Social Distancing

Global travel and tourism accounts for approximately 2.9 trillion USD in 2019 but Darren Winters looks at how the requirements for social distancing will impact business models in the post-pandemic era.

The unrestricted free movement of people and goods is the bedrock of a modern economy and that one way or other countless companies are directly or indirectly involved in the logistics of people and goods.

The post-pandemic era of social distancing will wreak havoc on business models which are based on accommodating as many people into confined spaces

Transportation, Commercial traveling, sea traveling, coaches, private taxis could all become unprofitable business models if social distancing became mandatory.

Mandatory social distancing would destroy the Budget airline business model

Ryan Air’s planes will not take off again if the “low-cost” airline is forced to leave the middle seats of its planes empty to comply with “stupid” social distancing rules on flights, said the Irish airline’s chief executive.

Social distancing rules would also destroy the business model for many pubs, bars, and restaurants

Social Distancing

As Darren Winters points out, packing in fewer dining tables and chairs into a dining lounge or terrace would probably force many restaurant businesses to close shop.

Nightclubs, conference organizers, concerts, movie theatres would also be hit hard by the shady science of social distancing, bearing in mind that the surviving population will already have herd immunity.

But it is not just the airline business that has been decimated from the pandemic’s social distancing rules, so too the entertainment business could suffer $9 billion of losses with an estimated 120,000 crew jobs lost due to the pandemic.

The related supply chains of these businesses will also be hit hard by social distancing regulations

The reaction to the pandemic, its social distancing rules could continue chipping away at the economy as the demand shock spreads to other sectors. So investors might need to look beyond demand shock for crude oil as dwindling demand for goods and services spreads to other sectors and the domino effect of social distancing gains momentum. Failing restaurants means less demand for restaurant furniture, coffee machines. Less commercial travel also means canceled orders for aircraft makers, coaches,  tire manufacturers, ball bearings and everything in between could all be adversely impacted either directly or indirectly by social distancing rules.

Social distancing, the practice of keeping a physical distance greater than normal, will make many business models unprofitable outside the digital matrix

But already clear winners have been identified in the post-pandemic world of social distancing, these companies are the FANGS of the digital matrix in the new world order investing.

The FANGS, which refers to the four popular technology companies: Facebook, Amazon, Netflix, and Alphabet, are the heads we win, tails you lose companies of the post-pandemic era of social distancing.

Is anyone surprised that Amazon’s Jeff Bezos’ wealth grew to $24 billion amid the coronavirus pandemic while mom and pop stores were forced to close?

Moreover, should you be astounded that Netflix added 16 million new subscribers during the pandemic great lockdown? The global quarantines of a billion healthy people, better said the house arrest and curfews, left a global population with not much to do but watch Netflix.

The great lockdown, a heads up for Netflix, temporarily secured a monopoly on global household entertainment, the companies stocks have rallied 30% to an all-time high.

Facebook filled the void created by social distancing and gathering, albeit digitally for human interaction, sharing of experiences and opinions. Facebook, the social network site saw significant usage during the great lockdown with its stock rising nearly 10% despite dwindling advertising revenues.

But there are many losers from the social distancing post-pandemic world which is weighing on retail real estate.

Retail real estate, already in a downward trajectory before the pandemic has accelerated its downward trend. In many ways, the post-pandemic world has sped up trends already in play, for example, e-commerce has ballooned as many people decided to shop in the convenience and safety of their own homes. So the demand for high street retail shops is likely to become even more depressed going forward. 

Moreover, as travel becomes more restrictive, demand for holiday second homes could also be adversely impacted in the post-pandemic world.

Airbnb hosts are now listing their properties on more sites and making their properties available long term at discounts rates.

These hosts are looking for any means to stay afloat on their mortgages as demand for short term rentals has suddenly dried up due to the coronavirus.

Another factor to consider is that the social distancing post-pandemic world is accelerating the trend of rising protectionism

In Europe, no-deal Brexit is back on the agenda as the UK now looks likely to crash out of the EU with a no-deal WTO option. But that would mean the UK would be subject to some tariffs and trade restrictions with the EU, which would be a headwind for both economies, particularly the UK’s, bearing in mind the UK economy is many times smaller than the EU. 

China-US trade relations have also reached an ebb in the social distancing post-pandemic world

The US-China trade war truce is over with neither side willing to give. Moreover, the pandemic is referred to as the Chinese flu by POTUS,  who is spearheading for reparations ,signalling that an early indication that Trade talks are going nowhere.

If fact, China-US relations could take a turn for the worse as China’s invasion threat of Taiwan grows.

“In COVID-19, Beijing sees the chance to win. This time, China benefits from a strategic position. It also benefits from first-mover status,”  Horizon reported. The coronavirus has crippled the USS Roosevelt and US naval hegemony in the region, and China could be looking to exploit the situation.

In the post-pandemic social distancing era what could come next is a war with China

History could be repeating itself with the 1929 great stock market crash, then the rise of protectionism, the Great Depression, and WWII. Today, 2020 great stock market crash, a trade war with China, the Greatest Depression, and WWIII?

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