China in near lock down being a global economic super power is going to impact the markets more so than in earlier years when stock markets were at lows in their cycles. Oil I think will take an obvious hit to stifle trade.
There’s talk that if it’s a protracted outbreak that the global economy would go into recession, not a unrealistic occurrence, a fact not lost on institutions hedging with gold bolstering gold prices.
SARS and H1N1 hit when the markets were at a low, but now with historical all time highs it’s going to get scary out there.
It has impacted many markets because China has become a global economic super power. They are in a way, strategic economic partners to almost all African countries, if not all of them. Gold is a natural reserve and its the best option in case things go sideways which they have.
Until a solution is found, I think gold will be a safe haven.
The virus, if not curbed will have multiple effects on the market.
I think the reaction has been disproportionate to the event to be honest. To put into perspective around 70 people have died. The NHS officials I listened to on the news described the virus as resulting in a cold/flu like symptoms for the vast majority of people with a handful developing more serious, lung infections. So similar to a flu virus. 10,000 people killed by flu last year and nobody bats an eyelid.
70 people…there’s 300 people a year killed by Toasters (yes, the thing you make toast with) in the US alone every year. Over hyped by the media to sell newspapers.
Buy the dip I say, there is a recession coming for sure but I doubt it will be caused by 70 deaths.
In this regard I cant really imagine all the possible outcomes from this. This could be a massive global issue as much as a straw fire.
Somebody says this is a very serious one.
Somebody says this is all scare mongering.
Somebody says this is a conspiracy maybe from some obscure power, maybe from China or maybe to destabilize China.
Where the mess and the voices go wild what i usually do is to put them all aside, and search for reliable data.
Here is some food for thoughts.
AT LEAST in the last 5 centuries, the THIRD DECADE (so starting from '20 to '29) is by cycle a decade where human beings face a huge pandemic. Here is what I found:
1530 Geneva’s plague;
1628 - 1630 Lyon and Milan’s plague;
1720 Marseille’s plague;
1817 - 1823 Cholera;
1918 - 1920 The Spanish.
I am a fan of cycles in history as much as in the markets because Natures evolves trough cycles and I pay attention to them…let’s say I was pretty confident to find some interesting epidemic in the past cycles in world’s history.
Bill Gates in 2018 gave a lecture in conjunction with WHO where he announced that in the years to come the world would have face a global pandemic able to kill like 30 million people. I guess they have far more advanced historical data than me.
Ccoronaviruses, like Sars are able to transmit from human to human by air.
This Coronavirus is 50 times more lethal than common flu and is 3 times more contagious.
The highest rate of death for this Coronavirus is for elderly people, debilitated or with weak immune systems.
This is a real time data site with the world map about the coronavirus if you want to take it monitored. It says up to now 12.000 confirmed cases and 259 death so far:
Your right Al, the common flu kills far more people in China each year… but they don’t put cities/provinces in lock down because of the flu. International governments don’t close borders to sovereign countries because of the flu. The Chinese are risking their entire economy to get a lid on this, and I suspect there’s many more deaths than the State has declared (no shock there though, it’s China), so let’s hope it is all hype or we’re heading for the recession bit earlier than the macro peep’s believe.
Of course they are…because it’s bad for business. People have stopped planes from flying there. China is losing money and have to be seen to be doing something. I didn’t suggest it wasn’t worth controlling - all infections diseases are. just that the reaction has been disproportionate and that,whilst vigilance is obviously required, I don’t think the global panic that seems to have started is really necessary. Not sure they’re risking their entire economy though.
A lot to discuss here. Like @Al_Wallace, I agree that the response to the outbreak might be disproportionate to the human impact. I say might because the data @Tradelta referred to sound a bit more serious than 70 deaths.
I think there are 3 primary factors on the market impact: 1) Lost productivity/income of those who get sick and/or are quarantined, 2) Diversion of healthcare resources from day-to-day operations to care for the outbreak, and 3) Fear / self-security response that affects trading, travel, and consumer behaviors.
There have been a number of recent outbreaks that probably affected market conditions: SARS, MERS, swine flu, zika, bird flu all come to mind. Information I came across seemed to draw a lot from seasonal flu. That seems like the ideal candidate to learn more about the economic impact of an outbreak. It is relatively predictable and occurs annually. It also has a similar economic impact as climate change (https://www.imf.org/external/pubs/ft/fandd/2018/06/economic-risks-and-impacts-of-epidemics/bloom.htm). Of course, that doesn’t account for the unforeseen nature of these other one-off outbreaks, which probably caused a more dramatic response than seasonal flu.
While writing about this I was wondering about the economic impact of recent wildfires as well. Particularly because the Northern California wildfires of recent years have had a major impact on healthcare and the community at large. There have additionally been major fires in Australia and the Amazon recently. I wonder, do these have as much impact on the market as coronavirus? Seems like they haven’t but maybe the impact hasn’t been quite as acute or maybe less media attention on their impact to markets make it appear to have less effect. Any additional insight on this?
I think the article above maybe reflects the point I was trying to make, possibly not as eloquently as I could have. Again, I’m not downplaying the coronavirus. Simply trying to highlight its relative risk compared to things like the flu and pointing out possibly the media Has fueled an overreaction? Flu doesn’t sell newspapers unfortunately.
I remember well the outbreak of flu in late 2018/early 2019 that started out in Australia. It was really brutal and caused a lot of issues. I remember it well because I had some underlying health issues of my own and, had I caught that, it could have been potentially problematic for me. I also remember how hard it was to get any real information about it from mainstream media sources.
Hi Al, I understand your point here. I think the difference between flu and coronavirus, why the flu is not reported as much as this one is actually due to the RISK FACTOR.
We know flu, we know how many people could lead to death on average each year, we know how we can manage it and so it is a PREDICTIVE RISK…each year more or less the same.
This coronavirus is UNPREDICTABLE RISK. We are learning on the way its incubation time (more the time more the risk of spreading increases). We don’t know how and IF it can adapt itself to our countermeasures. Lot of unanswered questions about its behaviour in respect to flu.
I think we’re off the path and into the woods here fellas my point re flu was just to give a point of reference for why I feel the market reaction is disproportionate and why I think it will recover. Didn’t want to get into the relative merits of flu Vs coronavirus shall we just agree none of us want to catch either?
Sorry to bring things back, but Coronavirus, don’t make me laugh!
More than 8,000 people in the U.S. have died from the flu this season , which peaks between December and February, according to CDC estimates. During the 2018-2019 season , the CDC estimates 16.5 million people went to a health care provider for the flu and more than 34,000( that’s scary) people died . Does anyone care about the thousands of people whom have died from the common cold and flu this year?
Let’s put the world under lock down and prevent anyone from travelling, then blame the market crash on the laboratory experiment that deliberately went wrong; demonization of a few ethic groups and a few cases of ethic cleansing and the reset is complete.
I think I might’ve come across more critical of your post than I intended @Al_Wallace . I do agree, and it seems there is agreement in how coronavirus has impacted the market. And that that impact could be overly dramatic at this point.
I don’t think the conversation is completely in the woods though. I think it’s important to acknowledge the difference of coronavirus’ and flu’s impacts on new / markets. At this point, flu is an annual thing. I assume it’s been pretty fully integrated into market cycles, and it’s most certainly integrated into news cycles. Coronavirus has possibly had more dramatic impact on the market – in the short term – and more dramatic coverage in the news simply because it was unexpected. I also agree that once it’s contained and all the risks, and unknowns, become knowns the market will recover.
Even though number of kills is very low compared to regular flu, virality is very high and I think the biggest threat is we still don’t know much about it no one likes unknowns especially money markets, heath vs. money is not the issue here as you know, discussing those global events and outcomes into financial world is the key, learnings will help us all to take better positions/judgements.
Maybe it is not that much “unknown” anymore, shall we say “Forza Italia @Tradelta?”