Keith Robinson gives a weekly industry-focused monologue (NextHome: REAL Update) summarizing COVID-19 case trends and testing caveats, vaccine and drug trial developments, and economic impacts across industries—notably airlines, credit-card delinquencies (AmEx, Visa) and the oil-price collapse (including states heavily affected: Texas, Alaska, California, North Dakota, New Mexico, Oklahoma). He flags data points to watch (daily new cases, vaccine timeline, airline earnings, credit-card delinquencies, oil prices) and offers cautious optimism about trends improving as economies reopen.
Chapters
This is just my time just to share with the industry what I'm seeing, what I'm experiencing, what I'm paying attention to for this week, and an update from last week. So this is for you, and I want this to be value that you can have. Yeah. So let's dive in, and I will give you my real update for this week. So what I try to do here is just distill down the big things from last week and the things I'm focused on this week. And so let's start with what we always start with, which is the worldwide new cases. Remember, I say this every time, but testing has a lot to do with this. It's not necessarily that this many people caught the COVID virus yesterday or the day before. This is just how many have tested positive. As more and more testing becomes available, you can see spikes or shrinkages, depending on how much testing is around. But at the end of the day, what we want to see is a trend line similar to what we're seeing. So that's a good thing. You're seeing the worldwide number come down, and you're also seeing the US Number come down as well. This pain that we're going through with social distancing seems to be working. I have read some reports that testing has also tapered down. So if that is true, then you might see this trend down as we're replenishing the supplies of available tests, which is something we'll continue to pay attention to. But in general, you are seeing the numbers trend in the direction that we want. And at the end of the day, look, we can only work with the data that we have. And this is the way you want to see the trend line go. So hopefully this trend will continue. Hopefully this will enable us to start to restart the economy, which we're going to talk about in a little bit. But when it comes to daily new cases, we are seeing the trend lines head in the direction that we want. So let's all hope that that continues. There was an announcement last week. Dr. Fauci felt that the coronavirus vaccine should be ready sooner than expected. Normally, what they say is it takes 12 to 18 months to do the clinical trials for a vaccine. He seems to be hopeful that this can be done in 12 months or less, which would be great. That that is obviously the point in time at which we can sort of completely put this thing in our rearview mirror, as opposed to sort of keeping a side eye, keeping an eye on what is going on with COVID as far as treatments and other Things. So big step, an important step, that sooner than expected, we could have a vaccine. There's a lot of this in testing right now. This was also a leaked last week. There's some people looking into how it got leaked. But there was a new drug, an experimental drug that had a drug trial in Chicago, and it seems to be a very effective drug at helping people recover. Remember, the first thing to do is social distance to reduce the spread. Second thing to do is to find a drug treatment, either existing drug or a new drug that's very good at treating it. And then the third thing, of course, would be a vaccine which will insulate you from it. So, again, couple of different fronts. We're seeing some good news, some things that are really seeming to provide some hope and some semblance of us starting to get our arms around this as we continue to work really hard to find these kinds of solutions. It's also earnings time. And so there's a couple of industry earnings reports that I'm looking at. One is the airline industry. This is obviously going to be one of the most hard hit. I was reading one forecast that said they thought air travel would be down more than 92%. That is a staggering number, obviously unlike anything we've ever seen. And you're going to hear more about numbers unlike we've ever seen in a little bit. This is unprecedented across the board. We've seen unprecedented unemployment. We're going to see unprecedented numbers here with this. There's no time in human history, modern human history, has a country or a world gone on lockdown the way that we have. So this isn't just happening in America, it's happening all across the world. These will be really bad earnings reports. I'm not Nostradamus, I'm not some brilliant stock picker to be able to tell you that. What I want to look at is how bad. So everybody thinks it's going to be atrocious. Is it a little bit better than that or is it even worse? This is just something that I want to pay attention to, to see how it goes. Not a ton of information that I'll be able to glean from this, but the next one will give me an interesting leading indicator. So there are several credit card issuers that have their earnings report this week. The thing that I'm going to be really looking at very closely is delinquencies. What I want to see is has there been an increase in delinquencies? Have people stopped paying their credit cards? Of course, some will. And you would Expect it to be higher. And then the government urged credit card holders and issuers to provide solutions and workouts with people. So maybe it won't be as bad. But I think that's a data point that will be interesting to pay attention to. Primarily American Express and Visa. The Citibank is a bank, but they also have some credit card issuances as well. But primarily American Express and Visa, I think could be an interesting leading indicator for how impactful is this. It's again, the unchartedness and the sheer unexpectedness of what we're processing. Right. The unemployment numbers, as I mentioned before, all of these charts that I'm looking at, that I've looked at for years, are they look like nothing we've ever seen before. So I'm really trying to just grab different data points and then trying to extrapolate what could that mean for the economy and what could that mean for the residential real estate industry? So specifically. And mostly American Express and Visa, really curious to see what their earnings reports hold specifically in around delinquency. So I'll be paying attention to that. I'll probably do a quick update when those come out. I'll wait till they both come out and then do both at the same time. But something to pay attention to if you're a big giant economics nerd like me. And hopefully you have more interesting hobbies than that. Please. This one is very topical in the news right now, and I thought I would spend a minute to unpack this because we have hit a record low in oil price for a couple of different reasons. This actually started before COVID So OPEC and Russia were kind of in a. In a argument over who was going to set the price for oil. And so they entered into a price war, actually before the virus even hit the US and we started having worldwide issues with the virus. So you had two large oil producers basically having a price war in and around oil. And they did that before we led into the demand for oil absolutely plummeting because so much of the world, not just our country, but so much of the world was in this lockdown, shelter in place, et cetera. Specifically for the US we have had so much. They keep shipping oil, right. Because they're producing it. So they keep sending it. And we got to put it all somewhere, but we're not using it at anywhere near the levels that we normally would. And so anytime you have an oversupply, which is what we have right now, you get massive downward pressure on price, which was already having downward pressure because of this national disagreement between OPEC and Russia. So we are at something I've never seen before, never happened, right? Oil is at zero or I even read a report that said it dipped into negative numbers. That means they'll pay you to take some oil off their hands. This has not happened before. This is not just a Covid thing. It was a pre Covid thing that's now being exacerbated, that's being amplified by what's going on with the virus and the lack of demand in the U.S. so some states to pay attention to. These are the six most impacted states where they've got a lot of oil production and oil is central to that state's economy. In order, Texas, Alaska, California, North Dakota, New Mexico and Oklahoma. So for all of you, my folks out there or anywhere else that are listening, that are in those states, this is something that you're going to want to pay attention to. Most of these states do naturally already, but if you're not in those states, that doesn't mean you're bulletproof or that it won't impact. This is the kind of thing that can trickle down through an economy and something we want to continue to pay attention to. I am hopeful that this will bottom can't go much lower than negative zero should theoretically be as low as it can go. Hopefully this is the bottom today and it will start to crawl back out as world economies start to turn back on and as US economies start to get more and more close to turning back on. You should see the demand side for the oil equation go up and help with some of this massive surplus that we're experiencing right now. But for Texas, Alaska, California, North Dakota, New Mexico and Oklahoma, we love you all. Please be safe. Please take care of yourselves. My family lives in Texas. My parents lived in Midland, Texas, West Texas, definitely Midland. Odessa is an oil area. I know really well how those boom and bust towns go and it can be really.
