Looking Forward: Observations on Business & Global Markets

Looking forward, what are some observations we can make about how to come back, be more resilient, and mindful of the bigger players in the global market?

April 27, 2020

By: Bobby Casey, Managing Director GWP

looking forward A lot of us are trying to get a read on what’s next. Or is there a next?  If so, when is next? Justin Trudeau told his citizens that Canada cannot get back to normal until there is a vaccine:

This is the new normal, until a vaccine is developed. It will take months of continued, determined effort. We’ll need to keep practicing physical distancing, staying home and washing our hands. It’s important that people understand that we will have to be vigilant for a year or year and half. There will be things we are not able to do.

While Canada sits on over a million jobs lost just in the month of March, and the US is now at 26.5 million jobs lost the question is, how will these millions move forward?

The “new normal” seems to include the government deciding what kind of work is essential. In some places there are discussions about regulations on room capacities not just accounting for a fire hazard but for viral spread; which means establishments that once held 100 people might only be allowed 25.

Flexible Businesses

Many offices have redesigned for an “open concept” arrangement, especially where real estate is tight and dear, to cram as many employees as they can into the space. If states like New York or California insist on 6 feet of distancing, those offices will be in desperate need of expansion, renovation, or closure.

One of the most valuable features coming into the days ahead will be flexibility and versatility. It was remarkable how distilleries were able to so quickly pivot into hand sanitizer producers! Well, the process itself isn’t difficult, but the regulations created some hurdles. Regulations typically put a wrench in the market, but the fact remains that is a remarkable switch these businesses made.

Businesses that can function off a remote model are at an advantage. I’m in no way discouraging the local mom-and-pop brick and mortar businesses. I’ve been on a road trip for the past week, and it would have been awesome to stop at a local restaurant rather than have to do drivethroughs.

Maybe the question is, can brick and mortar stores and restaurants flip from experiential to curb-side quickly? The gig workers at Doordash, GrubHub, and Instacart clutched up in a big way for many restaurants.

Public schools were caught off guard by the unexpected switch from in-class to online. Charters, on the other hand, were very prepared.

Which country should we be watching, and why is it China?

The markets are down right now, but that also means that stuff is “on sale” at deeply reduced rates. I’m not just talking about the master classes on Facebook (although if you can take up a new skill on the cheap, go for it!), but shares in stock and potentially very soon, real estate.

This is a huge opportunity for people with the means and time to wait this out. So much so, an article rolled out from Forbes: Watch Out for China Buying Spree, NATO Warns. It calls out some major acquisitions China has been making, and will likely continue making while markets are weak:

  • China has been busy buying Greek ports.

  • It already pretty much runs Italian textiles.

  • China Overseas Shipping Company, aka COSCO, owns 90% of the only terminal operator in Belgium. COSCO has a 51% stake in and managerial control of port terminals in Valencia and Bilbao, Spain. They also have minority stakes in other terminals in Antwerp, Las Palmas and Rotterdam, according to a December 2019 study by a Netherlands think tank, seen here.

  • China’s biggest athletic shoe company ANTA Sports bought Amer Sports in Finland in March 2019.

China has been amassing a lot over the years. Gold. Infrastructural control in Africa. Partnerships with Russia in the energy sector.

The interesting part is, they aren’t only fixated on natural resources and infrastructure.

They want to part of the global brand A-list, and they want to move way up the economic food chain, so that makes them buyers of life science tech, fashion brands and retail, logistics operations, and outside of the core economies, corporate banking, too.

Many countries are very suspicious of China and their motives. Given the economic vulnerabilities seen in Europe and US, it will be interesting to watch was she does.

While I see why some might be concerned with this, nothing is stopping anyone else from doing the exact same thing. Investing when markets are down makes sense if you do it right. Buying up assets while prices are low also makes sense. The downturn was contrived, but the market is far more spontaneous.

Alternative Currencies, Anyone?

Another interesting thing to surface is happening in Utah: GoldBack. This isn’t a direct result of the pandemic of course. This has been in the making for a few years. But the site itself is making rounds after that lovely $2 trillion “stimulus package” passed in the US.

They created a currency backed entirely by gold, but this currency is actually spendable. The amounts of gold are such that you can theoretically go buy everything from a pen to a house with it:

The Goldback is a voluntary, local currency in Utah that is made from gold. It can also standalone as a small denomination, low price point gold product. Unlike most gold products, the Goldback is designed to be used as a currency with interchangeable denominations rather than varying premiums based on gold content. They can be used/spent nearly anywhere in the world.

I think it’s cool that this is emerging. I’m not sure how successful it will be as a competing currency. I imagine it will go through a similar series of phases like Bitcoin.

  • No one takes it seriously.

  • People beg for it to be taken seriously.

  • People take it seriously.

  • Then government takes it seriously and drops a hammer on it.

If not this route then it might go the way of a novelty currency like so many others in the US.

So what is your strategy? How are you making yourself and/or your business more flexible and enduring? What sort of opportunities are you taking advantage of right now?

“If you can’t fly then run.  If you can’t run then walk.  If you can’t walk then crawl.  But whatever you do, you have to keep moving forward.” ~ Rev. Martin Luther King.

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