Coronavirus - Macro Investment Aspects Only

[dspp]

these kinds of virus,

It is difficult at this stage to be clear as to what actions are required. I am not sure we can just rely on the precedents from SARS etc.

We know that China has shut down large parts of the country in an attempt to slow the virus. I don't personally think we should do the same, but I do think we should take some reasonable actions to slow opportunities for infection. People can do that on an individual basis and are doing so (even if some are being a bit silly and not going to Chinese restaurants).

I would expect to see further cancellation of conferences and am giving personal consideration as to what actions to take. I am no longer a substantial employer (at peak I had 300 employees and at a later peak 260) and I have already talked to the staff in my office about the issue.

I am worried that the impact on the NHS could be quite damaging in terms of overloading facilities. It may calm down as things warm up (it probably will to some extent), but that does not mean that we are necessarily reacting at a sufficient level at the moment in the UK.

Zerohedge have a later (yesterday) report of China as well.
https://www.zerohedge.com/economics/chi ... ching-zero

I have to commend you for ramping up the bear story, but the reality is that this is folk who are short trying to take the market down and failing miserably.

I would take absolutely nothing from what zerohedge say because their track record is that they are hopelessly wrong about everything all the time.

Until the Centre for Disease Control change their tune one can be certain this virus is what they say, a more or less run of the corona virus via passage through camels and bats.

Unless something changes this news story will fade away as did all of the others covering all the myriad of virus scares that bears dream up.

If this virus becomes the sort of slayer of economies and people that the doomsayers are predicting it will become known to the big market investors via their extensive range of contacts and markets will dive rather than continue to rally in the greatest bull market I have ever seen.

Regards,

ody,
I wouldn't dismiss it so fast. Take a look at the statistics graphs in the zerohedge piece. And there are quite a lot of stats that the Chinese gov can't fiddle, such as the US pollution monitors etc. This is going to have a global economic impact.
regards,
dspp

[johnhemming]

That is an almost entirely ad hominem approach to the situation.

They (Zerohedge) reference this site:
https://www.capitaleconomics.com/the-ec ... ronavirus/

Which gives an impression of being factual.

I do have some considerable experience of how the public sector and regulators operate. Although there can an element of meaningless paranoia amongst those who criticise the approach of the authorities, the authorities are not always right. They can over react and also under react. I think it is worth trying to work out what the situation is for a number of reasons.

What I would expect is that the authorities are keeping the option of taking further steps and they may indeed to so. However, that does not mean that we should simply wait for them do take further actions and otherwise continue with Business As Usual.

[TUK020]

these kinds of virus,

It is difficult at this stage to be clear as to what actions are required. I am not sure we can just rely on the precedents from SARS etc.

We know that China has shut down large parts of the country in an attempt to slow the virus. I don't personally think we should do the same, but I do think we should take some reasonable actions to slow opportunities for infection. People can do that on an individual basis and are doing so (even if some are being a bit silly and not going to Chinese restaurants).

I would expect to see further cancellation of conferences and am giving personal consideration as to what actions to take. I am no longer a substantial employer (at peak I had 300 employees and at a later peak 260) and I have already talked to the staff in my office about the issue.

I am worried that the impact on the NHS could be quite damaging in terms of overloading facilities. It may calm down as things warm up (it probably will to some extent), but that does not mean that we are necessarily reacting at a sufficient level at the moment in the UK.

Zerohedge have a later (yesterday) report of China as well.
https://www.zerohedge.com/economics/chi ... ching-zero

Attached link to Dollars & Data coronavirus article gives an interesting perspective
https://ofdollarsanddata.com/how-will-c ... portfolio/
(thanks to Monevator for the link)

Spansih Flu infected a quarter of the world population between 1918-1920, mortality rate approx 1 in 10.
50 million dead, approx 3% world population.
Stock market impact: Dow down 10% for 4 months

I suspect that today's interconnected supply chain world would amplify the impact of a pandemic today.
Still, the rather chilling conclusion is that significant death rate in those vulnerable to respiratory infection (typically old and infirm) would result in a major human tragedy, but not necessarily an economic one.

[johnhemming]

It is, of course, difficult to separate out the effect of the Spanish Flu from the end of the First World War.

[redsturgeon]

A fairly comprehensive look at four possible scenarios.

https://www.zerohedge.com/health/four-c ... nthinkable

John

[Itsallaguess]

During these types of terrible outbreaks, the one statistic we never seem to see is how many collective man-hours are being spent studying and trying to manage the global health implications, set against how many man-hours are being spent studying and trying to manage the global financial implications...

With that said, perhaps it's best that we don't ever see those sorts of numbers....

Cheers,

Itsallaguess

[johnhemming]

I dont think there is any way of getting those figures. I personally have spent some time on considering how the uk could minimise deaths and other harm to people as a result of this, but this forum is about investment. Hence I would expect people to discuss the eonomic impact. (as will the media)

[77ss]

....


Spansih Flu infected a quarter of the world population between 1918-1920, mortality rate approx 1 in 10.
50 million dead, approx 3% world population.
Stock market impact: Dow down 10% for 4 months

I suspect that today's interconnected supply chain world would amplify the impact of a pandemic today.
Still, the rather chilling conclusion is that significant death rate in those vulnerable to respiratory infection (typically old and infirm) would result in a major human tragedy, but not necessarily an economic one.

Spanish Flu resulted in a much higher mortality in the young than is the norm. From https://en.wikipedia.org/wiki/Spanish_flu:

The pandemic mostly killed young adults. In 1918–1919, 99% of pandemic influenza deaths in the U.S. occurred in people under 65, and nearly half in young adults 20 to 40 years old.

[odysseus2000]

....


Spansih Flu infected a quarter of the world population between 1918-1920, mortality rate approx 1 in 10.
50 million dead, approx 3% world population.
Stock market impact: Dow down 10% for 4 months

I suspect that today's interconnected supply chain world would amplify the impact of a pandemic today.
Still, the rather chilling conclusion is that significant death rate in those vulnerable to respiratory infection (typically old and infirm) would result in a major human tragedy, but not necessarily an economic one.

Spanish Flu resulted in a much higher mortality in the young than is the norm. From https://en.wikipedia.org/wiki/Spanish_flu:

The pandemic mostly killed young adults. In 1918–1919, 99% of pandemic influenza deaths in the U.S. occurred in people under 65, and nearly half in young adults 20 to 40 years old.

Yes, the 1918 pandemic caused most deaths among people at the peak of their physical condition, killing e.g. a lot of soldiers. This was because it caused the bodies defences to over react & in young fit people this over reaction was so strong that it killed them.

The current coronavirus is so far killing vulnerable individuals, not young fit people.

The virus could mutate, but if we are lucky & it follows the standard trajectory it will cease to be a problem as did its predecessor virus.

No one currently can predict the future, but for now there is no evidence that I have come across that makes this virus likely more lethal & longer lasting than what has gone before. During the Asian flu epidemics large amounts of UK industry were shut down due to illness, we are currently no where near that.

Regards,

[TUK020]

A fairly comprehensive look at four possible scenarios.

https://www.zerohedge.com/health/four-c ... nthinkable

John

Good article, emphasises the interconnected nature of the world economy

Something brought to the fore in the dollars and data article, is that (barring the unthinkable scenario), the major economic impact is in the phase where everyone is trying to contain the spread of the virus.

If you think about seasonal flu, everyone carries on, some people get sick, a portion of those get hospitalised, a portion of those die. Covid19 will be much worse than seasonal flu. If it is contained long enough, it will hit the west after the current flu season (when the hospitals have emptied a bit), and if long enough, there will be a vaccine. In general, these viruses mutate into lower forms of virulence (this improves their own transmission ability)

[johnhemming]

I don't know if this is behind the paywall
https://www.thetimes.co.uk/edition/news ... -g0pc3t3s9

But the article essentially makes the point that the current approach in the UK (and most of the other only very slightly infected countries) is to track down infections and try to control it through contacts. There is potentially a point at which that becomes impractical as is made clear in the article.

My personal view is that we should do things like cancelling all school assemblies and the like. Things like making schools less infectious more generally would be a good first step that does not cause substantial disruption unlike shutting down schools (as has been done in Hong Kong).

[johnhemming]

https://www.telegraph.co.uk/news/2020/0 ... es-spread/

Anyone suffering flu-like symptoms could be ordered to “self-isolate” for a fortnight if the number of coronavirus cases in the UK hits the hundreds, in what would be a dramatic shift in Government strategy.

[johnhemming]

With a death in Taiwan
https://www.theguardian.com/world/2020/ ... oronavirus
and a report of a taxi driver picking up the disease from passengers
https://www.nejm.org/doi/full/10.1056/NEJMc2001621

It is clear that a taxi driver can pick up the disease from passengers. The death in Japan was the mother of a taxi driver.

The difficulty with these cases is that they are ones where the testing in two of the cases was only done as a result of someone being seriously ill.

As far as the figures are concerned they can only report on people where there is a test kit available and being used to test someone.

My guess would be that black cabs would be less likely to result in infection between driver and passengers and the cases highlighted are probably what would in the UK normally be private hire.

[odysseus2000]

Apple warns will miss forecast on account of Corona virus:

https://www.bbc.co.uk/news/business-51539322

Regards,

[LocalBob]

The recent cases in South Korea are concerning, but not as concerning as those in Iran. The Iranian cases are showing a very short time-lag between diagnosis and deaths, which makes one think the testing is occurring at the last minute. The number of deaths makes me think there are a lot of undetected infected people which bodes ill for effective containment.

https://en.wikipedia.org/wiki/2019-20_c ... itory#Iran

[johnhemming]

It is quite obvious that there are substantial numbers of people with the infection that are not recorded. Most of them only really have a sniffle of some form. The health impact is also clearly linked to the preponderance of ACE2 cells which is associated with the genotype such that people of a historic far eastern ethnicity are more likely to suffer than those of a history european ancestry (the detailed figures have been done on this via the 1000 genomes project).

Hence places like Korea and Japan really do need to be worried.

[Wuffle]

Genuine question, the older people who are being taken out in China will have lived through some stuff.
The shiny sky scrapers are recent and a 70 year old in China will have lived a good chunk of basically early Victorian Britain.
Did they need much of a push?
Or is it the opposite, that anyone who made it through the last 70 years in China is borderline indestructible?

W.

[odysseus2000]

Genuine question, the older people who are being taken out in China will have lived through some stuff.
The shiny sky scrapers are recent and a 70 year old in China will have lived a good chunk of basically early Victorian Britain.
Did they need much of a push?
Or is it the opposite, that anyone who made it through the last 70 years in China is borderline indestructible?
W.

As I understand this virus, it is behaving like many flu virus and predominantly killing older people who have age related weakness just like many flu epidemics have.

Bears have done a fair job of tying to make it something that it isn't, but for now there is nothing that I can find which indicates a significant change that could lead to very serious economic consequences.

As things now are it is rapidly becoming yesterdays news, although the bears are fighting the odd rear guard skirmish to try and get the most out of it that can be had.

Regards,

[johnhemming]

It tends to be bad news for older (ie 50+) Far Eastern (Japanese,Korean,Chinese) men who smoke. I don't know whether the people who run China, Japan and Korea are smokers or not, but quite a few are men and most are of those ethnic groups.

There are various estimates for the CFR (probably in ethnic Far Eastern populations) which run around 2.3%. It is obviously difficult to work that out, but for a really infectious disease this should concern people.

The USA has a figure on CFR for flu and pneumonia
https://www.kff.org/other/state-indicat ... 2asc%22%7D

Which is 14.3 per 100,000.

Corvid 19 runs at 2,300 per 100,000.

That's a lot of people.

In the end, however, the economic implications are not so much about the people who die, but the impact on the economy of switching off the country for possibly a couple of months production wise.

[gryffron]

Bears have done a fair job of tying to make it something that it isn't, but for now there is nothing that I can find which indicates a significant change that could lead to very serious economic consequences.

But as I've said before. When do we get to the point where the containment efforts have greater economic impact than simply letting the disease run its course?

As you stated, most of those who might die are economically inactive. But all those workers quarantined in their homes are seriously harming Chinese output. Left to itself, they might have taken a few days off with flu symptoms (for most, Coronavirus symptoms are fairly mild). But with the containment efforts, some factories have already been shutdown for several weeks.

Not a popular choice obviously. With the much higher death rate. Especially with the elderly and infirm. But, there must become a point where the disease has "escaped" and the containment is deemed an expensive failure.

Gryff