Friends,
These are the most uncertain and strange times.
The US economy is in clear signs of recession, it shrank 4.8% in its 1st Qtr. due to the Coronavirus, faster than any time since the Great Recession. Diamond dealers have experienced similar times only a decade ago. The experiences are fresh in our minds from the 2008 - 2009 recession. If we could survive that, I am optimistic we will survive this recession. One major reason, the previous one was financially driven and this time it has been an abrupt halt due to a natural pandemic. Therefore, the rebound should be quick and robust, as soon as they get a cure and have the pandemic under control.
Some states already have begun to allow businesses to re open and eased up on lock down and restrictions. The economy should be getting a lift from the
$2 Trillion
in relief spending by congress, more than
$650 Billion
aimed at small businesses. Interest rates have been the lowest with the Feds slashing its benchmark rate to near zero. The Federal and State government has been offering different relief programs and stimulus money available to all citizens and small businesses. With the pandemic curve flattening and all the stimulus funding, my speculation is that we should see a rebound in early 4th Qtr.
As in most economic downturns we see diamond inventories losing value, this time again from our recent past experience the diamond manufacturers (mainly in India) have reacted quickly to strategize the balance of supply and demand. Hence, not encouraging distress selling and lowering prices. In joint talks, strategic recommendations were made.
There has been no new manufacturing since March and should continue through till May.
All sight holders have refused sights and no knew import of rough for another month.
Lowering inventory in the pipeline and continuing to do business with caution.
When manufacturing starts, new productions would slowly roll out building it up to a maximum of 50% of full capacity.
Review business frequently and be nimble in adapting to the new normal.
These have been the united recommendations for the manufacturers. These strategic and disciplined measures should hold up inventory values and keep supply in line with demand. Most banks and vendors are more sympathetic towards their customers, allowing longer terms, waiving penalties and being accommodating.
In conclusion, people everywhere are doing their part to help slow the spread of the virus.
To all my fellow members staying at home to the essential workers and health care professionals on the front line - we send our deepest thanks. We are all in this together, and together we can make a difference. My grandfather (my mentor) told me to keep one thing in mind, that health is your real wealth.
I wish all my members and their families to be safe, healthy and happy always.
Your friendly Treasurer
Rahul Parikh
