Crisis, virus - business: who the mess works for

    Кризис 2020
    Crisis 2020

    Coronavirus and the looming financial crisis are projected by WOT and financiers to cost the world economy trillions of dollars and millions of jobs.

    However, any crisis is a two-sided medal, and while some are waiting for state payments and hoping to maintain their position, others take full advantage of the opportunities that fear, panic and uncertainty provide. What are these opportunities and who has become the main beneficiary of instability?


    National governments

    Нарушение прав человека
    Violation of human rights

    Despite the fact that the situation is heating up in the international arena, states are desperate to stop epidemic and mitigate the possible effects of the crisis by all available means. This, of course, is true, and, in fact, the state needs it to solve crises and problems that smaller entities cannot solve. But the protracted struggle costs citizens dearly, and it’s not just about money:

    • In China people who collect and transmit information about coronavirus are missing. In addition, did not allow HRW to report to Hong Kong;
    • In Malaysia, for violation of the decrees on the restriction of movement , citizens are simply sent to prison ;
    • In Egypt, a chemical army took to the streets, and in Turkey Erdogan personally assured of the citizens in a voice message that the situation was under control. Immediately after the arrest of journalists spreading information about the virus.
    • In Israel, special services received the command to monitor citizens through mobile communication devices.

    And all of this could be blamed on the “wild east”, which is a delicate matter, but here the Hungarian Prime Minister Viktor Orban became virtually the sole ruler “until the end of the epidemic” ignoring decisions Parliament. HRW is worried that Poland is touchingly looking at this dictatorship on the outskirts of an oasis of democracy, thinking about something similar.

    HRW - Human Rights Watch , an international non-governmental organization dedicated to the protection of human rights and monitoring of their violations in 70 countries of the world. It has been working since 1968.

    Посягательство на права и свободы человека 
    Violation of human rights and freedoms

    From equally important news about the violation of human rights and freedoms: [19459009 ]

    The Association of German Chambers of Commerce and Industry proposed to introduce tickets for visiting shops and pedestrian areas. Well, that is, if earlier it was possible to go there freely, now only by ticket, which will be issued in the application.

    This is somewhat reminiscent of food stamps, only now it’s not about daily ration, but about the right to be in a certain place.

    Only slogans like "Give two trips to the store and one walk a day" are missing.

    And in Chile, the state attributed to itself the right to decide who recovered and who did not, and based on this, determine who is “worthy” of the right to earn a living and who is not. People discharged from the hospital will be given special certificates so that they can return to work. WHO re-infection warnings do not bother officials too much. It seems that an effective vaccine against coronavirus was invented in Chile - this is a seal on a certificate, once they put immunity for life.

    The news of fines and court cases for publishing information about the virus or lack of medicines, perhaps, you will not surprise the residents of the Russian Federation. Well, if you were lucky enough to drop into the territory of Ukraine recently, then instead of observing at the border, you will be kindly invited to install “Diyu”, through which you need to send a selfie from the place of self-isolation at the very first request. Selfies, of course, with geo-tagging, and the application will swear if you are not at the specified address, or maybe you can even press the police.

    Diya - is a mobile application developed as part of the digitalization program. At the moment, it allows you to download a driver’s license, passport, as well as access to some public services directly from your smartphone. Functionality is constantly expanding.

    The trend is not alarming? Well, that’s okay, these geeks, how many of them fasts in instances with morning selfies, no one thinks, but the fact that you are fined for being in the wrong place is already more interesting. And this is against the background of the fact that in the absence of the State of Emergency, the government has no right at all to restrict the freedom of movement of citizens.

    Ограничение прав граждан
    Restriction of the rights of citizens

    It is not surprising that the UN Secretary General Antonio Guterres expressed concern at the briefing in early April . regarding the observance of human rights in the world. The UN is concerned that emergency measures introduced by the government can often neither be seen nor challenged. And taking into account quarantine measures, you can’t even protest. Hello Orwell, put on your mask.

    But the influence of the state, most likely, will not be limited to the legal and political sphere. Saxo Bank's chief economist, Steen Jacobsen , believes that cheap money will cost enterprises and the economy as a whole very expensive. Such support has already turned the market upside down, causing negative interest rates on loans and oil with a surcharge from the seller, and in the future it may result in the dependence of enterprises and pricing on the state.

    Most likely, after the crisis, the state will own significant shares of companies, dictating its economic and strategic decisions. First of all, this applies to the airline industry, many of whose players are already on the verge of bankruptcy. As for pricing, the Cabinet of Ministers of Ukraine, for example, has already stated that it intends to control prices for a basket of essential goods, forcing sellers to warn in writing of any change in value.

    And this is only direct control - legal and political. Now recall that in many countries of Europe and the United States on the verge of bankruptcy are dozens of large companies - air carriers, industrialists, transport workers and representatives of other industries that were hit by quarantine. And the state can buy up stakes in these companies. In some, at will, in some (to big to fail) - as necessary. In order to regulate prices in such cases, even coercion is not required - who needs the law if there is a controlling stake in your pocket?

    This beautiful picture will also be supplemented with new taxes, an increase in existing ones, an increase in public debt and the ability of the state to devalue the currency without serious consequences.

    Do not forget that the international trade and political system is also collapsing - the EU turned out to be a weak political union, China risks losing the status of a world workshop, and the United States blames everyone for everything .

    Less international leverage - more freedom of action within a single country.

    Investment Funds

    Инвестиционные фонды в кризис
    Investment funds in the crisis

    “One of the main slogans” is traders? And if a month ago on Black Thursday everyone was very poorly aware of what would happen to the market next, and they were just afraid to buy, now the situation has relatively stabilized. The funds that managed to sell rapidly cheapening securities received a large amount of undistributed funds, and with them, profitable assets almost for nothing.

    So, according to Forbes on April 15:

    • Boeing fell by 56% compared to the beginning of the year;
    • United Airlines Holdings lost 66%;
    • US Steel lost 40% of its value;
    • Alcoa went down 66%;
    • Basf fell 35%;
    • Dow Chemical Company - 20%.

    But these are large industrial and aviation companies - the "first tier", whose shares are classified as conservative investments with a small but stable profit. The loss of half the cost opens up a good buying position for large investment funds, as Both industry and the air sector are likely to show positive momentum immediately after quarantine has ended.

    Moreover, if, for example, US Steel shares were bought on the collapse of March 23 at $ 5.45, then on April 28, the income would have been 28%:

    Стоимость акций US Steel в период с 23.03.2020 по 28.04.2020 [19459004 ]

    The value of US Steel shares from 03/23/2020 to 04/28/2020

    And from April 15 (the data for this date are given above) - 7.98%:

    [19459001 ]

    Стоимость акций US Steel в период с 15.04.2020 по 28.04.2020
    The cost of US Steel shares from 04/15/2020 to 04/28/2020

    In addition, the released funds will be transferred to other sectors that are gaining momentum - retail, delivery services, entertainment and IT. Against the background of a general fall, they show growth, under quarantine, demand for their products rises.

    Not only investment, but also hedge funds can earn during a crisis. For example, the amazing story Chenavari Dynamic Credit Cycle Fund - a fund that makes bets on falling bonds and "shorts" them.

    This strategy made it possible to get 65% of profitability in March under the conditions of the crisis.

    True, the fund was initially created to earn money in crisis conditions, and at the time of the pandemic, it already had a well-developed strategy and forecast for the collapse of markets.

    Pharmaceutical companies

    Заработок фармацевтических компаний на кризисе
    Earnings of pharmaceutical companies during the crisis

    Media are starting to scream about excess profits for pharmacists at any a slight decent epidemic? And they strive to hang all the dogs on this industry as greedy capitalists who make money on grief. And against the background of coronavirus, pharmacists really feel great, because:

    • Demand for medicines has grown significantly, and although states are trying to keep prices for essentials at an affordable level, in the West even this “affordable level” gives income. Although pharmacologists in the Russian Federation noted that the government’s price rates are lower than the cost of medicines, they won’t last long;
    • In March, the United States allocated $ 3 billion for the development of the vaccine [19459493], within the framework of the total package for countering the virus for $ 8.3 billion. Britain is ready to give another 210 million pounds to the EU and 232 million euros. And this money in the form of grants and research projects will receive exactly pharmaceutical companies.

    After the launch of Quantitative Easing in the USA and the inclusion of the printing press, the money-flooded market has already begun to recover, but pharmaceutical companies show higher growth, according to Bloomberg charts: [19459009 ]

    Динамика индексов предприятий по различным отраслям до 31.03.2020
    Dynamics of enterprise indices in various industries until 03/31/2020

    And here data Forbes on the return on shares of pharmaceutical companies on April 15, compared with the beginning of the year:

    • Gilead Sciences Inc + 14%;
    • Moderna + 94%;
    • Johnson and Johnson (JNJ) + 1%;
    • Pfizer -8%.
    Let Pfizer not mislead you - they just reported the most recent drug testing in April.

    Here is what their stock chart looks like compared to the S&P 500:

    Динамика стоимости акций Pfizer по сравнению с S&P 500
    Pfizer share price dynamics compared to the S&P 500

    From the Bloomberg chart, it can be seen that even when the markets fell into the abyss on March 12, the pharmaceutical sector felt relatively good and much better than other industries, reaching a profitability level of -2.3% by the end of March. S&P 500 closed the same period at -18.5%.

    Like most other enterprises, pharmaceutical companies in the prevailing conditions receive money from the states, only if for the pharmacy this is investment, then for the rest - loans that still have to be given, albeit with minimal percent. Coronavirus has become just a wall of salvation for the industry, which pharmacists have fenced off from the general crisis and for which they can safely work and earn money.

    In general, these trends cannot but be alarming - if states and foundations start massively buying cheap shares of enterprises (the first to support the economy, the second to pursue) for profit), then in the post-crisis world they will become the main business owners, and this is already fraught with monopolies, conflicts of interest and other bad things.

    As for pharmacists, their profits in this period are quite justified, the only question is where these excess profits will go. Is it not on the basis of funds that buy up shares?

    But this is an “if,” but a violation of human rights is not a potential opportunity, but a harsh reality. It turned out that, if necessary, the government is able to monitor citizens through a smartphone and can destroy the country's legal system by frankly ignoring the very same Human Rights, because of which more blood has been shed than during the Crusades. It’s especially a shame for you, EU.

    Read also:

    Global social experiment: the world will never be the same after the coronacrisis

    COVID-19: Black Swan or the scapegoat

    How to survive the crisis of 2020 - a detailed guide to survival

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