(New York)

One of the hardest things to do in a crisis is to sit back and let one’s mind relax enough to think creatively and see the big picture. This has been particularly hard to do in the fog of the coronavirus, which is not just a financial/economic crisis, but primarily a health emergency that has disrupted our everyday lives more than in any period since WWII. So what are some of the long-term economic, and thus market, consequences of this virus? We believe the main outcome of this huge lockdown is ultimately going to be more consolidation of power by large corporates. As Main Streets across the US are cleared out of small business that do not have the capital to survive, American consumers will be ever more incentivized to look online and to existing behemoths (who have the resources to weather this storm). As a very short-term example, think of the 100,000+ workers will will quickly migrate from Main Street retail/service sector jobs into employment for Amazon; the consolidation that is happening in employment will front-run consumer spending.

FINSUM: As sad as it may seem, we see this lockdown as a big tailwind for the S&P 500 over the next few years, as this is the kind of crisis that will wipeout small competition and concentrate revenue in an ever smaller group.