"To finish first, you must first finish" is a motto that comes to mind in the current war with the invisible COVID enemy. As the US rolls out $2 trillion in support along with the Fed's full arsenal of financial weapons, it is clear that the US will survive and better days lie ahead.
However, every crisis has its consequences - some obvious and some unclear. This one started out notably as people claimed that wealthy people were buying stocks while poor people were buying toilet paper. I hope that the behaviors of the wealthy are not as misguided as those of the poor.
It does seem to me that one of the remarkable difference between the Spanish Flu virus of 1918 and the COVID virus is that today's world is connected by debt. At the time of the Spanish Flu virus, the economies of the world did not use debt as its lifeblood, thus limiting the daisy chain effect financially. The US has created support to minimize financial disruption, but are there any likely to be seriously hurt in the long run?
It appears to me that highly leveraged structures are the most likely to experience long-term harm as their funding is disrupted and likely to bear an enduring risk premium. Second, it appears that those structures which rely on subprime buyers are most affected. We had temporarily experienced the highest rate of employment and these new marginal workers were spending and borrowing. Third, it appears that the current crisis is delineating between "luxury" and "necessary" due to huge governmental support.
Despite Neiman-Marcus's likely bankruptcy as an example of funding costs rising and a "luxury" area, the challenges of Signet Jewelers who finance jewelry for subprime borrowers is an even more perfect example of those likely to have the worst business outcome.
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