Are We Nearly There Yet?

So when will it all be over?
Most of us probably feel like the child on a long road trip who keeps asking: "Are we nearly there yet?"
Parents or Waze can usually provide a response to placate youngsters.
But grown-ups in today's real world of coronavirus want to know when the crisis will be over, and the truth is that there simply are no answers.
Straight lines on graphs only emphasize our state of limbo. We're past the diamond industry's "falling off a cliff" stage (March), and the little bounce that followed (April), when the hope was that we'd seen the worst of it. Now we're settled into a long waiting game as the worst economic downturn in the history of the industrialized world unfolds.

A quick look at the industry's most reliable indicator for polished diamond prices, the IDEX price index, shows just how little movement  there has been of late.

March: Bumpy, down 1.6 per cent
April: Smooth, up 0.7 per cent
May: Straight line, virtually no change (down 0.04 per cent)
June: Straight line, virtually no change (down 0.36 per cent)
July: Straight line, virtually no change (up 0.29 per cent)

It's true that last month saw some positive movement, a negligible rise after a negligible fall.  But zoom out for a moment to the bigger picture.
When lockdowns were first imposed in March, few of us imagined there would still be restrictions in place five months later. Or that the worldwide death toll would have topped 700,000.
Or that the Indian midstream would still be largely closed for business (polished exports were down almost a half in June, according to GJEPC) as the industry remains trapped in a cycle of lockdowns, recoveries, infections and more lockdowns, and tens of thousands of diamond workers are deserting Surat and returning to their villages.
Or that excess inventories would be building up towards the $4bn mark (source: Gemdax), that De Beers, Alrosa  and other miners would be struggling to sell a tenth of their usual stock  (Alrosa's May sales $40m, De Beers May Sight reportedly $35m; Q2 sales for both down over 90 per cent), despite offering unprecedented flexibility to their buyers.
Retailers have plenty of inventory but are short on customers, and the knock-on effects of that go the full length of the supply pipeline - all the way from polished and rough trading to the miners.
In China Luk Fook's Q1 sales are down 71 per cent, Chow Tai Fook same-store sales fell 11 per cent in China and 76 per cent in Hong Kong, and Chow Sang Sang says first-half net profits could fall by as much as 70 per cent.
Signet, the biggest retail jewelry chain in the US, is laying off furloughed employees, and Swarovski has just announced 1,600 job losses on top of the 600 announced only a few weeks ago. The Jewelers Board of Trade (JBT) is reducing credit scores for retailers in the US at an "unprecedented" rate.
The French luxury conglomerate LVMH, with Louis Vuitton, Dior, Sephora, Fendi and Givenchy among its subsidiaries - saw first-half operating profits down 68 per cent.
The iconic J.C. Penney chain of 800-plus department stores is for sale after filing for Chapter 11 bankruptcy and many more big name stores are closing their doors.
It's not just that the whole coronavirus pandemic has lasted as long as it has. It's that there really is no end in sight. It falls into Donald Rumsfeld's "known unknown" category. We think we know what we're dealing with, but we honestly have no idea how it will play out.
And straight lines on a graph are somehow even more depressing than a dip. Everyone knows that a dip can't last forever. But a straight line can go for an awfully long time.  
The longer the pandemic goes on, the more the "new normal" just becomes "normal". It was during the First World War that the phrase "It'll be over by Christmas" was first coined - but nobody was ever sure which Christmas they were talking about.
The kids in the back seat are asking: "Are we nearly there yet?"  And so are the adults. Nobody knows when this nightmare journey will be over. All we can say with certainty is that with every passing day we must be getting closer to the end.
Have a fabulous weekend.