In case you haven’t been able to tell by my writing these past few weeks, I love pop culture.
Whether it’s music, movies, TV, theater, art, literature – old or new, good or bad – I have a deep appreciation for it all.
Part of that broad appreciation, of course, has to do with my past career as a musician and educator. But it wasn’t until a few years into my current career path that I actually figured out why.
Most of my day-to-day at that time was spent gathering mine-level coal production and quality data, compiling it at the regional level, and then charting it all to discuss industry trends. The templates we used were all constructed before I was hired, though, so the work itself was very mechanical.
That changed for me in 2010, when I was promoted to an analyst position. As part of that role, I was expected to contribute 3-4 papers a year – called “insights” – that fell outside our standard coverage.
Frankly, it was intimidating, because I didn’t feel I knew enough about the mining industry at that time to contribute any real insight at all. But much in the same way the late David Carr advised journalists to “keep typing until it turns into writing,” I took the approach of “keep sorting through data until it turns into analysis.”
That process quite accidentally drew me into the burgeoning field of data visualization, which unbeknownst to me, would forever change my perception of the world around me.
In it, the late Dr. Hans Rosling – a Swedish physician, statistician and epidemiologist – takes viewers on a narrative tour of 200 years of global socioeconomic development.
Using a simple animated bubble chart.
You see the Industrial Revolution lift up developed countries… and then you see World War I and the Spanish Flu epidemic decimate them.
You see that despite the Great Depression, countries still became wealthier and healthier… a message that runs counter to recent narratives about opening up our economies during the COVID-19 pandemic.
Finally, you see Asian countries and other emerging markets catch up to developed nations…though breaking up countries into provinces and cities shows that inequality still runs rampant.
I still get goosebumps watching it.
What it made me realize – about both myself and society at large – is that we all learn the same way…
Much like Lebowski’s rug, that tied it all together for me…my love of pop culture, my medical school aspirations, my previous career as a musician/educator, and why I was rising to the challenge posed by my new career as a data analyst.
I wanted to solve problems and tell stories for a living.
Today, the story I’d like to tell is about how consumer behavior is changing in response to COVID-19, because that will ultimately determine how successful reopening our economy will be.
By now, we have all seen the rumblings in the press about how Georgia’s governor would reopen the economy come hell or high water.
Well, the data are in and it’s… not very good.
One Atlanta bar owner said that he had “gone into reopening expecting business to be bad, with perhaps 10 percent of the normal crowds they see.”
That turned out to be pretty optimistic, as only two customers showed up the entire first weekend.
And when we dig into Tom Tom’s traffic data (a fantastic free online resource) we can see that two weeks in, total traffic improved slightly, but still remains 75% off of last year’s baseline activity level.
Worse, that seems to be the case everywhere, which means that eventually we’re going to see further upticks in unemployment.
In fact, this is already playing out, with “temporary” layoffs beginning to become permanent. But because of how they are currently classified with the Bureau of Labor Statistics, we’re not yet seeing this play out in the unemployment rate.
In years past, I would generally consider unemployment as a “lagging indicator,” or a statistic that follows an economic event.
However, given the circumstances surrounding us now, I actually believe that it’s turned into a leading indicator, because the market has expected these temporary layoffs to eventually come back.
Now that we know most aren’t returning, it’s only a matter of time before the market figures this out too.
The jobs in question are consumer-focused – restaurants, retail shops, customer service, etc – basically representative of brick-and-mortar businesses being replaced by online competitors, only at an accelerated pace due to the public health crisis.
When that is translated that into the investing world, you get what’s called a pairs trade – a long position in one area of market share growth, and a short position in the area of corresponding decline.
And there’s one ETF that focuses on this particular consumer-driven pairs trade – ProShares Long Online/Short Stores ETF (NYSEArca:CLIX).
It’s currently sitting at all-time highs, so now’s not the time to wade in. Plus, as I mentioned on Wednesday, I think we’re due for a pullback…just keep it in mind for when that happens.
That’s it for this week, but keep close tabs on the content here, as the next few months have some exciting things in store for us…
All the best,