running / walking on sidewalks even on busiers streets like O street, or 84th Street here in Lincoln Nebraska.
Even though most business will reopen, the 6ft policy will remain in place. This effectively cuts the capacity of most restruants to 50% of less of what they normally served. The result is they will not be able to handle their volume, and waiting times will be in hours. Whenever you have more demand than supply, prices go up. Its still to be seen if restruants take the opportunity to squeeze more profit from customers, but my theory is that will happen.
The best analogy I have for the state of our economy, is like being a teenager that is grounded by their parents. No friends, no going places, just staying at home in your room. Most people at home are not there by choice, and they are definitely not there by fear. The result is once everything opens again, and the grounding is over. People are going to try to make up for lost time. Many things people were putting off buying, such as larger ticket purchases, will suddenly be the new hot item. American consumers have a habbit of trying to consume their way to happiness. Suddenly, that new TV, New car, and even new House will be appealing.
We will hit Dow 30K before the end of the year. Whenever you put this much energy into repressing the economy the bounce back is going to be massive. Anyone who doesn't personally know someone that got sick and died from Covid-19 is going to act like it never happend. Areas of the country that were harder hit will have a much harder time. NYC, Detroit, will not bounce back in the same way the rest of the country will.
As we all go back to our normal lives, its inevitable that there will be a surge in cases, and even deaths. This will create another buying opportunity in the stock market, but as things warm up, the spread will slow, and people will start to look at Covid-19 just like the Flu.