After a month of pandemic and still with many doubts the world economy stopped.
I have been a few days without writing, and the truth is that there is little news. The world economy is practically closed, there is still no cure or treatment for COVID-19. There is already talk of reopening the economies, but without knowing how to do it for fear of pandemic flares.
There are many doubts about how to return to a certain normality because the medical problem of COVID-19 has not been resolved. And it is clear that the new normality, at least in the short term, will not be the same as the normality that we had previously.
I have been very struck by the fact that the US stock market is at such a high level, undoubtedly encouraged by the enormous aid from the government and the federal reserve. But the aid only works for solvent and profitable companies that will shortly restart their activity and will again generate benefits.
The stock market is not discounting how many companies and industrial sectors are going to have to reinvent themselves or are simply going to disappear. First, because millions of workers are going to lose or have already lost their jobs and this will logically generate less consumption and debts that cannot be paid.
And then, what will happen to the aeronautical sector? For example, flying will never be so comfortable, fast or cheap, the medical requirements that will be imposed, without knowing yet what they are, will certainly make flying certainly more expensive. What will affect the entire tourism sector and aeronautics.
Of course we are in a crisis at least similar to the crisis of 2008 but higher, we do not know how much it will affect employment because right now everything is paralyzed, but there is talk of tens of millions of workers who will lose their jobs. Which means loans that they will not be able to pay, mortgages, less car sales, less leisure spending, ultimately less wealth.
Of course right now the market does not reflect what will happen, because it does not know it, but if my forecasts are unfortunately fulfilled it will drop quite a bit because many companies will be in difficulties.
A fact by way of example, the oil market, with such a big drop caused by very low oil consumption compared to previous months.