March 11, 2020

The March of the Coronavirus

There was a moment this evening when my wife showed me that the NBA had suspended their season until further notice because one of the players on the Utah Jazz had been diagnosed as having contracted COVID-19.  According to the article, the players on the six teams that the Jazz played in the last 10 days have been told to self-quarantine, and the Jazz players don't yet know if they can return to Utah.  After seeing this article, I immediately started thinking about its far-reaching effects.  No NBA games means thousands of people out of work and millions of dollars in lost wages and revenue for employees, teams, and cities.  This means less money for everyone who works at the games, the concessionaires, the film crews, the maintenance personnel.  It means less money for the hotels and restaurants and Uber and Lyft drivers and all of the people who work to provide services for the people who go to the games.  It means less money for the TV networks and their myriad personnel.  It means the NHL and the MLB will have to seriously think about how and if they are going to proceed with the ongoing hockey and up and coming baseball seasons.  Thinking about the effects of just this one decision made me realize just how much our world is going to change over the next few months.

Now, I'm not one of the people freaking out.  My family hasn't bought our limit of hand sanitizer (which is now six at our local mega-mart - I mean really, who needs to buy six bottles of hand sanitizer?), we haven't stockpiled large quantities of food and paper goods (I've heard toilet paper is becoming a hot commodity), and our kids are still going to school with the normal cacophony of mucus factories that are present in elementary schools the world over.  We are being much more cognizant about washing our hands between activities, cleaning our light switches and door knobs, and not going to the store every single day.  But these activities are just the recommended guidelines for everyone to follow to try to slow the inevitable spread of the virus.  These aren't very hard to implement, and they seem like pretty good common sense.  So while personally our lives haven't changed much, at least yet, it is just a fact that our lives will be different for awhile, and these changes will most probably have a very serious impact on the economies of the world.

Nobody knows how large or how long these impacts will be.  How many millions of dollars are airlines, restaurants, hotels, and cultural attractions losing everyday?  Now that many store shelves are picked clean, are consumer goods companies showing short-term record revenues?  Are the supply chains robust enough to handle the increased volume of consumerism?  How are other service industries being affected?  My guess is that a few industries are making out like bandits, but that the majority of the market has a lot further to go downwards.  And it won't just be this initial reaction.  When the quarterly earnings statements start coming out and the real impact of the virulent scourge is known, that is when we will see if the market has dropped far enough or if it has a ways further to trek into the abyss.  Only once the stock traders and analysts see how badly companies' bottom lines have been affected, once the virus-induced personal discomfort of the change in lifestyle caused by new social policies has translated into the corporate realm of earnings and revenues and profits and losses, will the real pain in the market truly take form.