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That's right evlPanda .................. COVID-19 hasn't CAUSED the economic chaos, it's just ACCELERATED the economic chaos. Best part is that hopefully it will all be over quickly now, instead of the death by 1000 cuts that was previously going to happen 
interesting read ...
The CEOs, MBAs and private equiteers undermining our resilience
thenewdaily.com.au/finance/finance-news/2020/04/08/corporate-australia-resilience-coronavirus/
The ASX is in la la land. Given the current sh&$ storm, we are in for significant falls in Australian corporate earnings, which the ASX hasn't yet factored in.
Record low interest rates and the RBA's 'unlimited' quantitative easing, as well as larger fiscal stimulus (about 11 per cent of GDP so far versus 6 per cent in the GFC) will help support earnings. But we still need an unwinding of restrictions pronto if we are to avoid a train wreck. As the Wesfarmers chair said yesterday, the longer it goes the harder it will be to get the economic flywheel spinning again.
Currently, the Bloomberg terminal rolling 12-month forward analysts 'consensus' price-to-earnings (PE) ratio of the ASX 200 index is just under 15 times (as of Tuesday's ASX close). However, that analyst consensus doesn't appear to have fully accounted for the future downturn in company earnings.
So far the consensus only expects a 3 per cent contraction in market earnings per share (EPS) next year relative to last (joke). Given the emerging severity of the current recession, further downward EPS revisions appear almost inevitable.
Under a six-month 'hibernation scenario', market EPS could fall 35 per cent to a trough.
Using such a revised 'trough' EPS estimate (and even factoring in some capital raisings) the current ASX price-to-trough PE ratio is 22 times! Fark
Looking back to the 1991 and 2008 recessions, the same 'trough' PE ratio balanced out at about 16 times in both instances, so the current trough PE ratio of 22 implies the ASX will fall further.
Even if the S&P/ASX 200 only goes as far as a trough PE ratio of 17 times - because of the unprecedented degree of fiscal and monetary intervention - significant further falls are likely.
Calculating for a PE fall from the current 22 to a more realistic 17, gives an ASX of just over 4000 points. (17/22*5200=)
Patience is a virtue.
Australia began to de-industrialize during the 80's, a movement which gathered pace during the Howard government and which reached its climax when Abbot shafted the Car Manufacturing industry*. What jobs there were, then, were increasingly 'junk jobs' [in the sense of 'junk bonds'] in service industries.From what we are currently experiencing there is likely to be serious structural changes that will make for high unemployment for a long time.
Two examples:
1 The home fitness equipment industry has for years been in the doldrums with the plethora of cheap gyms now finds itself sold out of its stock... and the longer the lock down the more 'training at home' - which in the long run is a lot cheaper - will become a more viable alternative to expensive gym memberships.
Whether the massive 'gym industry' which employs so many 'personal trainers' and which has created a demand for fitness credentials in post school education will snap back would be debatable.
2 Even the geriatrics are going over en masse to buying stuff on line and doing our banking by PC so many shop front retail outlets and bank branches may well not snap back with the inevitable flow on to the 'food courts' and 'cafes' in the shopping centres.
With the big warehouse distribution centres being largely computer controlled and moving towards robotics in place of human employees even before the COVID-19 crisis new employment therein is not likely to replace those losses.And remember the economy is like a web. Damage in one place will impact on all of it in the longer term. I suspect that 'pick up' employment [now called the 'gig jobs'] low paying and very impermanent will become even more widespread. The 'underclass' will expand still more. Living standards will come to more greatly resemble those in what we traditionally thought 'third world' countries. The gap between the very rich and the rest of us will become a grand canyon like chasm.The social stress this causes may [or may not] become political stress.So no there will not be a 'snap back' and the longer the COVID crisis goes the less the future will be like what we once thought of as 'normal'.*It is true that Labor put up raising it from the dead last May by getting a home electric car industry started but you know what happened about that.
I'd say tax cuts might be off the table too. We have to pay back even more debt now.
evlPanda .................. new taxes will be on the table, there will be no tax cuts
Personally I think the way forward is that Australia should frigg the Oz Made and instead support Oz Taxpaying companies. Frigg The top 200 earners who pay zilch, who got us into the doldrums before Covid. Zero wage growth was here for years while profits grew and tax reduced from the companies.
Sheesh I'd rather invest in companies that pay tax.
Anybody notice Mum n Dad investors are up 5 fold?
ETFs are fine, unless major companies start failing. Then you get a share of that.
Bought Afterpay few weeks ago, sold today for 135% profit. Too easy after a crash
Not with all of the grey nomading, and cruising the high seas that's been milking future inheritances for decades. There's plenty of people who expect a fortune but will be woefully disappointed.
