Impact of COVID-19 on Financial Markets — We’re All ‘Long-haulers’ Now

The US’ numbers are in.

They aren’t pretty.

GDP growth for 2020 was negative 3.5%.

For context, that’s worse than 2009, when growth collapsed about 2.4%. Worse than the 2000 and 1990 recessions. Worse than the severe recession of 1982, when growth fell about 2%.

You have to go back to the decline during the demobilisation after the Second World War in 1946 to find anything as bad.

Jim Rickards has a new book out.

Its core premise is that, as bad as things are for the economies of the US and the world, things are going to get much worse before they get better.

The book is called The New Great Depression: Winners and Losers in a Post-Pandemic World.

An exclusive Australian edition is available for Rum Rebellion readers to access today. You can learn how to do so by clicking here.

As Jim explains in the book, the US’ catastrophic handling of the virus is going to have ripple-out effects everywhere in the world. Effects that could last generations. Effects that you should be preparing for now.

Says Jim:

In a $22 trillion economy, a 3.5% collapse equates to about $770 billion in lost output. The actual damage was far greater because output figures and GDP do not capture lost wealth in the form of failed businesses, lost skills, and declining asset values in commercial real estate, airlines, resorts, cruise ships, and many other endeavours.

The 2020 collapse was bad enough, but where do we go from here?

Most analysts and TV commentators say that growth will come roaring back in 2021, and we’ll be back to 2019 levels of output by mid-year. Don’t believe it.

First quarter 2021 growth will be severely curtailed by the new surge in coronavirus cases and fatalities that began in mid-November and the lockdowns that accompanied that surge. That surge is now abating, but the lockdown damage is done.

The vaccine injection program is gaining momentum despite a rocky start, but new virus strains are raising questions about whether new vaccine-resistant surges are on the way.

Even when lockdown relief is granted, restrictions such as 25% capacity on indoor dining in New York will keep a lid on the economic benefits. A new recession in the first half of 2021 (the first back-to-back recession since 1980–81) cannot be ruled out.

Stocks are way out on a limb and set for a fall to more realistic levels, which may have begun already…

In so many ways, there will be no return to normal…

I’ve said it here several times in the Rum Rebellion.

It also happens to be a core premise of The New Great Depression.

We’re all long-haulers now,’ according to Rickards and his Australian editor Nick Hubble.

Scientists are now studying the similarities between long COVID and ongoing symptoms experienced by survivors of the Ebola virus.

Just like with long COVID, survivors of ebola — another fairly new human virus — get an array of nasty symptoms that persist long after the initial virus has gone.

For Ebola, around 75% of survivors get ‘long haul’ symptoms a year after the initial infection… sometimes much longer.

These include joint and muscle pain, migraines, visual problems and fatigue.

‘“It’s the same kind of discussions as we’re having for Covid; it’s people whose lives have never been the same again, who describe joint pain and fatigue and cognitive problems and all those familiar lists,” says Danny Altmann, a professor of immunology at Imperial College London. “There’s a desperate need for some immunology to understand what’s going on.”

Impact of Long COVID on Financial Markets

What if a similar malady is going to afflict the financial markets for years to come?

Like us, Jim believes it was always highly optimistic to expect a hastily developed and unproven vaccine to return the world to normal in a matter of months. Or even years…

His book’s Bonus Chapter is called Long COVID Decade Australia: What comes next, how to prepare.

In the exclusive Australia edition, some pretty important questions are tackled, including:

  • Can the world’s greatest superpower the US — already facing a quasi-insurgency from within — ever recover from its current predicament? As its economy goes from bad, to worse, to even worse still in 2021…what is the fallout going to be globally?
  • What does an isolated, economically-hobbled Australia mean for your savings and investments…your retirement plans…and your family’s future freedom and security?
  • How is China going to act from here? What will the China/Australia collision course mean for our economy and our resources sector?
  • Above all, what might the world look like by 2030…at the end of this ‘Long COVID Decade’?

As I have said, an Australian return to ‘normal’…meaning an economy returning to any semblance of decent growth…should not be expected any time soon.

So, what will the market do next?

And what kind of asset mix should fare best in the coming ‘Long COVID Decade’?

Click here to read on.


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Greg Canavan,
Editor, The Rum Rebellion

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Greg Canavan approaches the investment world with an ‘ignorance is bliss’ philosophy. In a world where all the information is just a click away at all times, Greg believes we ingest too much of it. As a result, we forget how to think for ourselves, and let other people’s thoughts cloud our own.

Or worse, we only seek out the voices who are confirming our biases and narrowminded views of the truth. Either situation is not ideal. With regards to investing, this makes us follow the masses rather than our own gut instincts.

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