GoFounders Service Message Coronavirus (COVID-19) Update

GoFounders Service Message

The coronavirus outbreak has spread across the globe and has been declared a public health emergency of international concern in January by the World Health Organization (WHO). The WHO has since raised its global risk outlook and announced that new cases outside China exceeded those within for the first time on February 26th. The global economic strain of this outbreak will likely extend into the next quarter even as China recovers. Bruce Kasman, Chief Economist, J.P. Morgan. “We now forecast a 1Q20 stall in global GDP growth, representing the first time global growth has stalled outside of a recession.” (1)

Dubbed COVID-19, this coronavirus is the specific illness related to the current epidemic. The acronym, provided by the World Health Organization, stands for “coronavirus disease 2019,” referring to the year the virus was first detected. The name of the virus is SARS-CoV-2 and it’s not one type of virus.  The coronavirus is a large family of viruses that also includes SARS and other respiratory illnesses large and small. Coronaviruses can be spread between animals and people, as we have seen with this current strain.

The term “corona,” which is from a Latin root meaning crown or ring of light, refers to the shape of the virus under a microscope. 

You may have heard of or remember a coronavirus known as SARS emerging in China almost twenty years ago that killed hundreds of people and started an economic wave of panic throughout the world. This virus is the one now wreaking havoc across China and is already much more damaging than the one we saw back then. Twenty years ago, SARS sickened 8,098 people and killed 774 before containment. The new coronavirus, that originated in the central Chinese city of Wuhan, has already killed more than hundreds of people, infected over many thousands, and is affecting at least 25 countries and territories. The virus continues to spread even though Chinese officials have locked down Wuhan and several other cities.

Neil Shearing, Group Chief Economist at Capital Economics, had this to say:  “The outbreak has the potential to cause severe economic and market dislocation. But the scale of the impact will ultimately be determined by how the virus spreads and evolves, which is almost impossible to predict, as well as how governments respond.”

Apparently, the risk is being compounded because the world outside China has changed a lot since the first outbreak in 2003. Companies have been encouraged by globalization to build supply chains that make economies much more interconnected and are no longer limited by national borders. The major central banks are much less able to fight economic downturns since the 2008 financial crisis, and global debt levels are at peak levels.   Consequently, this virus is threatening global supply chains and disrupting companies. 

However, the current level of disruption is manageable, according to economists. China’s factories could reopen soon if the number of new coronavirus cases begins to slow.  If that happens, the outcome of the effects of the virus would have a short-lived impact on the Chinese economy in the first quarter with an only a dimpling effect on global growth. But, if the coronavirus keeps on spreading, the economic harm will increase severely and quickly.

Mohamed El-Erian, Chief Economic Adviser to Allianz (ALIZF), told CNN Business that he was most worried about the virus’ potential cascading economic effects when he said this: “They first paralyze the region of the virus outbreak. Then they gradually spread domestically, undermining internal trade, consumption, production, and the movement of people. If the virus is still not contained, the process spreads further, including regionally and internationally by disrupting trade, supply chains, and travel.

Interestingly enough, the virus is not what drives such losses. It’s how consumers, businesses, and governments respond that matters most. That’s because people are more likely to stay home so they don’t get sick. And staying home prevents traveling, shopping, and working so the demand for consumer goods and energy is limited. As it progresses, the decisions by schools, companies, and governments to close doors and slow factories restricts production.

A critical part of recovery is the government’s ability to coordinate its outbreak response, ideally with help from multinational institutions. According to the World Bank, being prepared for a potential pandemic is low. But coordination could be improved by companies with a global reach working together with cooperation valued above national boundaries.

Neil Shearing, quoted earlier, went on to say, “It’s quite clear that multinational institutions are under more pressure, and have fewer teeth on the day to day issues than 10 years ago.  But the optimist in me would like to think that in the face of a global pandemic, global institutions are still in a position to respond.” (2)

Covid-19 went largely ignored as got started and began spreading across China. But in February, global financial markets had a marked reaction last week as fears of a global pandemic became tangible the virus’ spread to Europe and the Middle East.   Ever since the risks aggressively assigned across asset classes have some fearing a recession in the global economy may be a foregone conclusion.   But how bad would a Covid-19 recession be?  I mean, there really isn’t a single number that can predict or credibly anticipate the economic impact the virus could have with any real accuracy.

So, what do we do?  We take a careful look at market signals across many types of assets, recession and recovery patterns, and even the history of epidemics and shocks.  By doing this, we may be able to see a little of what lies ahead or at least what we could expect.

Looking at at-risk assets, where the impact of Covid-19 has not been uniform. We see credit spreads have risen only little and equity valuations have fallen recently but, historically speaking, are still high. These are good things. On the other hand, instability could mean reaction in the market could be on par with the major dislocations of the past 30 years as we close out the first quarter of 2020; outside of the global financial crisis.

There is no doubt that financial markets are placing a good amount of disruptive potential on Covid-19 and feel those risks are real even though unsure of effects of this epidemic because of its uncertainty and the fact that financial market sell-offs may not provide accurate indicators for the real economy so may not point to a recession. Recessions typically fall into one of three categories.

1.       Real recession. We can experience this when a capital expenditures boom cycle stops.  These are funds used by a company to acquire, upgrade, and maintain assets. But, demand and supply shock war or natural, which can also push the real economy into a recession.   And this is where Covid-19 has the most damage.

2.      Policy recession. In a nutshell, this is when central banks leave policy rates too high relative to the economy’s “neutral” rate, which causes economic growth to slow or halt, so there’s not much worry about this because of the virus.

3.      Financial crisis. It’s unlikely that Covid-19 would contribute to, much less create financial imbalances, but if small and medium enterprises (SMEs) experience cash-flow problems as a result, it could have an effect.

So, what could a real recession look like as initiated by Covid-19 look like?

Major economies are made vulnerable to recession through a slowing of growth which, could be brought about as factories and schools are closed and even through government closures or mandates issued through them that lessen productivity. As these types of things occur, an economy becomes less to absorb additional economic shock resulting from not only a diminished supply but also form decreased demand because so many people are consigned to their homes, by loss of work or even fear of contracting the virus.  In fact, an economic slow-down hitting any economy, even as the result of something originating from outside of it borders, especially at a time of vulnerability, has been the most plausible recessionary scenario for some time.

A real recession that looks like this scenario will tend to be more likely than others in that they represent changing demand (or supply) shocks. Ability or likelihood of voiding recession is really not the question I would ask so., Instead, I will talk ask about recovery.  This is because, certainly at the national, and quite possibly at a global before too long, countries are already feeling the impact f the epidemic.   

This means, a pathway to recovery, to reestablished growth post-COVID-19, is going to depend on the length of time the supply and demand side of things will be diminished.   And that will dictate whether the shock results in a “V” spike or whether there is real economic damage.   Historically, we can understand the potential impact path of Covid-19 because V-shapes monopolize the previous landscape of prior shocks. Very interestingly, this includes epidemics like SARS, 1968 Asian flu, 1958 Hong-Kong flu, and 1918 Spanish Flu.

A V-shaped spike refers to a real economy shock in the classical sense caused by diminished productivity that eventually rebounds. If this happens, annual growth rates could absorb the shock completely. While this may seem a bit optimistic, it is plausible.

Included as part of the cause, economic consequences of Covid-19 could result as an indirect hit to market confidence so as to have a negative “wealth effect” though an impact on the real economy through financial markets. As a result, markets drop and household wealth diminishes causing people to hang on to what they got so fewer consumer goods are used. Additionally, a direct hit to consumer confidence could keep consumers at home, afraid of spending because of uncertainty or pessimistic views concerning longer-term aspects.

As of March 8th, 2020, there was a big jump in Italy’s COVID-19 cases and deaths making it the second worst-hit country behind China and pushing South Korea to the number three spot.  Italy’s reported 1,492 new cases and 133 more deaths, making overall totals at 7,375 cases and 366 deaths. As a result, Italy announced a lockdown affecting 16 million. France reported 177 new cases today, along with 3 new deaths, which has brought its total to 1,126, including 19 deaths.  Germany has reported 902 cases.

In the Middle East, Iran reported 743 new cases today, plus 49 more deaths, which marked a total of 6,566 cases, with 194 more deaths. The virus has been reported from at least 30 locations, with Tehran, Qom, Gilan, and Isfahan the hardest-hit areas.

And in Saudi Arabia, the city of Qatif in Eastern Province where 11 cases have been reported, is on lockdown. With a population of just over a half-million 525,000, it also announced the closure of all schools and universities throughout the country until further notice.  South Korea today reported 367 new cases and 6 more deaths, bringing totals to 7,134 and 50, respectively. Japan reported 30 more cases from 6 different regions with total cases at 438.

At the same time, American COVID-19 infections continue a slow and steady increase with at least 34 states have reported cases, according to a New York Times tracker. A Johns Hopkins University online dashboard shows 516 US cases, up by nearly 100 cases from the 417 reported at the same time the days before.  Washington State reported 136 cases, up 34 cases from yesterday, and 18 deaths, 2 more since yesterday. Eight counties have reported cases. 

At least four other states have reported their first cases: VermontMissouriVirginia, and Connecticut. A US Marine from Fort Belvoir was named as Virginia’s first case yesterday with a Fairfax resident named as a second case.  Connecticut’s first case was also reported. A handful of states previously affected reported more cases as well.  Oregon, which has reported 11 more cases over the last two days, raising its total to 14, has declared a state of emergency. New York announced 16 more cases today, raising the total to 105.California reported 88 cases and  has also declared state of emergency. Chicago officials reported a new case, binging the Illinois total to seven.

Top brands on the EPA’s registered disinfectant list:

Clorox Disinfecting Wipes, Clorox Disinfecting Spray, Clorox Multi-Surface Cleaner + bleach, Klercide 70/30, Lonza Formulation, Lysol Clean & Fresh Multi-Surface Cleaner, Lysol Disinfectant Max Cover Mist, Lysol Heavy-Duty Cleaner Disinfectant Concentrate, OxyCide Daily Disinfectant Cleaner, Peak Disinfectant Wipes, Peroxide Multi-Surface Cleaner, Disinfectant, and Glass Cleaner, Purell Professional Surface Disinfectant wipes, Sani-Cloth Prime Germicidal Disposable Wipe, and Sani-Prime Germicidal Spray. (5)

In its MARCH 8th 2020 update, the World Health Organization said that 24,727 of the 105,856 global COVID-19 cases have been reported by 101 countries outside of China. (4) But no matter how it plays out, history suggests that the global economy will likely be significantly different in varying ways after a major crisis like Covid-19.

Political implications will become evident as political systems test their ability to protect their populations.  Who knows?  Covid-19 could even play a part in shaping the upcoming U.S. presidential election as well as political frameworks in other countries.

However, in micro-economics, crises, which include epidemics, can hasten the adoption of new technologies and business models. Alibaba’s rise was accelerated by the adoption of online shopping among Chinese consumers as a result of the SARS outbreak of 2003. It makes us wonder, with schools closing in Japan and other markets if an online business model for e-learning and e-delivery of education be seen as an innovation to curtail the severity of the crisis?

Again, who knows?  Whatever the case turns out to be, we need to begin to look past the crisis and towards what opportunities or challenges will arise? How will we address the post-crisis world? Can we be a part of the implementation of the adoption of new technologies and new processes?  (3)

I believe we can.  And I also believe we address the post-crisis economy by not waiting for the post-crisis opportunities to appear.  We know that thousands are going to be looking for new, readily available sources of livelihood from channels not previously considered.  Because of the scope of this epidemic, companies with products and services globally available are in the best position to directly assist those affected and to assist governments with their efforts as well.

One such new-comer, whose timely arrival can provide digital products and services globally while providing income to its members, known as ONPASSIVE, has come onto the scene as a powerhouse for global economic good. 

This is because ONPASSIVE’s ecosystem consists of several types of ecosystems working together. It includes the hundreds of products and services, founders, citizens, customers, etc., including its AI makes ONPASSIVE a total internet solution! 

The effectiveness of ONPASSIVE’s ecosystem will be demonstrated in areas of technology, healthcare, industry, education, and government, to name a few.  This is why ONPASSIVE can be a ready-made solution for a great many people whose employment opportunities have been or will be dislocated as a result of the COVID-19 [coronavirus] epidemic. Because it has the platforms available to reestablish a great many services right from the safety and comfort of individuals’ homes, centers, or other areas safe from contact with COVID-19. Specifically, I am referring to VPN, video-chat, print shop, video marketing, video e-mail, advertising, video marketing, video conferencing, domain names, crowdfunding, website builders, email marketing, calendar schedules, payment transfer capability, merchants and cards, liquid hosting, bulk mailing, digital marketing, Webinar platform, mass marketing capability and much, much more.  Everything we have available can be used to reestablish employment and productivity from any location you choose anywhere on the globe. Especially if you work in education or government or your skills allow transitioning to an online platform of any kind.  So, whether you’ve ever worked from home or not doesn’t matter; this can be one of the solutions.

Related: Get ahead even if the global economy is affected by COVID-19

Jeffrey Morlock

onpassive founder
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All Comments

  • Avatar yvonne Beckles

    So thankful to be in the right place at the right time

    3 weeks ago | 18 May, 2020 3:19 pm Reply
  • hassan ait belaid hassan ait belaid

    onpassive is artificial intelligence technology

    3 weeks ago | 14 May, 2020 1:14 am Reply

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