I'd have to broadly agree with your assertion durmaz.
If we can characterize the US economy as the ice breaker for the global economy - they are in far better shape than Europe and Japan - then things for the land of Oz are tenuous and specifically retail or any brick and mortar assets. They can mitigate some of the risk by increasing their digital presence - Amazon, etc. have and continue to show the way for retail - but thats a fairly singificant departure from their current model.
A couple of broad facts and close proximity and longer term outcomes which will feed into OZ and retail.
- The US had the greatest level of debt in history prior to the pandemic. It has increased significantly post.
- Historically high corporate debt will need to be serviced and rolled over - but only if they have revenue that is equal ++ to what they had prior to the pandemic. We know the virus can create secondary waves of infections and therefore risks of further shutdowns. Australia is well placed, but can't become complacent.
- US unemployment is at a record historical level. But so is every other country.
- Net national savings in the US will turn negative for the first time since 1920s. This includes private and government. Less capital for physical investment.
- Private savings will increase because (a) pandemic experience (b) unemployment risk (c) less recreational spend because of health risk.
- Broad consumer and corportate spectrum insolvency because the FED can't save everyone - they can fix liquidity issues but can't spend or create revenue streams. Its also likely some Municipalities go belly up, because revenue to diving as a result of COVID19.
- Depository institutions (banks, etc) have been supported by the FED but unlikely to lend to corps already up to the eyes balls in debt and in particular if they place a premium for risk (in this environment). Banks are also required to carry additional tier 1 capital for to protect these positions, but are already under pressure. In Oz, the likely of WBC are already under pressure on multiple front, including litigation, commercial and consumer solvency risks, revenue risks as a result of back of office throughput issues (offshore) and higher onshore mitigation costs.
- M2 money velocity (https://fred.stlouisfed.org/series/M2V) is in an aggressive downward trajectory, meaning GDP remains under pressure... GDP = monetary expansion x velocity. The FED has filled a liquidity gap, but can't create revenue streams.
- Over suppy of skill and labour will create an deflationary environment, because of (a) less spending (b) more savings (c) downward pressure on wages, i.e. over supply of skill. Onshoring or the reconfiguration of supply chains will mitigate this a little, but this will be a slow grinding process over years, with the exception of anything to do with national security.
- GDP/Debt ratios in all major western countries is the highest in history and above thresholds that allow them to successfully drive GDP growth above the pre late 1990s of 2% = less retain spend.
- Stimulus hand outs will need to come to an end - a waterfall will follow if a vaccine is not found. In reality it takes years, but optimistically it will still be many months to prove safety and efficacy. Then add manufacturing and administration scale up = more months of economic risk and distruption.
- Corporates in a similar way to consumers, will hoard cash and not reinvest in this environment - less capital expenditure for ROI opportunities.
- CFO's have worked through scenarions, which include some of the above likely/potential outcomes and commenced names on a spreadsheet cycle to identify most productive, least cost skill - the rest are at significant risk of being shunted. Additionally, mid to family sized business will vapourise along with a significant percentage of the total demographic employed.
- A belligerent politically and idealogically ambitous China, will continue to place pressure on our economy with real outcomes and perceived, creating spending risk aversion. There's a much larger set of issues to be concerned about here, but for the sake of brevity.
- The world birth demogaphic is the worst in 500 years = less people spending. The aging population is increasing = equal more government spend. Both of these facts is part of the reason Japan's economy has been stagnant for 30 years. Western world and now China is about to follow suit. Immigration is key in this country - naturally skilled and talented who can provide a net contribution to the economy.
- The pandemic has sped up the movement of consumers habits from in-store to online - check out all the online retailers sp.
- McKinsey studied 24 over indebted economies 1900-2008 and the common theme for rehab from the spend beyond your means lifestyle cycle is plain and simple - austerity.
So MYR will need to create significantly better value propositions in terms of product and online solutions, in addition to optimising commercial space footprints and staff overheads. Why, because the much broader macro environment could/will turn significantly worse for an extended period of time before it is back to where is was prior to the black swan event. Insolvency risk a major threat quarter 3 - banks are prepping for this outcome now.
Never shorted a stock in my life - based on the above plus more, would be extremely careful about holding retain stocks, but in particular traditional models - its time for contra-cycle or digital assets.
The above is not advice, simply my opinion only.
(20min delay)