I came across a series of great analyses from JP morgan regarding the US economy reopening mentioned below:
- The US reopens: reopening, mobility, production and spending
- US recovery marches on; why deaths are diverging from sharply rising infections
- Overall JP morgan research resources for Coronavirus
The learnings are incredible. It presents a precisely quantifiable extent to which various sectors have been impacted by covid and how much they have recovered.
Reference point (before covid): 19 feb
After-covid point: 8 July
Some key things I learned from 1st pdf:
- US new job openings are down from 80 to 30 (treating 23rd march as the 0). This means that businesses are only hiring half the number of new employees as they were in beginning.
- Department store sales are down from 90 and have recovered only to 10.
- GPS workplace mobility is down from 100 to 30.
- Production of steel, coal, electricity is down from a high of 90 (march beginning) to 40.
- Rail traffic (Consumer goods) has recovered to pre-covid levels.
- In store credit/debit card spends are down 20% (5th july) from beginning of march. More importantly the spending seems to be roughly stagnant between 20 june and 5 july. The trajectory is unclear at this point.
- US GDP growth weekly estimates (which were roughly 2% pre-covid) are -7% even now and trending downward (low of -12% in april mid).
From the second pdf i learned that:
- Global GDP growth (weekly) is still around -8%. Low of -16% near april beginning. The -8% is roughly stagnant since july beginning (meaning global GDP estimated growth is not improving since june beginning).
- Manufacturing has recovered to pre-covid levels in most regions of the world (US, china, Asia, Europe) or is upward trending.
- US hospitalizations now catching up to rising infections, but deaths are not. “Two weeks ago, some observers proposed that rising infections were just the result of more young
people circulating and not getting sick. This appears to be part of what’s going on; a Vanderbilt study found that in Tennessee, COVID is now infecting a younger and less vulnerable population. To be clear, lingering health consequences of COVID can be very debilitating for survivors of all ages: lung scarring, heart damage (cardiomyopathy and myocarditis), neurocognitive problems and abnormal blood clotting. Bottom line: you do not want to get this disease, no matter your age.”
- “Some experts have suggested that the spike in infections is just the result of more testing, but that’s not entirely the case either: as shown in graphs, Hotspot infections have been soaring while Hotspot testing rates are not that different from “Other States”.”
Overall while the learnings do not generalize directly to india, they certainly point in some key directions:
- Higher ecommerce spends
- Much lower mobility
- Longer future duration of GDP decline led by travel, hospitality, consumer discretionary spending.
Key actionables imo:
- Best time to buy any pharma company is broadly independent of what happens wrt covid since consumer and government spending on pharma will only increase not go down over time.
- Better entry points can be expected for retail, FMCG type products, post Q1, Q2, Q3 results.
- B2B businesses are largely unimpacted and hence should possibly be bought on dips, specially if Q1 results which show reduced productivity result in price corrections.
Would also suggest/invite other forum members to share their analyses etc.