How behavior will change after COVID-19, according to DB

Yahoo Finance’s Alexis Christoforous, Brian Sozzi and Heidi Chung discuss how the coronavirus has impacted social behaviors and what will change as social distancing stops.

Video Transcript

BRIAN SOZZI: Heidi, good to see you this morning. And you know, we were looking at a pretty hot note from our friend of the show, Torsten Slok, over at Deutsche Bank-- chief economist there. And he's outlined some pretty, I would say, disturbing changes to consumer behavior post-coronavirus outbreak.

HEIDI CHUNG: Yeah, Brian. So I think a lot of folks out there have been talking about a, quote, new normal for quite some time now, especially as this COVID outbreak really starts to wreak havoc on economies, not just here in the US, but abroad as well. And I think this note really, truly takes a look at how everything will be changing in different parts of the economy, right?

So we have the household sector. Slok also mentions the corporate sector, as well as the government sector. And the fact of the matter is, because all of these behaviors will be changing, it will have an impact on the economy, at least in the near-term.

But what I think we need to think about-- and looking at it from a more optimistic point of view-- is that the economy will eventually adapt, right? So yes, we're going to have to start doing more events-- public events-- in wider spaces. So if you take a look at restaurants and cinemas, sporting events, people are not going to be as comfortable early on to stand so close to each other, in terms of proximity.

And as well as when we take a look at travel, right, a lot of people might hold back on that summer travel that they were planning earlier on, just because we don't necessarily have a vaccine on the market yet. But that being said, a lot of the companies that we've spoken to talk about sentiment, right? So sometimes, it's not just about the actual reality. It's about perceived reality.

And so, at a certain point, consumers will start being comfortable again. They'll start going out. They'll start spending money. But I think it is important to note here, consumers are the bulk of our economy. So that is why we have to be very, very careful in analyzing how this trend will sort of evolve in the near-term and long-term.

BRIAN SOZZI: Yeah, Heidi, I want to point out, too, that caught my attention-- one, in the corporate sector, Slok says fewer buybacks. A near and dear subject to me. I just wrote about this on Yahoo Finance this morning. I encourage everybody to check out that article.

Stock buybacks need to happen. We just need to stop in this post-coronavirus future. And Heidi, I know one special to you-- Slok calls up more space between seats at restaurants. And the way I think about it, that's less productivity for restaurants.

HEIDI CHUNG: Absolutely. And it's definitely probably going to hurt their bottom lines. But on the flipside, Brian, we've seen such an uptick in deliveries and takeout as well.

So I'm not saying that that's going to completely offset the fact that they're going to have fewer seats in actual dining portions of their restaurant. But things are changing, and people will adapt to those changes. And businesses are ultimately going to have to adapt to those changes as well.

So yes, it's concerning. And yes, we need to point out the fact that we need to be a little bit more cautious when we look at the near-term here. But in the long-term, the economy will always adapt.

Consumers will adapt. Businesses will adapt. I think there is some silver lining in this, Brian.

ALEXIS CHRISTOFOROUS: And to jump in here about stock buybacks, Brian, it looks like there are strings attached to the government's stimulus package, the money that it's giving to certain industries and companies. It's saying, we'll give this to you, but there are conditions here. And one of the conditions is that you cannot continue to buy back your stock in a big way. We know that it's been a bone of contention with lawmakers as well. So I definitely think the buyback picture is going to change post-pandemic.

But also, taking a look at what else Torsten Slok had to say about behaviors changing, at least for corporate America, I have to agree with it. Health insurance costs will probably go up, so higher insurance premiums. We don't know yet if companies are going to say, hey, you know, employees, you're going to have to kick in a little bit more now as well, to foot the bill. And also increased pressure for paid sick leave and health benefits-- you could be seeing that coming from the lower income side, especially folks in the hospitality and restaurant industries. I think this is really going to change the way companies look at their benefits packages and how they treat their employees.

BRIAN SOZZI: No, no, right on, Alexis. And I agree with you on the stock buybacks. Just think. All these companies looking for cash right now, where would they have-- they would probably be in a much better position to help the coronavirus relief efforts, keep employees on the payrolls, if they didn't dump billions and billions of dollars into stock buybacks the past two years.

You really have to question a lot of those leaders who continue to do that. Nonetheless, a very interesting topic. Heidi Chung, thanks so much.