Coronavirus and the market

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rockstar
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Re: Coronavirus and the market

Post by rockstar » Tue Feb 25, 2020 11:50 pm

I'm trying to wrap my head around the supply chain distributions. I don't expect a vaccine to come out for at least 18 months. Given that timeline, I expect economic impacts.

teelainen
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Re: Corona virus and the market

Post by teelainen » Wed Feb 26, 2020 12:05 am

nisiprius wrote:
Tue Feb 04, 2020 11:33 pm
1918 was the word year of the flu pandemic in the United States. Here are the annual returns of the US stock market in that time frame.

Image
They didn't have direct flights from Asia to North America back in 1918.

Asia is the continent with the highest number of Coronavirus infections right now.

ginrummy
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Re: Coronavirus and the market

Post by ginrummy » Wed Feb 26, 2020 12:18 am

But how many times has a pandemic run the markets in the modern era? And because the markets will seemingly begin to rise when a vaccine is verified, why wouldn’t one time it. Go to cash and wait for a vaccine? Taxes on capital gains withstanding.

I understand markets rise and fall. But isn’t an addendum to this, why..what is the cause? Would a pandemic be viewed and treated differently than extreme valuations?

Or is it just, markets rise and fall. End of story.

Iridium
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Re: Coronavirus and the market

Post by Iridium » Wed Feb 26, 2020 12:21 am

CnC wrote:
Tue Feb 25, 2020 11:37 pm
By the way guys this thread is about my minor market timing and how the coronavirus will effect or has affected the markets.
Sorry, CnC. On the market side, I think the most underreported story is the massive decrease in cases reported in China, outside Hubei. Only 5 today. The number of cases has been low for a while. While the virus' escape to other countries is clearly very bad news for the market, China production may be very close to running at full bore by the time you buy back into the market.

iamlucky13
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Re: Corona virus and the market

Post by iamlucky13 » Wed Feb 26, 2020 12:22 am

teelainen wrote:
Wed Feb 26, 2020 12:05 am
nisiprius wrote:
Tue Feb 04, 2020 11:33 pm
1918 was the word year of the flu pandemic in the United States. Here are the annual returns of the US stock market in that time frame.

Image
They didn't have direct flights from Asia to North America back in 1918.

Asia is the continent with the highest number of Coronavirus infections right now.
3 years is more than long enough to cross an ocean by boat, which the Spanish flu clearly did. 1/2 million Americans died of it. That's the kind of thing you would expect to affect financial markets.

I'd stick with "Past results are not an indicator for future success," and avoid the temptation to be certain you know and can properly time the market response to events with an unclear future.

CodeMaster
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Re: Coronavirus and the market

Post by CodeMaster » Wed Feb 26, 2020 12:36 am

Valuethinker wrote:
Mon Feb 10, 2020 9:42 am
guyinlaw wrote:
Sat Feb 08, 2020 10:10 am
An "expert" on TV said they expected peak infection at 70k.. not sure where they got that number. Hopefully the fatalities start reducing.. daily deaths are still increasing, 73 -- 73-- 86 on Friday..

Nytimes reported that many of the initial deaths were not categorized as being related to coronavirus.
A total of 722 people had died from the virus and 34,546 were infected in mainland China by the end of Friday
https://amp.cnn.com/cnn/2020/02/08/asia ... ndex.html

Chinese infusion has stabilized their markets, but the spillover effects on supply chain is TBD..

This website is informative

https://www.worldometers.info/coronavir ... us-cases/
As ever, on matters scientific, New Scientist does a pretty good job.

Anyone who says they know, is lying or exaggerating. We are in uncharted territory.

We don't know the actual number of people infected, nor the actual death rate (by definition). The doctor who died did so after several weeks - that is not a good sign - it means you can be sick, and infectious, for a long time before it is fatal. And he was relatively young, and healthy - not your typical influenza victim (old, immune compromised, etc).

Even despite crash programmes to develop a vaccine, it will take months (or years) before we have a workable one available in global scale (1 bn+ innoculations?) enough to grant herd immunity. And that's before the anti-Vaxx crowd gets its teeth into this.

This could be another Spanish Flu. It's perhaps more likely to be another Hong Kong flu. It is certainly easier to catch than SARS, and therefore its spread is likely to be global - it was too late weeks ago to shut borders. I doubt even North Korea will escape (as perhaps the world's most shut in country).

Certainly if it is something that severe most healthcare systems, already burdened with an older and sicker population than ever before in history, will not be able to cope - to provide even minimal levels of care. The mass public health institutions, like mass vaccination, that got us through Polio epidemics, and that eliminated smallpox from the human race? They probably don't exist in anything like the same strength.

We don't as yet know where this came from - what the (presumed) animal vector was.

Our science, particularly around the genetic nature of the disease, is vastly improved - so a vaccine may come very quickly. But then we will need trials.

Effect on the world economy? Bad if this persists for months - into the next winter flu season. Effect on companies? Bad. Lower demand plus interruption of supply chains - Hyundai has already cut production I believe. Long run effects? Normally that economic activity is made up when the threat is over - but we don't know for something more elongated.

Effect on stock market? Probably bad in the short run. Longer run? Depends on how long this runs.

Effect on government bond markets? Probably long run lower interest rates. So good. Corporate bonds? Lower interest rates v. higher default rate, at a time when credit ratings are stretched.

We are in uncharted territory. There are no good maps.


Woah... chillout with the super fear drama factor... most USA people who got it were so OK they told them they DONT NEED TO BE HOSPITALIZED, jsut stay home. and they did.. and drank soup and it passed like a normal flu. :beer

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watchnerd
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Re: Coronavirus and the market

Post by watchnerd » Wed Feb 26, 2020 12:45 am

ginrummy wrote:
Wed Feb 26, 2020 12:18 am
But how many times has a pandemic run the markets in the modern era? And because the markets will seemingly begin to rise when a vaccine is verified, why wouldn’t one time it. Go to cash and wait for a vaccine? Taxes on capital gains withstanding.

I understand markets rise and fall. But isn’t an addendum to this, why..what is the cause? Would a pandemic be viewed and treated differently than extreme valuations?

Or is it just, markets rise and fall. End of story.
Or to turn it around:

Would the market be treating a pandemic differently with less extreme valuations as a starting point?

2009 H1N1 paints a very different picture.
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ginrummy
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Re: Coronavirus and the market

Post by ginrummy » Wed Feb 26, 2020 1:04 am

watchnerd wrote:
Wed Feb 26, 2020 12:45 am
Or to turn it around:

Would the market be treating a pandemic differently with less extreme valuations as a starting point?

2009 H1N1 paints a very different picture.
Ah, great point. Thank you for that.

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Stef
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Re: Coronavirus and the market

Post by Stef » Wed Feb 26, 2020 1:06 am

Why are markets droping? Isn't everybody already expecting that the virus will spread out over the whole world? I don't know why this isn't already priced in.

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watchnerd
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Re: Coronavirus and the market

Post by watchnerd » Wed Feb 26, 2020 1:13 am

Stef wrote:
Wed Feb 26, 2020 1:06 am
Why are markets droping? Isn't everybody already expecting that the virus will spread out over the whole world? I don't know why this isn't already priced in.
Because people want to sell.
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ginrummy
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Re: Coronavirus and the market

Post by ginrummy » Wed Feb 26, 2020 1:16 am

Stef wrote:
Wed Feb 26, 2020 1:06 am
Why are markets droping? Isn't everybody already expecting that the virus will spread out over the whole world? I don't know why this isn't already priced in.
I don't know, but if I can't go to the yoga studio or, comfortably, to the super market 10 or even 21 days from now, my account is going to reflect that.

I don't think it's completely priced in because as of yet most of us aren't restricted. If we become restricted, even in the slightest, my account will be lower. I don't think that's priced in yet.

stocknoob4111
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Re: Coronavirus and the market

Post by stocknoob4111 » Wed Feb 26, 2020 1:19 am

Stef wrote:
Wed Feb 26, 2020 1:06 am
Why are markets droping? Isn't everybody already expecting that the virus will spread out over the whole world? I don't know why this isn't already priced in.
there is also institutional selling that have predetermined trigger points programmed into their computers to lock in gains. Some pension funds will sell as well to manage risk. So this becomes an avalanche of selling until the point where there are more buyers stepping in and bidding prices back up.

Iridium
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Re: Coronavirus and the market

Post by Iridium » Wed Feb 26, 2020 1:41 am

Stef wrote:
Wed Feb 26, 2020 1:06 am
Why are markets droping? Isn't everybody already expecting that the virus will spread out over the whole world? I don't know why this isn't already priced in.
I think that there was originally some hope that the virus could be largely contained to China. Sure, everyone expected there to be localized outbreaks here or there, but to have South Korea, Iran, and Italy all report that they went from a trivial number of cases, to an uncontainable outbreak covering several regions with no patient zero identified is worse than the market expected. Even if the expectation was that this would eventually become a global pandemic, I don't think it was expected to hit this quickly. Humanity will be in much better position to fight the virus in a couple of months (rapid test kits likely to be commercially available and mass produced, treatment clinical trials will announce results, and flu season will be largely over). If the global pandemic could wait, it would likely have lesser economic impact, as health agencies won't necessarily have to be as aggressive about stopping it, with treatment in hand, excess hospital capacity for respiratory issues, and confidence in a nasal swap test of the virus. Alas... It is looking less likely that the virus will give humanity time to catch up than it had looked a few days ago.

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Robert T
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Re: Coronavirus and the market

Post by Robert T » Wed Feb 26, 2020 6:32 am

.
Interesting impact on inflation in China https://fortune.com/2020/02/15/china-co ... n-economy/
.

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Stef
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Re: Coronavirus and the market

Post by Stef » Wed Feb 26, 2020 6:40 am

It just doesn’t make sense. The spanish flu wiped out millions and had literally no impact on stocks. This market is totally irrational.

columbia
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Re: Coronavirus and the market

Post by columbia » Wed Feb 26, 2020 7:11 am

SCMP coverage on that, which isn’t paywalled:
https://www.google.com/amp/s/amp.scmp.c ... ys-subdued
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JoeRetire
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Re: Coronavirus and the bear market

Post by JoeRetire » Wed Feb 26, 2020 7:14 am

JD2775 wrote:
Tue Feb 25, 2020 5:09 pm
People have been speculating for a while now (pre-coronavirus) that a correction or Bear market is "likely" to happen at sometime in the near future. Then along comes the coronavirus......this is all assumption but, if the market continues to fall and we go into a correction or Bear Market due to this...do you think that incident takes over for the correction/Bear Market people had assumed was coming? OR, do we go into a coronavirus Bear Market, come out of it, and then go into another one soon after that we thought would happen originally? I guess I am wondering if this could be an unplanned event that satisfies the correction we thought would happen?
When a correction inevitably occurs, folks will come up with all sorts of causes. It's never that simple. There are always multiple factors. And there are always some who have a vested interest in "blaming" a correction on something outside of their control, rather than something they should have done.

Investors have been looking for a reason to declare that "It's finally happening! The (market) sky is falling! Run, panic, sell!" Maybe now is the time. Maybe not.

And apparently lots of people like to claim "I saw it coming before everyone else." and so jump on any event as "the one".
Last edited by JoeRetire on Wed Feb 26, 2020 7:17 am, edited 1 time in total.
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sid hartha
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Re: Coronavirus and the bear market

Post by sid hartha » Wed Feb 26, 2020 7:16 am

JoeRetire wrote:
Wed Feb 26, 2020 7:14 am
JD2775 wrote:
Tue Feb 25, 2020 5:09 pm
People have been speculating for a while now (pre-coronavirus) that a correction or Bear market is "likely" to happen at sometime in the near future. Then along comes the coronavirus......this is all assumption but, if the market continues to fall and we go into a correction or Bear Market due to this...do you think that incident takes over for the correction/Bear Market people had assumed was coming? OR, do we go into a coronavirus Bear Market, come out of it, and then go into another one soon after that we thought would happen originally? I guess I am wondering if this could be an unplanned event that satisfies the correction we thought would happen?
When a correction inevitably occurs, folks will come up with all sorts of causes. It's never that simple. There are always multiple factors.

Investors have been looking for a reason to declare that "It's finally happening! The (market) sky is falling! Run, panic, sell!" Maybe now is the time. Maybe not.

And apparently lots of people like to claim "I saw it coming before everyone else." and so jump on any event as "the one".
Agree, sellers need a reason. Now they have one.

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JoeRetire
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Re: Coronavirus and the bear market

Post by JoeRetire » Wed Feb 26, 2020 7:17 am

sid hartha wrote:
Wed Feb 26, 2020 7:16 am
JoeRetire wrote:
Wed Feb 26, 2020 7:14 am
JD2775 wrote:
Tue Feb 25, 2020 5:09 pm
People have been speculating for a while now (pre-coronavirus) that a correction or Bear market is "likely" to happen at sometime in the near future. Then along comes the coronavirus......this is all assumption but, if the market continues to fall and we go into a correction or Bear Market due to this...do you think that incident takes over for the correction/Bear Market people had assumed was coming? OR, do we go into a coronavirus Bear Market, come out of it, and then go into another one soon after that we thought would happen originally? I guess I am wondering if this could be an unplanned event that satisfies the correction we thought would happen?
When a correction inevitably occurs, folks will come up with all sorts of causes. It's never that simple. There are always multiple factors.

Investors have been looking for a reason to declare that "It's finally happening! The (market) sky is falling! Run, panic, sell!" Maybe now is the time. Maybe not.

And apparently lots of people like to claim "I saw it coming before everyone else." and so jump on any event as "the one".
Agree, sellers need a reason. Now they have one.
Sure, but there have been plenty of reasons before this one.
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columbia
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Re: Coronavirus and the market

Post by columbia » Wed Feb 26, 2020 7:22 am

The current reason is staring you in the face.

Whether it goes any further - a reasonable assumption, but we shall see - is TBD.
If you leave your head in the sand for too long, you might get run over by a Jeep.

sid hartha
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Re: Coronavirus and the bear market

Post by sid hartha » Wed Feb 26, 2020 7:23 am

JoeRetire wrote:
Wed Feb 26, 2020 7:17 am
sid hartha wrote:
Wed Feb 26, 2020 7:16 am
JoeRetire wrote:
Wed Feb 26, 2020 7:14 am
JD2775 wrote:
Tue Feb 25, 2020 5:09 pm
People have been speculating for a while now (pre-coronavirus) that a correction or Bear market is "likely" to happen at sometime in the near future. Then along comes the coronavirus......this is all assumption but, if the market continues to fall and we go into a correction or Bear Market due to this...do you think that incident takes over for the correction/Bear Market people had assumed was coming? OR, do we go into a coronavirus Bear Market, come out of it, and then go into another one soon after that we thought would happen originally? I guess I am wondering if this could be an unplanned event that satisfies the correction we thought would happen?
When a correction inevitably occurs, folks will come up with all sorts of causes. It's never that simple. There are always multiple factors.

Investors have been looking for a reason to declare that "It's finally happening! The (market) sky is falling! Run, panic, sell!" Maybe now is the time. Maybe not.

And apparently lots of people like to claim "I saw it coming before everyone else." and so jump on any event as "the one".
Agree, sellers need a reason. Now they have one.
Sure, but there have been plenty of reasons before this one.
Yes totally agree. However this has the potential (stress potential) to do far more economic damage than we have seen in a while if 40% to 70% of the population is infected and there are mass quarantines. Part of what is going to potentially cause investors to panic is the uncertainly of how serious things might get and what drastic measures will be put in place. It's a lot different than all the other recent hiccups. Also you can never under estimate the stupid things people will do.
Last edited by sid hartha on Wed Feb 26, 2020 7:27 am, edited 3 times in total.

Tdubs
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Re: Corona virus and the market

Post by Tdubs » Wed Feb 26, 2020 7:25 am

teelainen wrote:
Wed Feb 26, 2020 12:05 am
nisiprius wrote:
Tue Feb 04, 2020 11:33 pm
1918 was the word year of the flu pandemic in the United States. Here are the annual returns of the US stock market in that time frame.

Image
They didn't have direct flights from Asia to North America back in 1918.

Asia is the continent with the highest number of Coronavirus infections right now.
This comparison is flawed. America in 1918 was nothing like today. The response by governments, businesses, markets, and the public will be very different, too. We may get through this will minor impacts, but it will be for different reasons.

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JoeRetire
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Re: Coronavirus and the bear market

Post by JoeRetire » Wed Feb 26, 2020 7:26 am

sid hartha wrote:
Wed Feb 26, 2020 7:23 am
It's a lot different than all the other recent hiccups.
I guess we can agree to disagree about that

[qote] Also you can never under estimate the stupid things people will do.
[/quote]
Fair enough.
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ImUrHuckleberry
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Re: Coronavirus and the market

Post by ImUrHuckleberry » Wed Feb 26, 2020 8:53 am

CodeMaster wrote:
Wed Feb 26, 2020 12:36 am
Woah... chillout with the super fear drama factor... most USA people who got it were so OK they told them they DONT NEED TO BE HOSPITALIZED, jsut stay home. and they did.. and drank soup and it passed like a normal flu. :beer
Only 5 or 6 people in the USA are classified as recovered so I'm not sure where you are getting this info.

Brost2355
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Re: Coronavirus and the market

Post by Brost2355 » Wed Feb 26, 2020 9:14 am

The true denominator is unknown. Until we know for a fact how many are infected with the virus the true mortality rate cannot be known. The USA does not even have working testing kits. The original were faulty. This could already be here. People diagnosed with flu could actually be corona. No one knows.

Everyone relax and keep the fear in check. The world is not ending.

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Re: Coronavirus and the market

Post by RubyTuesday » Wed Feb 26, 2020 9:22 am

Robert T wrote:
Wed Feb 26, 2020 6:32 am
.
Interesting impact on inflation in China https://fortune.com/2020/02/15/china-co ... n-economy/
.
Mostly behind paywall, but you get the idea from first 2 paragraphs.

It is unfortunate to see poor editing in opening paragraph of Fortune article.
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Variant
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Re: Coronavirus and the market

Post by Variant » Wed Feb 26, 2020 9:34 am

Morning, all.

You may find it informative/reassuring to follow this map. Of note, monitor the "Daily Increase" tab on the chart at bottom right.

Recoveries have been out-pacing new cases for some time now. The market will eventually realize this.

Everyone overreacting right now by putting travel plans on hold, etc. will have that much more money to spend during the summer months.

Great buying opportunity.

ImUrHuckleberry
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Re: Coronavirus and the market

Post by ImUrHuckleberry » Wed Feb 26, 2020 9:45 am

Variant wrote:
Wed Feb 26, 2020 9:34 am
Morning, all.

You may find it informative/reassuring to follow this map. Of note, monitor the "Daily Increase" tab on the chart at bottom right.

Recoveries have been out-pacing new cases for some time now. The market will eventually realize this.

Everyone overreacting right now by putting travel plans on hold, etc. will have that much more money to spend during the summer months.

Great buying opportunity.
Those number all need to be taken with a large grain of salt. For example, Iran is reporting 19 deaths on only 139 infections. If we assume a roughly 2% death rate is accurate, and roughly 3 weeks from infection to death for those who die, then there had to be about 1000 infected 3 weeks ago. Or else Iran is seeing a much higher death rate than 2%. Who knows how many are infected in Iran now. But I would place a large bet on > 5000.

You can find examples like that literally all over that map. Another issue is that test kits continue to be a problem. (Both availability and accuracy)

That map is really only useful for making some very general assumptions and trending, with the expectations that the assumptions could be way off to the positive or negative.

I assume all of these uncertainties are playing a large part in the market response.

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Tony-S
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Re: Corona virus and the market

Post by Tony-S » Wed Feb 26, 2020 9:57 am

teelainen wrote:
Wed Feb 26, 2020 12:05 am
nisiprius wrote:
Tue Feb 04, 2020 11:33 pm
1918 was the word year of the flu pandemic in the United States. Here are the annual returns of the US stock market in that time frame.

Image
They didn't have direct flights from Asia to North America back in 1918.
One could argue that the Spanish flu (which likely originated in Kansas) helped the 1919 economy because it helped bring WWI to an end.

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Re: Coronavirus and the market

Post by watchnerd » Wed Feb 26, 2020 10:04 am

Stef wrote:
Wed Feb 26, 2020 6:40 am
It just doesn’t make sense. The spanish flu wiped out millions and had literally no impact on stocks. This market is totally irrational.
Interesting comment.

I don't expect markets to be rational in the short-run.
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Variant
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Re: Coronavirus and the market

Post by Variant » Wed Feb 26, 2020 10:05 am

The reactions still feel a bit irrational. Normal flu has been far more impactful to my $DAYJOB from a purely health perspective (anecdote, I know).

Humans tend to be wired to overreact to small, less well understood threats.

You're right, of course, to observe that there could be more data points on this and that there could be very real long-lasting economic impacts. My bet however, is that, as with the Ebola outbreak in the past, COVID-19 will run its course here soon. Vanguard ETF activity the last couple of days makes me think other Bogleheaders are thinking the same way.

Almost 200K Influenza A/B cases in the US since flu season began. Many go un-reported, too.

Edit: COVID-19 not COVID-16
Last edited by Variant on Wed Feb 26, 2020 11:23 pm, edited 1 time in total.

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Re: Coronavirus and the market

Post by whodidntante » Wed Feb 26, 2020 10:08 am

SimpleGift wrote:
Mon Feb 24, 2020 6:34 pm
^^^ Makes sense as the reported fatality rates have been MUCH higher for the elderly population.
If you're relatively young and/or relatively healthy, the reported fatality rates have been significantly lower so far.
We did need a solution to the pension crisis. :twisted:

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Re: Coronavirus and the market

Post by HJG0989 » Wed Feb 26, 2020 10:17 am

It just doesn’t make sense. The spanish flu wiped out millions and had literally no impact on stocks. This market is totally irrational.
The world is a very different place now. Our supply chains are disrupted due to our dependency on cheap labor from 3rd world countries for one thing. Plus, information and viruses move a lot faster now. In addition, many countries have been inching toward a recession while the stock market has been zooming. It just can't go up at such a steep rate forever. It wasn't that long ago that we were approaching DOW 10,000.

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Re: Coronavirus and the market

Post by NearlyRetired » Wed Feb 26, 2020 10:34 am

Before this drop, there was discussion on this board as to whether the markets had priced in the virus getting nasty. I am interested to see, if whether the markets have effectively priced in Coronvirus going global (which I am assuming the recent sell off is reflecting), or whether the markets will react further to more averse news.
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Pikel
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Re: Coronavirus and the market

Post by Pikel » Wed Feb 26, 2020 10:42 am

Some interesting papers on
https://www.ssrn.com/index.cfm/en/coronavirus/




"Our results show that the turning points of the daily infections are predicted to be Feb.,6 and Feb.1, 2020, for Hubei and China other than Hubei, respectively. The epidemic in China is predicted to end up after Mar.10, 2020, and the number of the total infections are predicted to be 51600."

https://papers.ssrn.com/sol3/papers.cfm ... id=3542169




"Findings: Our data showed elders and people with underlying diseases are easier to develop to severe or critical situation. Only 192 (64.4%) patients presented fever at onset of illness. Most of the patients 240(80.6%) were non-severe affected individuals, who turned well in the end usually. Other organ injuries including liver, renal, and myocardial were seldom and most occurred at the later stage of the disease. Only a minority of the patients (32, 10.7%) received invasive mechanical ventilation, of which 2 patients received extracorporeal membrane oxygenation. To date, the overall mortality rate of these patients remains 0."

https://papers.ssrn.com/sol3/papers.cfm ... id=3542163

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Re: Coronavirus and the market

Post by watchnerd » Wed Feb 26, 2020 10:56 am

NearlyRetired wrote:
Wed Feb 26, 2020 10:34 am
Before this drop, there was discussion on this board as to whether the markets had priced in the virus getting nasty. I am interested to see, if whether the markets have effectively priced in Coronvirus going global (which I am assuming the recent sell off is reflecting), or whether the markets will react further to more averse news.
How will you know when all the things you mentioned are priced in or not?
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Re: Coronavirus and the market

Post by NearlyRetired » Wed Feb 26, 2020 11:00 am

watchnerd wrote:
Wed Feb 26, 2020 10:56 am
NearlyRetired wrote:
Wed Feb 26, 2020 10:34 am
Before this drop, there was discussion on this board as to whether the markets had priced in the virus getting nasty. I am interested to see, if whether the markets have effectively priced in Coronvirus going global (which I am assuming the recent sell off is reflecting), or whether the markets will react further to more averse news.
How will you know when all the things you mentioned are priced in or not?
Not sure, but presumably if the market reacts negatively to more bad news, it would suggest it hadn't. If there is not much of a reaction if more bad news comes out, it would suggest to me that it's all priced in
To err is to be human, to really mess up, use a computer

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Re: Corona virus and the market

Post by Valuethinker » Wed Feb 26, 2020 11:02 am

Tony-S wrote:
Wed Feb 26, 2020 9:57 am
teelainen wrote:
Wed Feb 26, 2020 12:05 am
nisiprius wrote:
Tue Feb 04, 2020 11:33 pm
1918 was the word year of the flu pandemic in the United States. Here are the annual returns of the US stock market in that time frame.

Image
They didn't have direct flights from Asia to North America back in 1918.
One could argue that the Spanish flu (which likely originated in Kansas) helped the 1919 economy because it helped bring WWI to an end.
I don't think it did?

Germany collapsed because there was widespread starvation and its army was in full retreat on the Western Front. See Battle of Amiens "the black day of the German Army".

The flu only hit later?

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Re: Coronavirus and the market

Post by firebirdparts » Wed Feb 26, 2020 11:09 am

NearlyRetired wrote:
Wed Feb 26, 2020 10:34 am
Before this drop, there was discussion on this board as to whether the markets had priced in the virus getting nasty. I am interested to see, if whether the markets have effectively priced in Coronvirus going global (which I am assuming the recent sell off is reflecting), or whether the markets will react further to more averse news.
For sure. I would think anybody not interested to see that is a pretty dull person. Oddly enough, I kinda think if it gets totally out of control and everybody just lets it run its course, it might have a lot less impact. However, I admit everybody will have to decide individually whether to go into work or not. It's obvious now that it's an evolving situation. It's totally out of control in South Korea and somewhat out of control in several other countries.

I'm amazed that anybody would even try to identify this given the symptoms are unremarkable. Truly amazed. You figure there are about 1-2 billion people with colds and flu right now.
A fool and your money are soon partners

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Re: Coronavirus and the market

Post by ImUrHuckleberry » Wed Feb 26, 2020 11:14 am

firebirdparts wrote:
Wed Feb 26, 2020 11:09 am
I'm amazed that anybody would even try to identify this given the symptoms are unremarkable. Truly amazed. You figure there are about 1-2 billion people with colds and flu right now.
Maybe because if 1 billion people get infected with this something like 20 million will die? Seems problematic, but that could just be me.

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Re: Corona virus and the market

Post by Valuethinker » Wed Feb 26, 2020 11:21 am

curmudgeon wrote:
Wed Feb 05, 2020 1:53 am
I can see the potential for significant impact on cruise lines and airlines. If the virus spreads more widely, many people will start avoiding planes and cruise ships.
Already happening. Not "will start avoiding". Are avoiding. Too many news stories here (UK) of British couples trapped on cruise ships in quarantine.

The other area is manufacturing.

Global manufacturing is Just in Time and that means no inventories-- never more than 1-2 weeks of productions worth of spare parts. Jaguar Land Rover has been bringing in parts in suitcases from China.

Apparently pharmaceutical manufacturers have outsourced much of the production of active ingredients to China and India. Even if the pill is made here, its contents are made somewhere else.

[ edited - anecdote from someone on the front line of world logistics]

It's impossible to know how this will play out.

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Re: Corona virus and the market

Post by willthrill81 » Wed Feb 26, 2020 11:23 am

Valuethinker wrote:
Wed Feb 26, 2020 11:21 am
curmudgeon wrote:
Wed Feb 05, 2020 1:53 am
I can see the potential for significant impact on cruise lines and airlines. If the virus spreads more widely, many people will start avoiding planes and cruise ships.
Already happening. Not "will start avoiding". Are avoiding. Too many news stories here (UK) of British couples trapped on cruise ships in quarantine.

The other area is manufacturing.

Global manufacturing is Just in Time and that means no inventories-- never more than 1-2 weeks of productions worth of spare parts. Jaguar Land Rover has been bringing in parts in suitcases from China.

Apparently pharmaceutical manufacturers have outsourced much of the production of active ingredients to China and India. Even if the pill is made here, its contents are made somewhere else.

[ edited - anecdote from someone on the front line of world logistics]

It's impossible to know how this will play out.
From both a humanitarian and an economic perspective, it seems to me that we have not yet hit bottom.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Coronavirus and the market

Post by epicahab » Wed Feb 26, 2020 11:30 am

I watched my mom panic in 2008 and permanently alter her net worth, so it was a good lesson and I haven't changed anything this last week.

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Re: Corona virus and the market

Post by Valuethinker » Wed Feb 26, 2020 11:32 am

Tdubs wrote:
Wed Feb 26, 2020 7:25 am
teelainen wrote:
Wed Feb 26, 2020 12:05 am
nisiprius wrote:
Tue Feb 04, 2020 11:33 pm
1918 was the word year of the flu pandemic in the United States. Here are the annual returns of the US stock market in that time frame.

Image
They didn't have direct flights from Asia to North America back in 1918.

Asia is the continent with the highest number of Coronavirus infections right now.
This comparison is flawed. America in 1918 was nothing like today. The response by governments, businesses, markets, and the public will be very different, too. We may get through this will minor impacts, but it will be for different reasons.
One key difference. In 1918 civic governments were highly alert to, and geared towards, the outbreak of contagious diseases/ pandemics.

They did not have many good medical treatments for common diseases. Diseases like polio were recurrent.

And so civic governments knew how to react to disease outbreaks where only the symptoms could be treated. Field hospitals. Mass burials etc.

Philadelphia v St Louis. Bathhouses were a common way for people to clean themselves then, lacking their own indoor bathrooms. Theatres were the equivalent of tv, cinema and radio. One of those 2 cities reacted much faster in 1919 in closing theatres and public bathhouses - infection and death rates were much lower.

Remember the anthrax scare? Where they had to reopen hospitals in DC area which had been closed, to examine possibly infected postal workers? We have cut the infrastructure of addressing mass outbreaks quite considerably.

I would rate governments then as being in many ways better prepared than governments now. Governments now operate on the assumption that a magic bullet of a pharmaceutical treatment, and then a vaccination, will be found.

Also people were more religious then. We are not so used to accepting that control of our fate and those of our loved ones is out of our hands.

Given the demographics of the 1918-1920 flu, which killed primarily healthy adults via a "cytokine storm", I would wager there is at least one person who died of it in most of our family trees.

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Re: Coronavirus and the market

Post by Jeff Albertson » Wed Feb 26, 2020 11:35 am

We represent an interdisciplinary group of scientists and policymakers at the Scowcroft Institute’s Pandemic and Biosecurity Policy Program based at the Bush School of Government at Texas A&M University who have been holding annual summits addressing pandemic-related issues for the past five years.
...
Today, about 80% of pharmaceuticals sold in the U.S. are produced in China. This number, while concerning, hides an even greater problem: China is the largest and sometimes only global supplier for the active ingredient of some vital medications.
...
China is not only the dominant global supplier of pharmaceuticals, but it is also the largest supplier of medical devices in the U.S.
...
More concerning still are the limited options available to the U.S. and the rest of the globe to make up the shortfall. It could take years to develop the necessary infrastructure to reestablish U.S. manufacturing capacities and obtain Food and Drug Administration licensure to overcome the loss of the Chinese supply.
http://theconversation.com/the-silent-t ... als-130670

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Re: Corona virus and the market

Post by Valuethinker » Wed Feb 26, 2020 11:37 am

willthrill81 wrote:
Wed Feb 26, 2020 11:23 am
Valuethinker wrote:
Wed Feb 26, 2020 11:21 am
curmudgeon wrote:
Wed Feb 05, 2020 1:53 am
I can see the potential for significant impact on cruise lines and airlines. If the virus spreads more widely, many people will start avoiding planes and cruise ships.
Already happening. Not "will start avoiding". Are avoiding. Too many news stories here (UK) of British couples trapped on cruise ships in quarantine.

The other area is manufacturing.

Global manufacturing is Just in Time and that means no inventories-- never more than 1-2 weeks of productions worth of spare parts. Jaguar Land Rover has been bringing in parts in suitcases from China.

Apparently pharmaceutical manufacturers have outsourced much of the production of active ingredients to China and India. Even if the pill is made here, its contents are made somewhere else.

[ edited - anecdote from someone on the front line of world logistics]

It's impossible to know how this will play out.
From both a humanitarian and an economic perspective, it seems to me that we have not yet hit bottom.
Absolutely. The disease is starting to reach places (like Iran) where the healthcare system is stretched thin or is nonexistent. Chinese workers have been proceeding alongside its Belt-and-Road initiative to construct infrastructure everywhere from Xinjiang in western China to Piraeus Port outside of Athens Greece, and to Africa and so likely carried it with them. We are now getting to clusters of infection where we cannot trace the origins back to China or someone who visited China.

It's clear this disease is extremely easy to catch. And one is infectious whilst asymptomatic.

What does not seem clear is what the mortality rates are - some people seem to be dying weeks afterwards. My sense is that the actual morbidity and mortality rates are low, but I am not well informed.

Chevron today evacuated its London offices due to a possible infection by coronavirus.

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Re: Coronavirus and the market

Post by Valuethinker » Wed Feb 26, 2020 11:40 am

ImUrHuckleberry wrote:
Wed Feb 26, 2020 11:14 am
firebirdparts wrote:
Wed Feb 26, 2020 11:09 am
I'm amazed that anybody would even try to identify this given the symptoms are unremarkable. Truly amazed. You figure there are about 1-2 billion people with colds and flu right now.
Maybe because if 1 billion people get infected with this something like 20 million will die? Seems problematic, but that could just be me.
Good one :sharebeer

If it's another Spanish flu, we could be talking 4-8 billion people infected, and 50m+ dead (on a world population of c 2 billion, Spanish flu killed c 50 m?).

Now I don't think the evidence supports that kind of catastrophe - the available evidence, that is.

But this seems to be a disease that is as easy to catch as the common cold, at least so far.

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Re: Corona virus and the market

Post by NearlyRetired » Wed Feb 26, 2020 11:43 am

Valuethinker wrote:
Wed Feb 26, 2020 11:37 am
willthrill81 wrote:
Wed Feb 26, 2020 11:23 am
Valuethinker wrote:
Wed Feb 26, 2020 11:21 am
curmudgeon wrote:
Wed Feb 05, 2020 1:53 am
I can see the potential for significant impact on cruise lines and airlines. If the virus spreads more widely, many people will start avoiding planes and cruise ships.
Already happening. Not "will start avoiding". Are avoiding. Too many news stories here (UK) of British couples trapped on cruise ships in quarantine.

The other area is manufacturing.

Global manufacturing is Just in Time and that means no inventories-- never more than 1-2 weeks of productions worth of spare parts. Jaguar Land Rover has been bringing in parts in suitcases from China.

Apparently pharmaceutical manufacturers have outsourced much of the production of active ingredients to China and India. Even if the pill is made here, its contents are made somewhere else.

[ edited - anecdote from someone on the front line of world logistics]

It's impossible to know how this will play out.
From both a humanitarian and an economic perspective, it seems to me that we have not yet hit bottom.
Absolutely. The disease is starting to reach places (like Iran) where the healthcare system is stretched thin or is nonexistent. Chinese workers have been proceeding alongside its Belt-and-Road initiative to construct infrastructure everywhere from Xinjiang in western China to Piraeus Port outside of Athens Greece, and to Africa and so likely carried it with them. We are now getting to clusters of infection where we cannot trace the origins back to China or someone who visited China.

It's clear this disease is extremely easy to catch. And one is infectious whilst asymptomatic.

What does not seem clear is what the mortality rates are - some people seem to be dying weeks afterwards. My sense is that the actual morbidity and mortality rates are low, but I am not well informed.

Chevron today evacuated its London offices due to a possible infection by coronavirus.
But, is this and other concerns now priced into the market. At the moment stocks are rising again (go figure) and yet the news suggests coronovirus is spreading. Or do I just have to resign myself to the fact that there is no rhyme or reason to market prices :?
To err is to be human, to really mess up, use a computer

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Re: Coronavirus and the market

Post by Valuethinker » Wed Feb 26, 2020 11:45 am

CodeMaster wrote:
Wed Feb 26, 2020 12:36 am
Valuethinker wrote:
Mon Feb 10, 2020 9:42 am
guyinlaw wrote:
Sat Feb 08, 2020 10:10 am
An "expert" on TV said they expected peak infection at 70k.. not sure where they got that number. Hopefully the fatalities start reducing.. daily deaths are still increasing, 73 -- 73-- 86 on Friday..

Nytimes reported that many of the initial deaths were not categorized as being related to coronavirus.
A total of 722 people had died from the virus and 34,546 were infected in mainland China by the end of Friday
https://amp.cnn.com/cnn/2020/02/08/asia ... ndex.html

Chinese infusion has stabilized their markets, but the spillover effects on supply chain is TBD..

This website is informative

https://www.worldometers.info/coronavir ... us-cases/
As ever, on matters scientific, New Scientist does a pretty good job.

Anyone who says they know, is lying or exaggerating. We are in uncharted territory.

We don't know the actual number of people infected, nor the actual death rate (by definition). The doctor who died did so after several weeks - that is not a good sign - it means you can be sick, and infectious, for a long time before it is fatal. And he was relatively young, and healthy - not your typical influenza victim (old, immune compromised, etc).

Even despite crash programmes to develop a vaccine, it will take months (or years) before we have a workable one available in global scale (1 bn+ innoculations?) enough to grant herd immunity. And that's before the anti-Vaxx crowd gets its teeth into this.

This could be another Spanish Flu. It's perhaps more likely to be another Hong Kong flu. It is certainly easier to catch than SARS, and therefore its spread is likely to be global - it was too late weeks ago to shut borders. I doubt even North Korea will escape (as perhaps the world's most shut in country).

Certainly if it is something that severe most healthcare systems, already burdened with an older and sicker population than ever before in history, will not be able to cope - to provide even minimal levels of care. The mass public health institutions, like mass vaccination, that got us through Polio epidemics, and that eliminated smallpox from the human race? They probably don't exist in anything like the same strength.

We don't as yet know where this came from - what the (presumed) animal vector was.

Our science, particularly around the genetic nature of the disease, is vastly improved - so a vaccine may come very quickly. But then we will need trials.

Effect on the world economy? Bad if this persists for months - into the next winter flu season. Effect on companies? Bad. Lower demand plus interruption of supply chains - Hyundai has already cut production I believe. Long run effects? Normally that economic activity is made up when the threat is over - but we don't know for something more elongated.

Effect on stock market? Probably bad in the short run. Longer run? Depends on how long this runs.

Effect on government bond markets? Probably long run lower interest rates. So good. Corporate bonds? Lower interest rates v. higher default rate, at a time when credit ratings are stretched.

We are in uncharted territory. There are no good maps.


Woah... chillout with the super fear drama factor... most USA people who got it were so OK they told them they DONT NEED TO BE HOSPITALIZED, jsut stay home. and they did.. and drank soup and it passed like a normal flu. :beer
Your post was 16 days after my post (10 Feb v 26 Feb). And I don't think I said anything in the above which could be summarised as "super fear drama factor". I simply said it was unknown.

So there's more information now then when I posted. We do have confirmed that this thing is very easy to catch but that many affected people do not show symptoms (or strong ones).

This 2% death rate is still quite haunting, though - if that's a real number. And the effect on supply chains seems to be quite real.

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Re: Corona virus and the market

Post by willthrill81 » Wed Feb 26, 2020 11:47 am

NearlyRetired wrote:
Wed Feb 26, 2020 11:43 am
Valuethinker wrote:
Wed Feb 26, 2020 11:37 am
willthrill81 wrote:
Wed Feb 26, 2020 11:23 am
Valuethinker wrote:
Wed Feb 26, 2020 11:21 am
curmudgeon wrote:
Wed Feb 05, 2020 1:53 am
I can see the potential for significant impact on cruise lines and airlines. If the virus spreads more widely, many people will start avoiding planes and cruise ships.
Already happening. Not "will start avoiding". Are avoiding. Too many news stories here (UK) of British couples trapped on cruise ships in quarantine.

The other area is manufacturing.

Global manufacturing is Just in Time and that means no inventories-- never more than 1-2 weeks of productions worth of spare parts. Jaguar Land Rover has been bringing in parts in suitcases from China.

Apparently pharmaceutical manufacturers have outsourced much of the production of active ingredients to China and India. Even if the pill is made here, its contents are made somewhere else.

[ edited - anecdote from someone on the front line of world logistics]

It's impossible to know how this will play out.
From both a humanitarian and an economic perspective, it seems to me that we have not yet hit bottom.
Absolutely. The disease is starting to reach places (like Iran) where the healthcare system is stretched thin or is nonexistent. Chinese workers have been proceeding alongside its Belt-and-Road initiative to construct infrastructure everywhere from Xinjiang in western China to Piraeus Port outside of Athens Greece, and to Africa and so likely carried it with them. We are now getting to clusters of infection where we cannot trace the origins back to China or someone who visited China.

It's clear this disease is extremely easy to catch. And one is infectious whilst asymptomatic.

What does not seem clear is what the mortality rates are - some people seem to be dying weeks afterwards. My sense is that the actual morbidity and mortality rates are low, but I am not well informed.

Chevron today evacuated its London offices due to a possible infection by coronavirus.
But, is this and other concerns now priced into the market. At the moment stocks are rising again (go figure) and yet the news suggests coronovirus is spreading. Or do I just have to resign myself to the fact that there is no rhyme or reason to market prices :?
The market cannot price in what it does not know (though it can price in the probabilities associated with different possibilities), and there are still a lot of serious unknowns with regard to this virus and its impact on the markets. I really suspect that the markets have not yet fallen as far as they will.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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