Covid isn’t over yet and its changing the ways consumers behave

Blain’s Morning Porridge – Jan 17^th 2022: Covid isn’t over yet and its changing the ways consumers behave

“Behold the power of the peanut!”

This morning:  How much has Covid changed people, markets and the way the global economy works? The event has triggered significant phycological, behavioural and expectational changes across society, and we can only guess how they will ultimately play out in terms of consumption and politics. It ain’t over till it’s over!

There is one clear rule the global elites seem to be forgetting… Don’t Get Caught…

You really can’t make it up.. but someone up there must be running a massively short Credit Suisse position…. Perversely, it might be a buying opportunity for CS that their new saviour CEO, Antonio Horta-Osorio, has been forced to resign over Covid breaches. Getting rid of him may be positive – and maybe bring forward the gaff-prone bank’s quietus via a trade sale. It’s not the first time AHO been caught in questionable behaviours… but despite them he was still chosen as the man to take over “Man Steps on Rake Bank”. Bingo. Rake slams him in the face 8 months after becoming the Boss.

As I’ve said before…. If things are going to massively wrong in banking, it will likely go wrong at Credit Suisse first.

But aside from our inevitable giggles about Credit Suisse inevitably screwing up, again.. the defenestration of AHO highlights the degree to which COVID is changing society and the way we behave. I suspect some subtle and some sledgehammer phycological effects in the ways we now interreact with each other will have long-term economic effects across consumption and politics. Economics is all about mass behaviours, and when people become less polite, ruder, offensive, and angry… and scared, that’s got to change the ultimate economic outcomes.

(Aside: I am only using defenestration to demonstrate I can.. It’s becoming massively overused. It refers to the act of chucking someone unacceptable out a window, the most famous incident being the Defenestration of Prague – look it up yourself.)

Let me give an example of how behaviours evolve. At the Farnborough Airshow in September 1952 a new jet fighter crashed into the crowds killing 29 people and injuring scores more. That day’s flying programme continued, the injured were swiftly triaged and taken to hospital, and the following day continued as planned. Stiff upper lips prevailed. The rules about how aircraft could display at flying shows were changed after a full investigation and report. Today? Airshows around the UK were immediately cancelled following a fatal crash at Shoreham in 2015. Many have not resumed.

Just how might Covid change behaviour?

This morning, as Novak Djokovic rues his recent Australian odyssey at his breakfast for one in Dubai, around the globe business leaders, sports personalities and politicians are scrabbling to cover up the afternoon they met colleagues for a glass of wine, or maybe went to the shops while supposedly isolating for 10 days. Many will want to prove they are “holier than thou” in their covid observances. If they don’t, they may find themselves obliterated by cancellation on social media.

But its difficult.. how to judge the mood of the crowd? A minority believe Covid was manufactured by Bill Gates using 5G mast technology to serve us up as lunch to the lizardmen who run the universe from Davos. More of us believe Covid is probably mutating into something akin to the common cold, and it’s time to reopen economies. But a significant majority (56% in Wales) still think National Health Services are in deadly peril so tougher restrictions are required. How do celebs balance the need to get economies working again while being seen to be unquestionably supporting valiant health workers?

I’m going to admit it… I am becoming a Covid Apostate.

Time to reopen and damn the torpedoes. I have been slightly whoosh on the rules. I went for 2 hour walks rather than 15 minutes. I didn’t wear a face-mask while working in my home office. And… I spoke to a chum across the street during the first lockdown, and while having a beer with another in his back garden on a beautiful summer day after sailing, his neighbour called the police to report us. (A bored constable told us to stop wasting his time and to stop breaking the rules.)

The exception is of course the USA, where Covid heretical behaviour remains completely acceptable for larger than life personalities and  billionaire CEOs continue doing whatever it is they wish, because they are rich and able to.  In ‘Merica everyone accepts the natural truth rich men are brighter, smarter, and less vulnerable to strange new diseases because they are rich men. I have no evidence at hand to suggest Elon Mush has done anything except obey regulations to the letter of the law… (whatever law he may choose to follow) but can you imagine challenging him on them?

Here in the UK, despite 100 Nights of Sodom in Westminster, Boris Johnson looks likely to dodge his P45 (the tax slip you get on being fired.) Lots of his MPs are saying the right things to appease angry constituents about how he’s got to go, but apparently very few have actually submitted their no confidence letters. (I shall be writing to my MP, Mr Paul Holmes, and asking if he sent his recorded delivery, because clearly the Royal Mail ain’t working.. must be because everyone is off sick with Omicron-flavour Covid.)

Like it or lump it Covid is changing the way we think. We are not happier…

Yesterday while walking the puppy there were still people jumping onto the road to avoid being within meters of another human being. I got snarled at for not wearing a mask as we walked to our table in the pub. I read a post from a chum with underlying health issues who hasn’t been out her house since November. My own experience of Covid was a mild one-day flu, yet weeks later I am finding my blood oxygen (on my Apple watch) is down and I’m excessively tired. A doctor chum reckons its mild-Long-Covid. It’s a very real infection that seems to do damage to organs all around the body.

However much we shake our heads at Covid shenanigans, the reality is it still bites…

Back in the real world Covid is still playing havoc with economic growth. China is cutting its lending rates as Q4 growth came in stronger than feared, but still only (only!?) 4%, raising fears that tumbling retail spending, draconian lockdowns (like closing the 3^rd largest container port on the planet because a single stevedore was tested positive), will leave global supply chains fractured for longer than anticipated.

Europe is now experiencing the wave of Omicron infections that swept the UK over Christmas. The official numbers suggest the UK peaked last week – and even the Welsh government acknowledged that, meaning I will get to see Wales vs Scotland next month! According to one report Omicron has effectively burnt itself out in London…

Germany’s policy of locking down the unvaccinated seems to have worked: more cases in the general population but a fall in ICU occupancy numbers. (The unvaccinated will still probably catch it in due course, so that ICU number will rise.) Around the globe the efficacy of the vaccines is generally accepted – aside from the legions of Piers Corbyn supporters here in the UK, and US citizens who fear the jab might make them vote Democrat.

Meanwhile, the CEO of vaccine maker Moderna is on the wires saying the efficacy of the booster programme against Covid will decline over time. Further “fourth” booster shots are inevitable as the Omicron variant will not be the last time the virus stages a dramatic mutation. The next variant could well prove more trouble – although most virologists agree it’s likely to lesson over time as the virus and humanity adapt to co-exist. (A virus that kills everyone would be an unsucceful virus – it wants us fit and healthy!)

I guess we just have to live with it… Oh, that’s a great idea…! (NSS!)

Five Things to Read This Morning (I would love to share stories from BBerg – but my subscription seems to have been cancelled…)

FT – Kim Kardashian, Floyd Mayweather and crypto token’s wild ride

WSJ – Day Traders as “Dumb Money”? The Pros are Now Paying Attention

Thunderer – Factory pay deals soar as inflation accelerates

Torygraph – Britain’s failed establishment will never apologise for the catastrophe of lockdown

FT – BlackRock surges past $10 trn in assets under management

Out of time, and back to the day job…

Bill Blain

Shard Capital – Strategist