Coronavirus Fallout

America has forever changed in reaction to Covid-19 (Coronavirus). Not surprisingly, private business (Corporate America) and US citizens have stepped up in unison to help our government and medical care personnel in this time of need.

What are some of the other potential ripple effects of a post Covid-19 world?

Not to discount all the negative health and economic impacts of the Coronavirus, but Covid-19 may have positive side effects when it’s finally beaten. For example, after being forced to work from home, many people will do so more frequently going forward. A more virtual world may have just been sped up exponentially. This could save thousands in gas money, eating out money, commute time and help the environment in the process. The Wuhan Virus May Finally Bring About A Work-From-Home Revolution.

College courses may become more available online. I have three children in college and they are all completing course work entirely online. Hopefully, more online courses will become a permanent college class option and make a college education more affordable going forward.

Cleanliness will be engraved in everybody’s life. Maybe the spread of other transferable illnesses will go down. Roughly 50-75,000 people die every year in America from the Seasonal Flu. So far in 2020, 40,000 Americans have died from the Seasonal Flu. Where’s the media outrage? Nothing has ever been shut down in the past over all these deaths. Wouldn’t it be great if this number went down going forward as a great side effect of the COVID-19 response?

I imagine corporations of every size will be streamlining operations as a result of the virus reaction. This will include a “cleansing” of staff. For many reasons it’s difficult for employers or managers to fire people that are not particularly good at their job. These will be the first people let go and not likely hired back. For larger companies, entire manufacturing plants or offices that were least productive may be shut down and possibly never reopened. “The strong survive.”

At home, people are also streamlining life. I suspect people are cleaning the food out of their freezer as they are cooking from home more than ever. I spoke with one client that said he has the same amount of cash he had a week ago. He only bought groceries that were delivered. I think people realize they don’t really need to shop as often as many do.

Like most of you, I am scared and wondering how this will all play out. Of course, we have a way to go. The smoke is starting to clear as the United States is coming together with private business and government working together to get the supplies and medical attention to those that need it most. The U.S. has tested many more people than any other country and is close to having do-it-yourself tests. The best news is that only about 1% of those that have the Coronavirus die from it. So far with .00000394 (1,300 died) U.S citizens have died from Corvid-19 compared to 40,000 ytd from Seasonal Flu.

Portfolio Impact

it’s been a decade since the last stock market plunge. This means much larger account balance drops (many will see six-figure loses on next account statement) for most of us. Many people won’t know how much they have lost until they see their next statement which won’t come until the first or second week of April.

IT WILL BE A MAJOR SHOCK FOR MOST! Your balance will have dropped more in a single month then ever before. You will wonder if it will keep going down or will come back.

If you don’t have a financial plan to give you some peace of mind, fear might overwhelm you. If you have a financial plan and are a client of Fortune Financial Group, you know you allocation matches up with your goals. At a minimum, you might be well served to rebalance your portfolio. Watch video

I know after one of the longest stock market runs (almost straight up for a decade) “complacency” had set in for many investors. Why wouldn’t it? The economy was humming along and economic policies were going to continue to help that happen going forward. It wouldn’t surprise me if the stock market went back down before it starts on its next boom upward.

Why many people will focus on the impact from the flow of money provided by our Government (U.S. tax dollars) bailouts my focus will be on when we get back to work. I believe the stock market’s initial recovery has been due to President Trump’s message that we can’t make the cure (staying home) worse than the virus. We need “demand” for products and services to drive the economy. Without “demand” the economy will swoon.

As bad as Covid-19 is, it has a long way to go to be as bad as the Swine Flu (H1N1) in 2009. Nothing was shut down due to this virus and the economy moved slowly along without millions losing their jobs and companies closing down.

Swine Flu (H1N1) over $12,000 death – CDC
Impact of 2009 H1N1

Going Forward:

Watch for the media to continue to focus on how bad things are (FEAR gets your eyeballs and helps TV ratings). When the news is better or good, people either turn the channel, turn the TV off or wonder why they are not able to go back to work.

The turning point will be when people go back to work while practicing social distance and cleanliness. President Trump will be heavily criticized by the media (that want him out of office or more eyeballs on their coverage) for allowing states to run their own show and relaxing go back to work guidelines.

States should be running themselves. North Dakota (52 cases, 0 deaths) and New York (50% of all U.S. Coronavirus cases) are polar opposites and each should be able to have their own appropriate guidelines. United States Coronavirus: Worldometer

The sooner most of America is back to work (following guidelines) the better for the economy. Since 75% of the country lives paycheck to paycheck, those with lower income incomes need more than the wealthy to get back to work. Staying at home, away from work will likely be much when then be inconvenienced with the virus.

First quarter corporate earnings will be horrible (all-time record poor earnings) and we just saw record unemployment (could get much worse) claims. The stock market’s massive 30% drop earlier this week took this into consideration. The stock and bond market’s are expecting horrible economic news and have weighed their expectations into the valuations.

The government policy and economic surprises going forward will determine the day-to-day movements. How fast we get back to work will be key.

Give this fantastic, brief video a listen by a terrific economist: TWO INVISIBLE THREATS – Brian Wesbury