Economic implications of a SARS/Coronavirus outbreak

[SirRumpole]

I think the Corona virus crisis will eventually decline, and leave us with the thought "when is the next one coming".

Our dependence on China is obvious, can we afford to be so reliant on them when they are the world's biggest incubation chamber for serious diseases ?

Some tough decisions ahead I reckon.

 

[qldfrog]

The point I'm thinking of is the long term one.

Suppose that your scenario plays out (and I think there's at least some chance it will) then what will be the long term effect? If someone looks back at this in the year 2050 then what do they see?

Do they see a minor blip akin to a recession after which all previous trends resumed? In 2050 most things are "Made in China", most people routinely travel internationally and broad economic and social trends that were in place prior to 2020 resumed after the virus crisis had passed?

Or do they see a permanent inflection point on the chart for all sorts of things from cruise ship passenger numbers through to the growth of Chinese manufacturing? A point where the trend changed and never went back to how it was previously?

My comparison with the 1973-74 oil crisis is of the latter scenario. 46 years later and oil's still very much around but the previous growth trend never returned. Things were never the same after the crisis compared to before it and I do think that there's some chance of a similar situation playing out here. A situation where only in hindsight we'll realise that some things never returned to the previous trend - cruise ships would be an obvious one with that risk.

Cruise ship indeed.was not very keen before, now an absolute never

 

[qldfrog]

It could be the final nail in the coffin of globalisation.the West electorate is now waking up to what free circulation of people and goods means: a leveling to the lowest denominator with minimal but substantial improvement for the poorest countries and the decimation sp? Of the western working and middle class and that crisis could be the inflection point..

 

[qldfrog]

But first survival ...and it could get ugly as we do not have Chinese behaviour and iron grip

 

[sptrawler]

Another profit downgrade by Treasury Wines, due to corona virus and lack of demand in China.

https://www.asx.com.au/asxpdf/20200225/pdf/44ffgqjrg03ht3.pdf

 

[Smurf1976]

I think the Corona virus crisis will eventually decline, and leave us with the thought "when is the next one coming".

With the GFC there was a lot of "when's the second one coming?" sort of thinking around for years later indeed it's really only in the past year or two such comments seem to have dried up, so that was a full decade.

At least some US based financial commentators have still occasionally mentioned SARS in recent times (last few years) as an historical event that could happen again in some form.

I mentioned the oil shocks of the 1970's - there were still people actively concerned at the prospect of a repeat well into the 1990's.

So the thinking won't go away anytime soon is my expectation.

 

[Smurf1976]

Port calls by container carriers fell 30 per cent in February, from a year ago, according to Clarksons

Oil shipment to China from the Middle East fell to 12 per cent of what it was a year ago on February 5

https://www.scmp.com/business/compa...es-face-troubled-waters-oil-tankers-container

It would seem that the impact is quite substantial if this is correct.

A 30% drop in container volume is pretty significant but does raise a question as to how that impacts specific products. At a guess, most likely some product types will have gone to zero whilst others are unaffected, it's probably not a 30% drop across everything.

To the extent that anything has gone to zero or close to it, well it's only a matter of time until we see that show up as product shortages here in Australia. What items is the big unknown.

 

[ducati916]

Corporate debt in US BBB (Junk) sitting at $3.4T. Impacted cash flows will inhibit servicing and we will likely see a large chunk fall over.

Reports from China, a significant number of companies only have 2 mths working capital remaining. Without intervention, layoffs are coming.

The virus issue is not going to resolve tomorrow. Therefore another couple of months or so will create even further damage. The markets are still pricing this as if it will disappear tomorrow.

Real rates up to the US 10yr are now negative.

If the virus triggers a global recession and it looks pretty likely atm, there is nowhere really to go for the Central Banks and the recession could be a nasty one.

If a recession is triggered, Trump will likely lose the election and that is looking increasingly to Bernie Saunders. A 'Socialist' US President will make the virus issue look minor by comparison.

jog on
duc

 

[satanoperca]

The virus will keep on spreading/growing and the death rate will climb.

It cannot be contained or stopped.

Over the coming months we will see the true mortality rate of this virus, I believe it will be higher than 3% as an average across the globe, some countries less, some more.

Once the govnuts release they cannot contain it and there is hope of a vaccine, the borders will be opened again and it will be back to business.

Just another flu like virus.

 

[MrChow]

China deaths hit a 3 week low so may have already peaked at the source country 2 months in.

Keep in mind actual flu deaths are about 1m per year world wide so hundreds times more deadly.

If you look at the stock markets in 1918 and 1968 when millions of people died from similiar viruses it had very little effect.

 

[Dona Ferentes]

Just another flu like virus.

Flu death rates about 0.1%.

 

[Dona Ferentes]

The longer-term issues are [ ] complex. Will the shock to China derail what has been an unprecedented development process? What will happen to the China brand that was underpinning much of the country's regional and international expansion and integration?Will the disruption to travel and supply chains fuel a multi-year deglobalisation?

The hope remains that the coronavirus will be contained quickly and that the cascading sudden economic stops can be reversed rapidly. Even before that happens for sure, the time will come to buy risk assets, focusing on market segments that have underperformed for a while.

But there simply isn't enough evidence at this stage to predict a timetable with any degree of confidence. After all, it is rare for a sudden stop to break out in some of the largest economies in the world. There is still much more unknown than known.

Mohamed El-Erian is a Bloomberg Opinion columnist

 

[SirRumpole]

Tokyo Olympics in doubt.

https://www.abc.net.au/news/2020-02...ate-says-ioc-top-official-dick-pound/12001034

 

[qldfrog]

China deaths hit a 3 week low so may have already peaked at the source country 2 months in.

Keep in mind actual flu deaths are about 1m per year world wide so hundreds times more deadly.

If you look at the stock markets in 1918 and 1968 when millions of people died from similiar viruses it had very little effect.

really sorry but FFS could you please stop spreading this kind of **** info:
the number of death due to annual flu is around 61000(usually less but that is the figure in bad years) so 200 times less than the figure you state, just do a google search at the minimum before spreading such misinformation

 

[Dona Ferentes]

really sorry but FFS could you please stop spreading this kind of **** info:

Well said.
Flu... 0.1% death rate.
COVID-19.... somewhere between 2-3%, if over 80 years old it's 15% death rate, if over 70, about 8%.

Now some say this is just acceleration of a natural attrition ("No-one here gets out alive" - Clive James) but even if it's 2%, if you have 50 in your circle of family and friends, just ask yourself this: "Punk, are you feeling lucky today?" Because it it's going to get personal if the outbreak becomes a pandemic (which in and of itself is becoming more and more likely)

 

[Smurf1976]

even if it's 2%, if you have 50 in your circle of family and friends, just ask yourself this: "Punk, are you feeling lucky today?" Because it it's going to get personal if the outbreak becomes a pandemic (which in and of itself is becoming more and more likely)

Thus far 81,002 cases reported of which 30,109 are recovered and 2,762 are dead.

So the death rate is presently at 3.4%, recovered 37.2% and the rest are still alive but infected.

So a 3.4% death rate thus far which realistically is more likely to go up rather than down given that almost 60% of cases are thus far unresolved and presumably at least some of those will end with death.

The only hope for a fall in the death rate is if it turns out that China's medical approach isn't as good as that of other countries. I've no idea if that's the case or not but it would appear that they've certainly made a major effort, they couldn't be accused of not at least trying, whilst in practice there are other countries which are really going to struggle to do much at all so there's a fair chance that the rest of the world as a whole isn't going to do any better than China's done with this.

Particularly concerning is Iran. 95 cases with 16 reported deaths and no recoveries. I know nothing about Iran's hospitals but hopefully they're not much good and that's the reason for so many deaths? If they are good, and they still have that death rate, well then oh s***.

 

[sptrawler]

Well said.
Flu... 0.1% death rate.
COVID-19.... somewhere between 2-3%, if over 80 years old it's 15% death rate, if over 70, about 8%.

Now some say this is just acceleration of a natural attrition ("No-one here gets out alive" - Clive James) but even if it's 2%, if you have 50 in your circle of family and friends, just ask yourself this: "Punk, are you feeling lucky today?" Because it it's going to get personal if the outbreak becomes a pandemic (which in and of itself is becoming more and more likely)

Lucky they are going to urbanise the young first.

 

[qldfrog]

Thus far 81,002 cases reported of which 30,109 are recovered and 2,762 are dead.

So the death rate is presently at 3.4%, recovered 37.2% and the rest are still alive but infected.

So a 3.4% death rate thus far which realistically is more likely to go up rather than down given that almost 60% of cases are thus far unresolved and presumably at least some of those will end with death.

The only hope for a fall in the death rate is if it turns out that China's medical approach isn't as good as that of other countries. I've no idea if that's the case or not but it would appear that they've certainly made a major effort, they couldn't be accused of not at least trying, whilst in practice there are other countries which are really going to struggle to do much at all so there's a fair chance that the rest of the world as a whole isn't going to do any better than China's done with this.

Particularly concerning is Iran. 95 cases with 16 reported deaths and no recoveries. I know nothing about Iran's hospitals but hopefully they're not much good and that's the reason for so many deaths? If they are good, and they still have that death rate, well then oh s***.

with the health minister contaminated in Iran...

 

[Knobby22]

It's fascinating to watch this unfold. It is a proven fact that people are poor at assessing risk accurately. Me included.
This is going to be bad.

 

[Klogg]

Thus far 81,002 cases reported of which 30,109 are recovered and 2,762 are dead.

So the death rate is presently at 3.4%, recovered 37.2% and the rest are still alive but infected.

So a 3.4% death rate thus far which realistically is more likely to go up rather than down given that almost 60% of cases are thus far unresolved and presumably at least some of those will end with death.

The only hope for a fall in the death rate is if it turns out that China's medical approach isn't as good as that of other countries. I've no idea if that's the case or not but it would appear that they've certainly made a major effort, they couldn't be accused of not at least trying, whilst in practice there are other countries which are really going to struggle to do much at all so there's a fair chance that the rest of the world as a whole isn't going to do any better than China's done with this.

Particularly concerning is Iran. 95 cases with 16 reported deaths and no recoveries. I know nothing about Iran's hospitals but hopefully they're not much good and that's the reason for so many deaths? If they are good, and they still have that death rate, well then oh s***.

Mathematically, your death rate calculation is correct. However, there's reason to believe it much lower.
Given the number of cases in China, there are bound to be some undetected, potentially thousands. If they survived, nobody tested them. If not, you can be sure people asked if they died of coronavirus.
So deaths are added to the count, survivors are not.

Further, we have better medical care than China. It won't make a huge difference, but it'll definitely reduce the death rate in 1st world countries.

Those two factors alone should lower the death rate, the first much more than the second.
Or I'm just too optimistic...