Coronavirus

[Spekulatius]

I think the best similar case is that we can expect a mild form of 9/11. I expect travel and related industries to take a hit. Travel is responsible for about 10% of the global GNP, so if you haircut this by 10-20%, it’s going to be a 1-2% hit to global growth. Then there are trickle down effects on restaurants, malls, sport events, conventions and possibly business travel, aerospace (especially aftermarket parts)

 

Best case scenario , this blows over in a few weeks and it’s just a minor speed bump  with a bad quarter in GNP growth. Worst case, this leads to lockdowns to slow down the epidemics and then it comes back next winter and cause more lingering effects. Some countries like Greece, Spain, Thailand etc skid in recession and need a bailout.

 

https://knoema.com/atlas/topics/Tourism/Travel-and-Tourism-Total-Contribution-to-GDP/Contribution-of-travel-and-tourism-to-GDP-percent-of-GDP

[Dalal.Holdings]

There are now 6 dead Americans and 102 confirmed cases. 6/102...about 6%...that ratio is much larger than elsewhere in the world (in Italy it's 2.5%). Perhaps it's because that denominator is falsely depressed by our great American healthcare system/CDC that has missed at least 50% of cases that would have been detected in other nations...hope those undetected 140 or so people have self quarantined!

 

Edit: and about half of those 102 detected (45 people) were evacuated from the Diamond Princess Cruise ship. So far a terrible job at testing for infections. A national disgrace.

[Castanza]

@Dalal

 

Which country should we be looking at on how to handle this issue?

 

Finland who has the lowest flu death rate of any country has 6 confirmed COVID-19 cases and 130 people recently in quarantine who were in contact with the original 6.

 

https://en.wikipedia.org/wiki/2020_coronavirus_outbreak_in_Finland

 

List of every country with COVID-19

 

https://www.cdc.gov/coronavirus/2019-ncov/locations-confirmed-cases.html

 

Fact is there is nothing any country can do. This is the flu on steroids and no modern country has been able to eradicated influenza. Even Finland suffered a flu epidemic in 2018. The fact is, this thing is going to run its course globally and there isn't a damn thing any government or healthcare system will be able to do about it.

 

 

[hyten1]

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

[Dalal.Holdings]

@GeorgieBoy

 

Which country should we NOT be looking at as far as handling this? So far, it's the USA.

 

Like I said, ratio of deaths to # of cases is abnormally large, larger than most places (even Iran). USA is the outlier. And not in a good way.

[hyten1]

interesting facts (people will say chinas data are not trustworthy, maybe), beijing has 8 death, shanghai has 3 deaths so far (3/2/2020 10pm), these are 2 mega city with population of over 20 million people each. not saying we have nothing to worry about,  the outcome obviously depends on how the situation is handle by the authorities etc., nothing is guarantee or a given.

 

EDIT: either you don't believe anything out of china, or this is an illustration of what can happen if the authorities act quickly etc. 

 

EDIT 2: if you don't believe data from china, there is taiwan, japan to look at, both have large cities (obviously outcomes is highly dependent on how the local authorities handle the situation).

[Gregmal]

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

 

LOL Russia. 3 cases. 2 cured. They must be rigging the virus.

 

Im still waiting for someone to connect why the likely or even less likely and more severe scenario warrants, lets say, Google losing $100B in value? One quarter of really ugly numbers? Two? A year? How ugly should those be? Lets say it goes on for a full year and figures contract 35%! Surely a rational investor would pay, lets say 20x trough earnings for a company like Google. Is the doomsday scenario 11% downside? How scary. No one seems to be quantifying anything in any terms that translate to anything of significance for investments. And no one has really answered the question, what if we only end up with numbers that resemble the flu? Does that kill the markets? I mentioned early last week how people I was speaking with were telling me restaurants in Chinatown were seeing traffic down 40%. And that people in other parts of the country have noticed nil. So obviously the effects will ripple into some areas of life. Others probably not. You want to give me Madison Square Garden at a $5B EV because of a year of the flu? OK.... give it to me. All day. If nothing else, thing is perfect long/short territory. You'll likely have such volatility for a short while that you dont even need to be a good investor just cover shorts when market goes down and flip longs when it goes up and gradually taper short exposure as this plays out.

[Gregmal]

And for all the America bashing(Dalal), please explain how it could have been handled any worse than China? They knew about it and covered it up to promote economic activity and travel for the New Year. Deliberately let people get exposed. Possibly fabricated the entire fish market story, and then locked down the entire place for a couple weeks. Total numbers? 3k/85k. Oh they're lying. Multiply by 10. So even after China style negligence multiplied by 10 you have numbers that rival!.....dun, dun, dun.... The common flu annual totals! Do you think those figures are ultimately the totals here? About 5-8% of people get the flu every year. Less than 1% of Wuhan got coronavirus. But throw a big, bad name on the thing, and spam blast it all over Twitter and every media outlet, and yea you might have some residual effects and people running around scared. People are now treating a new case total gaining 25% similar to a company gaining/losing 25%, when in reality it is probably more equivalent to 25 shares trading after hours.

[John Hjorth]

If you want to hear the unvarnished truth of where the US is at and what is coming next watch this CNBC video. Dr. Scott Gottlieb, member of the boards of Pfizer and biotech company Illumina and former FDA commissioner, and Dr. Matt McCarthy, an infectious disease physician, join "Squawk Box" to discuss the latest on the coronavirus outbreak.

 

NYC ER doctor: I have to 'plead to test people' for coronavirus

 

Guest 1: Dr. Matt McCarthy

- The problem right now is I still do not have a rapid diagnostic test available

- In New York State 32 tests have been done. That is a national scandal.

- We know there are 88 cases in the US. There are going to be hundreds by the middle of the week. And thousands by next week

- The message today we are hearing from this administration that the risk is low, that things are probably going to be OK, that you don’t need to change your lifestyle. That is simply not true.

- You are going to see widespread disruption to daily life. Do not believe the false reassurance.

- We are hearing that life is going to go about normal. This is just not true.

- The longer we wait to get testing up and running the worst this will be.

- A week or two from now is when we will begin to get real information. Now we are still largely flying blind.

 

Guest 2: Dr. Scott Gottlieb

- A vaccine is a year or two away.

- Hopefully this will start to dissipate in July and August

- We need a backstop in place – it is likely going to come back in the fall

- For a while this is going to be regional. We are probably a couple of weeks away from significant measures in Washington state.

- There is probably low thousands of cases currently in this country

 

Viking,

 

To me - & in short - you're actually talking my book. What you've posted, just confirmed to me, that you can't silence science & facts persons.

 

My basis is what's been going on within the last 5 days or so in my own country [Denmark]. In short, a dearly shape-up, leaving lies [lies, which even I understand & can relate to are lies], to real and fact based public communication to the Danish population, talk about different scenarios going forward, some of them really severe etc.]

[StubbleJumper]

@GeorgieBoy

 

Which country should we NOT be looking at as far as handling this? So far, it's the USA.

 

Like I said, ratio of deaths to # of cases is abnormally large, larger than most places (even Iran). USA is the outlier. And not in a good way.

 

 

So if this is being "handled" incorrectly, what is your hypothesis?  Is it:

 

1) People in the US are actually getting sick from Covid-19, but are electing to not seek medical help?

 

2) Doctors across the US (who generally work in private practice and are not public employees) are treating people for respiratory illness, they suspect Covid-19, but are failing to inform local public health authorities?

 

3) Local public health agencies in thousands of cities in the US are collaborating to not test people to confirm the existence of Covid, and they are also collaborating to not forward presumptive diagnoses or suspected cases to the state public health agencies?

 

4) The 50 different state public health agencies are in cahoots to hide the real numbers from the federal government and are forwarding incorrect numbers to the CDC?

 

 

So, in your book, where are the facts being hidden?

 

 

SJ

[Viking]

https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6

 

LOL Russia. 3 cases. 2 cured. They must be rigging the virus.

 

Im still waiting for someone to connect why the likely or even less likely and more severe scenario warrants, lets say, Google losing $100B in value? One quarter of really ugly numbers? Two? A year? How ugly should those be? Lets say it goes on for a full year and figures contract 35%! Surely a rational investor would pay, lets say 20x trough earnings for a company like Google. Is the doomsday scenario 11% downside? How scary. No one seems to be quantifying anything in any terms that translate to anything of significance for investments. And no one has really answered the question, what if we only end up with numbers that resemble the flu? Does that kill the markets? I mentioned early last week how people I was speaking with were telling me restaurants in Chinatown were seeing traffic down 40%. And that people in other parts of the country have noticed nil. So obviously the effects will ripple into some areas of life. Others probably not. You want to give me Madison Square Garden at a $5B EV because of a year of the flu? OK.... give it to me. All day. If nothing else, thing is perfect long/short territory. You'll likely have such volatility for a short while that you dont even need to be a good investor just cover shorts when market goes down and flip longs when it goes up and gradually taper short exposure as this plays out.

 

I think the real economic risk is if the US has to lock down regions where this really breaks out. Kirkland, Washington will be the first test and we should know more in about two or three weeks. If lock down is the answer then this will cause significant economic disruption.

 

After that, it really depends how many ‘clusters’ in the US are incubating currently. Because of pretty much no testing the past month one has to assume a fair bit as this virus is very contagious.

 

It is like a small meteor randomly hitting a region in the US. Not causing a huge amount of death but causing short term economic damage. We just don’t know how many meteors are coming and what their size will be.

 

The crazy thing is we still know so little. Will warm weather slow it? Perhaps, but don’t know yet. Will it resurface in the fall? Probably, but don’t know yet. Will it ‘bomerang’ and re-infect already hit areas? Don’t know. Bottom line, fasten your seat belts as the ride is just getting started.

 

Looks to me like the bond market sees what is coming with the yield on the 10 year treasury down again today to 1.12%. The stock market? Up 5%. It is rallying because of expected central bank easing. Not sure that is going to help in this situation.

[Viking]

@GeorgieBoy

 

Which country should we NOT be looking at as far as handling this? So far, it's the USA.

 

Like I said, ratio of deaths to # of cases is abnormally large, larger than most places (even Iran). USA is the outlier. And not in a good way.

 

 

So if this is being "handled" incorrectly, what is your hypothesis?  Is it:

 

1) People in the US are actually getting sick from Covid-19, but are electing to not seek medical help?

 

2) Doctors across the US (who generally work in private practice and are not public employees) are treating people for respiratory illness, they suspect Covid-19, but are failing to inform local public health authorities?

 

3) Local public health agencies in thousands of cities in the US are collaborating to not test people to confirm the existence of Covid, and they are also collaborating to not forward presumptive diagnoses or suspected cases to the state public health agencies?

 

4) The 50 different state public health agencies are in cahoots to hide the real numbers from the federal government and are forwarding incorrect numbers to the CDC?

 

 

So, in your book, where are the facts being hidden?

 

 

SJ

 

SJ, did you watch the 8 minute CNBC video i recently posted? I think the doctor more than answers your question.

[james22]

One take on the response:

 

“I’ve been handling these emerging contagions for about 20 years now, and I have to tell you, I’ve never seen one handled better,” Dr. Marc Siegel said regarding the actions of President Donald Trump since the coronavirus first emerged as a concern in January. ...

 

“They’ve been doing exactly what they’re supposed to be doing,” he said, listing actions Trump has called for such as “restricting travel, isolating patients who are sick and, trying to cut down on contact. It’s a very hard thing to do when people are pouring in from all over the world.”

 

 

More importantly, numbers:

 

“One, at the beginning of an emerging contagion, it always appears more deadly than it actually is. The 1918 flu is an exception, but normally as time goes on, it’s less deadly, and part of that is because you see more immunity appearing, and you also find a lot of milder cases — or even cases where people don’t get sick at all. You find that as you start to test more people,” he said.

 

He also noted that people who were infected but never got sick do not show up in statistics, making the virus seem more deadly than it is.

 

https://www.westernjournal.com/medical-professor-praises-trump-admin-coronavirus-response-never-seen-one-handled-better/

[mcliu]

@GeorgieBoy

Which country should we NOT be looking at as far as handling this? So far, it's the USA.

 

Uh.. what about China, Iran, Italy, S Korea, princess diamond?

[LC]

This thread will be a pretty good case study regardless of which direction COVID 19 plays out.

[Viking]

interesting facts (people will say chinas data are not trustworthy, maybe), beijing has 8 death, shanghai has 3 deaths so far (3/2/2020 10pm), these are 2 mega city with population of over 20 million people each. not saying we have nothing to worry about,  the outcome obviously depends on how the situation is handle by the authorities etc., nothing is guarantee or a given.

 

EDIT: either you don't believe anything out of china, or this is an illustration of what can happen if the authorities act quickly etc. 

 

EDIT 2: if you don't believe data from china, there is taiwan, japan to look at, both have large cities (obviously outcomes is highly dependent on how the local authorities handle the situation).

 

Thought provoking post. Why does it blow up in some areas and not others (in the same country)? Making me think  :-)

[UK]

https://millervalue.com/market-uncertainty-coronavirus/

https://brooklyninvestor.blogspot.com/2020/03/who-cares-what-mr-market-thinks.html

[rb]

2) This is a quote from Masterdard.  I think Mastercard is a great proxy for world economy.  It sees GDP in real time.  They took their revenue guidance down by 2-3%.  I am not a macro-economist.  But I find it interesting that if they are lowering their revenue estimate by 2-3%, it likely means that the word's GDP is expected to grow 2-3% lower.  Someone correct me if I am wrong.  World GDP is expected to grow around 3%.  Won't this put the world into the dreaded "R Word"? 

 

“Cross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted by the Coronavirus,” the company said in a statement on Monday after the bell. The company said its first-quarter revenue growth will be about two to three percentage points lower than previous guidance.

 

“If the impact is limited to the first quarter only, we expect that our 2020 annual year-over-year net revenue growth rate would be at the low end of the low-teens range,” the company added.

One place where you're making an error is confusing real with nominal numbers. World "real GDP" was expected to grow by 3% which is probably around 6% nominal (I think). The revenue guidance at Mastercard is nominal.

 

Mastercard numbers also reflect consumer spending. While that is a big part of GDP, we should keep in mind it's not all. Other sectors of the economy that don't make it into the Mastercard numbers - like say healthcare - are growing. While a 2-3% pullback in consumer spending is not good, it's also not the nightmare scenario either.

 

Generally what pushes economies into recession and what pulls them out is business investment in inventory. In this case that is very difficult to predict. In a normal scenario businesses would react to the slowdown in consumer spending by cutting orders in so they draw down inventory. That leads to even lower economic activity and TA-DA! you have a recession. The question is will businesses react in this manner this time? For one you have very sharp declines in services businesses (travel, hospitality) that carry no inventory. So the impact to goods businesses may not be very large and they will not react. Also disruptions or fear of disruption to supply chains can alter the inventory decisions. Say a company normally may draw down inventory in a situation like this. But in this case they won't because they don't know whether they can stock back up again when they want to. So they choose to carry more inventory than they normally would given the conditions.

[Dalal.Holdings]

@GeorgieBoy

 

Which country should we NOT be looking at as far as handling this? So far, it's the USA.

 

Like I said, ratio of deaths to # of cases is abnormally large, larger than most places (even Iran). USA is the outlier. And not in a good way.

 

So if this is being "handled" incorrectly, what is your hypothesis?  Is it:

 

1) People in the US are actually getting sick from Covid-19, but are electing to not seek medical help?

 

2) Doctors across the US (who generally work in private practice and are not public employees) are treating people for respiratory illness, they suspect Covid-19, but are failing to inform local public health authorities?

 

3) Local public health agencies in thousands of cities in the US are collaborating to not test people to confirm the existence of Covid, and they are also collaborating to not forward presumptive diagnoses or suspected cases to the state public health agencies?

 

4) The 50 different state public health agencies are in cahoots to hide the real numbers from the federal government and are forwarding incorrect numbers to the CDC?

 

 

So, in your book, where are the facts being hidden?

 

 

SJ

 

As was posted recently, up until a few days ago, British Columbia had tested more people than all of the United States. CDC refused to test someone in CA who ended up having the disease...so the failure of U.S. is...not testing enough. Hence, sick people will go undetected (and stay out in the community) and confirmed cases will be falsely low. According to new outlets, govt plans to substantially increase testing. Don’t be surprised if U.S. cases shoot up as a result.

 

The China numbers are certainly not to be trusted. China did mishandle this in early stages...but black swans are hard to accept as real in the beginning. Diff between U.S. and China is that U.S. has had head-start of months to prepare. U.S. has clearly not prepared and we are reactive more than proactive.

 

https://www.npr.org/sections/health-shots/2020/02/28/810520187/cdc-defends-its-handling-of-new-coronavirus-case-in-california

 

The UC Davis Medical Center in Sacramento, Calif., where the woman was being treated, says its diagnosis of the patient's COVID-19, the disease caused by the novel coronavirus, was delayed for days because the patient didn't initially meet the CDC's criteria to approve a coronavirus test.

 

Add to that flaws in the testing kits/reagents and the fact that you had to mail samples to the CDC to get the test done...

 

As one of the last places to start getting cases, the U.S. has actually had a head start compared to most of Asia and Europe in having time to prepare for this. Too bad it was squandered.

[stahleyp]

You know, if this thing isn't that bad and even more stimulus comes out we could get to dotcom level euphoria.

[John Hjorth]

Some hypothetical thoughts about the design of a gruesome experiment with an infectious virus on rats :

 

1. You put a large number of healthy rats in a large and sealed lab, where you can - on running basis - observe, what going on through a large glass wall. Let's call that large number X.

2. You're only allowed to observe and take notes, except for :

2a. Providing water & food to the rats in the lab,

2b. Cleaning the place on a regular basis [because you aren't an animal molester, right?]

2c. Remove any dead rats on an ongoing basis, as the experiment moves on over time. [You'll examine them for cause of death, too.]

3. Then you put that particular extra rat, which you - by injection - has infected with the virus into the lab, to start the experiment.

 

- - - o 0 o - - -

 

Now, let's set that large number X to 3,710 [so there are 3,711 rats in the experiment].

 

- - - o 0 o - - -

 

Next, every place above, where I've written "rat"/"rats", you substitute that with "human being"/"human beings".

 

- - - o 0 o - - -

 

The difference between the experiment with rats and that with human beings is that the rats don't understand whats actually going on, while the human beings do, and individually try to take every measure possible for self-protection.

 

- - - o 0 o - - -

 

That experiment with human beings has a separate line in the daily WHO sit reports [the last one, actually], called "Princess Diamond" :

 

Here are the numbers, based on WHO sit Report 42:

 

Population : 3,711 [source : Here]

 

Observed development period February 1^st - March 2^nd 2020 :

 

Infections [called "confirmed cases"] : 706 [including the original infected specimen, that you added your self]. So infection rate is  ~ [[706 - 1]/3,711] ~ 19 percent.

 

Deaths : 6. So death rate is [6 / 3,711] ~ 0.16 percent.

[rkbabang]

You know, if this thing isn't that bad and even more stimulus comes out we could get to dotcom level euphoria.

 

That's what I've been thinking exactly.

[Liberty]

 

Atrocious.

 

 

I'm not sure that I quite understand the fixation on having "correct" and up to date statistics.  What would governments in the US do differently if they had "good" statistics resulting from more prevalent testing? 

 

So, suppose that there was more testing being done of people who sought medical attention for respiratory disorders and it came back that there were 1,000 positive Covid-19 cases.  If that were true, how many cases would there be that had not sought medical attention because the symptoms were not so severe?  Perhaps it would be 1,000 more that wouldn't show up in the official statistics?  And then what would the US government do with those numbers? 

 

Look, either this virus can be controlled and we can put the genie back in the bottle, or it cannot be controlled and the genie is on the loose.  If you are in the camp that this thing has already spread so much that the world has lost control of it, then "good" statistics don't strike me as too useful.  If you are not going to impose mandatory quarantines and if you are not going to suspend international travel, what are the remaining levers that governments can pull and how are better statistics actually useful?

 

I guess that I'm in the camp that the genie is out of the bottle and that it's time to focus on managing a situation which is no longer preventable.  But, maybe I'm alone in that camp?

 

 

SJ

 

It makes a huge difference. Investors are supposed to understand exponential growth, right? This means that time matters a lot and early interventions in the right places, in the right ways, giving correct info to population and medical staff so they can act in the right way, etc, can have a tremendous impact on the rate at which things unfold. Since healthcare system capability isn't built for huge peaks, these delays can help it absorb increases much better and will result in saved lives.

 

Also, vaccines and other drugs are being tested and developed, and delays help get more people across that line.

 

In short, bungling the public health response will cost lives, could be your grand-parents or some friend who has a weaker immune system because they survived cancer or have asthma or whatever.

[griezeman23]

You know, if this thing isn't that bad and even more stimulus comes out we could get to dotcom level euphoria.

 

That's what I've been thinking exactly.

 

+1. My thoughts as well. I think this is a textbook demand shock for certain industries (airlines, hospitality, etc.) or supply shock for others (consumer discretionary, etc.). Both of these types of shocks are temporary and we should return to something relatively normal in the next 12m to 24m.

[mcliu]

Just announced -50bps!