Economic implications of a SARS/Coronavirus outbreak

[sptrawler]

It’s not the end of the world but it’s a massive inconvenience and economic cost.

It is, but it is looking more and more likely.

 

[Garpal Gumnut]

I said to my wife (who happens to be in a high risk environment where the virus has been confirmed at least once)

In an ideal world, the only way to get this thing under control is by doing the following ...

For the sake of the example lets assume we are dealing with just 1 town or city in Australia so it simplifies the suggestion.

1) The whole population of that City should go into immediate isolation for 14 days unless their occupation is determined an essential service (ie. Medical/Nursing/Food distribution etc etc)

2) Everyone (everyone!) has to be tested for the virus after the 14 day period except those working in essential services who should be tested immediately in order of likeliness of being a carrier.

3) A further 5 day wait for results (19 days)

4) Any carriers of the Virus after testing immediately go into severe isolation with appropriate medical facilities and become monitored and re tested after another 14 days minimum

5) After testing results people must wear a badge stating their condition as either negative or positive.

6) The complete process is then started again (another 19 days)

7) Those with 2 consecutive negative tests (wearing 2 badges) should theoretically be safe to associate with others with the same result.

8) After this process was completed 3 or 4 times, it would be reasonable to expect that the majority of those still carrying the virus would now be totally isolated.

9) Rinse and repeat the testing process until carriers of the virus test clear.

Now I'm not naïve enough to suggest this would be easy or even possible to implement, but IF each Town/City/Country had enough testing kits and enough medical staff to carry out the testing, I believe the worst of the situation could be curtailed in around 3 months which would be a hell of a lot quicker, less costly and more efficient than trying band aid measures.

Because the World has a lack of Testing facilities available, the above cannot be implemented. We need to find a way to improve the ability to TEST large numbers of the population quickly!

Sorry @barney

That makes no sense.

Ockhams razor needs to be applied.

gg

 

[basilio]

No surprises here. But this is an imminent disaster across the board.

Coronavirus measures in Victoria send hospitality industry to 'the brink of collapse'
https://www.abc.net.au/news/2020-03-18/coronavirus-covid-19-victoria-cases-rise-to-121/12065698

 

[basilio]

One way or another we have to keep people and businesses solvent and hopefully productively active.

Having said that we know that the Chinese went through this situation for at least 8 weeks effectively locking down 1.5 Billion people. Cost them a mint but they are now getting back into production. Minimal new virus infections.

 

[MrChow]

Exactly quarantine is the solution not the problem.

The blueprint is achieving peak infections within a month and GDP growth again in a quarter.

Great deal.

 

[Smurf1976]

Just read that car manufacturers are shutting down in Europe:

https://www.bbc.com/news/business-51944301

Then I read that supermarkets in the UK are now limiting the purchase volume of all food items and some other products as well.

Then I see that the Eurovision song contest is cancelled.

This has stuffed the world basically.

 

[Value Collector]

Exactly quarantine is the solution not the problem.

The blueprint is achieving peak infections within a month and GDP growth again in a quarter.

Great deal.

It’s starting to look like Italy and Iran May have peaked.

That is the case, we may see the “Active cases” growth begin to stagnate soon.

There is currently about 115,000 active cases at the moment (not counting people who have already recovered).

it’s still super early to make predictions, but I wouldn’t be surprised if we see the active cases number stagnate before it hits 200K.

(total cases is already over 200k but that includes the dead and recovered, I am just talking about active cases Eg those currently infected)

 

[So_Cynical]

The Canadians are basically giving everyone the dole - COVID19 Benefit, self employed with no income, sick carers, everyone who needs money
450 per week, Canada and Australia both have about 570 confirmed cases, 27 Billion for people payments and 55 billion for business.

WOW 82 Billion.

 

[MrChow]

SP500 companies have spent $4.5 Trillion on buybacks since 2012.

Airlines now want $60 Billion from Trump.

 

[Kauri]

Price of Iron Ore holding up remarkably well. Smart traders betting that the virus will get a hold in the Pilbara, ( a relatively safe bet considering the FIFO nature of a lot of the mines and associated plant/services ), if it does and consequently shuts down a part of the supply chain then procuring Iron Ore may rival the Great Dunny Roll Dash. The resultant hit to W.A and Federal cashflow would put a severe strain on the Pollies Strategic dunny roll reserve. Add in the gas and coal industries and we may have a serious problem. Incidentally I see a lot of retail traders are short Iron Ore.

 

[basilio]

QANTAS just announced a stand down of 20,000 employees...
That will put a bomb onto the unemployment figures. I wonder if these people are counted as unemployed ie available for work ? I also wonder how what will happen to these employees entitlements ie long service leave, holiday pay, redundancy packages at this stage ? It would be really, really off to not ensure the company doesn't preserve these benefits at this stage.

Now I understand why the company could last another 6-12 months.

I wonder how many senior management jobs will be part of the stand down ?

https://www.theguardian.com/world/l...s-500-as-more-stimulus-planned-latest-updates

Update .

It seems all senior executives will be working on no pay for the rest of this financial year. Classy move.
The February dividend will not be paid. Clearly preserving cash.
Full statement at the above URL

 

[basilio]

The economic survival package is coming. (Forget the sugar hit...)

Australian government plans coronavirus 'safety net' package as fresh rate cut tipped
Income support measures are set to be signed off within days, as business warns of a ‘dire’ downward spiral in economy
https://www.theguardian.com/world/2...s-safety-net-package-as-fresh-rate-cut-tipped

 

[sptrawler]

QANTAS just announced a stand down of 20,000 employees...
That will put a bomb onto the unemployment figures. I wonder if these people are counted as unemployed ie available for work ? I also wonder how what will happen to these employees entitlements ie long service leave, holiday pay, redundancy packages at this stage ? It would be really, really off to not ensure the company doesn't preserve these benefits at this stage.

Now I understand why the company could last another 6-12 months.

I wonder how many senior management jobs will be part of the stand down ?

Here is a comprehensive article on the conditions.

https://au.news.yahoo.com/qantas-temporarily-sands-down-thousands-215951221.html
From the article:
Around 18,000 stood-down employees will be able to access annual leave, leave at half-pay, and will also be able to draw down on long service leave early.

Staff with low leave balances will have access to up to four weeks of annual leave before earning it. However, Qantas said unpaid leave is also inevitable for some employees.

“The reality is we’ll have 150 aircraft on the ground and sadly there’s no work for most of our people. Rather than lose these highly skilled employees who we’ll need when this crisis passes, we are instead standing down two-thirds of our 30,000 employees until at least the end of May,” CEO Alan Joyce said.

“Most of our people will be using various types of paid leave during this time, and we’ll have a number of support options in place. We’re also talking to our partners like Woolworths about temporary job opportunities for our people.”
Senior Management wont be paid.

 

[sptrawler]

Too late was two weeks ago.

The Government was playing a game of chicken between the economy and the virus, they already lost and just don't know it yet.

Here is a link to the medical experts, the Government is taking its advice from, hopefully they know what they are doing. By the way, the article isn't written very well, a bit disjointed.

https://www.smh.com.au/national/it-...a-s-coronavirus-strategy-20200318-p54bfb.html
From the article:
Professor Jodie McVernon, director of epidemiology at the Doherty Institute, has shed light on the behind-the-scenes work, including the reason the government is keeping schools open and why their worst-case scenario has proven correct.

She is part of a team of pandemic modellers, infectious disease and public health experts advising the government every day on its coronavirus response for the past eight weeks.

"We are not coming to these questions naively or without prior thought. [We are] coming with tools we've prepared earlier," she said.

We converged early on the expectation that this was the worst case we were preparing for, for say an influenza pandemic, and as time has emerged that's become clear," Professor McVernon said.


“We always knew, we knew on the 3rd of February, that there [would] come a point when it would be inevitable that our capacity could not completely put out every spark.

"Now we are moving to the 'flattening the curve' phase", Professor McVernon said.

Professor McVernon and her Australian colleagues are parts of a global network of modellers who share information “rapidly, openly and freely … so that in these times of vast uncertainty we can together arrive at a clear understanding of the threat our world is facing.

 

[banco]

One thing I think is being under-covered is the bond market isn't acting normally. Yield's spiking etc.

 

[satanoperca]

Great Site, if true maybe this is not going to be so bad.
https://www.worldometers.info/coronavirus/country/china/

 

[trading_rookie]

One thing I think is being under-covered is the bond market isn't acting normally. Yield's spiking etc.

@banco you can say that again!!!! How the hell does the Fed injecting more than a trillion $$$ into the bond market cause yields to jump more than 20% on a variety of treasuries??

From investopedia:
Open Market Operations
The other major tool available to the Fed is open market operations (OMO), which involves the Fed buying or selling Treasury bonds in the open market. This practice is akin to directly manipulating interest rates in that OMO can increase or decrease the total supply of money and also affect interest rates. Again, the logic of this process is rather simple.

If the Fed buys bonds in the open market, it increases the money supply in the economy by swapping out bonds in exchange for cash to the general public. Conversely, if the Fed sells bonds, it decreases the money supply by removing cash from the economy in exchange for bonds. Therefore, OMO has a direct effect on money supply. OMO also affects interest rates because if the Fed buys bonds, prices are pushed higher and interest rates decrease; if the Fed sells bonds, it pushes prices down and rates increase.

Am I missing something or are things behaving strangely?!?!?!

 

[Smurf1976]

Price of Iron Ore holding up remarkably well. Smart traders betting that the virus will get a hold in the Pilbara, ( a relatively safe bet considering the FIFO nature of a lot of the mines and associated plant/services ), if it does and consequently shuts down a part of the supply chain then procuring Iron Ore may rival the Great Dunny Roll Dash.

For a possible trading opportunity if that plays out, Grange Resources (ASX: GRR) operates an iron ore mine at Savage River and a processing plant at Port Latta, both in Tasmania.

Both operations use a local workforce, no flying involved, and the ore is moved ~70km from the mine to the processing plant by pipeline, no reliance on trucks or trains once it leaves the mine.

It's a tiny operation compared to those in WA, it sure won't save the national economy, but the company could benefit from any disruption to other producers if it pushes prices up.

 

[IFocus]

One thing that caught my eye watching the ABC national press club address was the lack of testing in Australia.
The lady talking about it was shutdown by and lady who did modeling of the virus (had to stop watching at that point due to appointment).
The point was you needed proper surveillance to be able to take proper or appropriate actions.

Testing in Australia is way under those countries who have kept the numbers down.

If you know who's infected then you can control the situation in Australia now thats not the case as they have narrow conditions to getting tested.

 

[Smurf1976]

This whole situation is getting rather drastic really.

If someone had said on 1 January 2020 that in less than 3 months we'd have the AUD at 55 cents, oil trading at $20 a barrel, most international borders closed, city centers deserted, every major event from F1 races to classical music concerts cancelled, supermarkets selling out of essentials in developed countries and the population locked down in multiple places including those with democratically elected governments then nobody would have believed it possible and yet that's exactly the situation we have right now.

To the extent there's anything out of line with all that, it's that the stock market has only dropped 30% or so. That seems rather mild compared to what's going on in the real economy right now.