Coronavirus Concerns

[Donoghus]

Early Tuesday morning, Trump tweeted: "The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!"

I guess if you are very rich and have a ton of available cash burning a hole in your pocket, the stock market might look very appealing right now.   Buy low, right?

For the rest of us ... not so much.

Exactly buy low. Things usually bounce back so those who buy low make out.

If you have the disposable income to actually be able to do it.

[celticsclay]

How do we know when it is "low"?

Serious question...

[bdm860]

Early Tuesday morning, Trump tweeted: "The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!"

I guess if you are very rich and have a ton of available cash burning a hole in your pocket, the stock market might look very appealing right now.   Buy low, right?

For the rest of us ... not so much.

I think way too much has been made about the stock market (as of now), it's a mistake to focus on it with a daily lens.

The market is still higher at today's close than all but 21 days of 2019 (based on S&P 500 adj close), it's at its lowest point since, gasp, November 18th.  I wish the market could continue to set record highs every single day, but there's always going to be ebbs and flows.

If at any time, pre-November 2019, I said the market would be where it is right now as of 2/25/20, most would gladly sign up for that and say it would be a strong stock market.  Go back a few months further, many probably would doubt the market would be as high as it is now.

Now I don't at all think this is what Trump was alluding to when he made that statement, but overall the market is still doing great under him.

For all of us poor people though, if you didn't think November was a buying opportunity, now is not really much different (unless you've luckily come into a ton of cash the last couple of months).

All that to say, not making a prediction of where we're going.  Today could be the new bottom, or we might dream of getting back to the high levels of 2/25/20 in a couple of days/weeks/months.  Time will tell, will be interesting to see how this all plays out.

[BringToughnessBack]

How do we know when it is "low"?

Serious question...

Read all the estimates and choose prediction when you think market will bottom out from this. If you believe short lived, buy soon. If you feel this will become worse, the market will go lower with the worsening until news turns it around. That scenario means you might have months before absolute bottom is reached.

Make your list of stocks you always wanted to snap up when price dropped. One way to do it is to buy a few shares every day market tanks and keep adding. This way you don't miss turn around. Look at the P/E and make sure you believe in the company as well.

Personally I believe it will be months but that does not mean I will be right. I do have some stocks I will be watching and trying to add on the way down.  I always try and invest in what I use and believe in and what I think will be getting bigger into the future.

[ozgod]

After the Dow dropped 300 on Friday, it's now down another 1000 based on coronavirus concerns. Hot spots have broken out in Iran, South Korea and Italy. Italy is concerning because they have no clue who patient zero is, hampering being able to make containment, both in Italy and maybe across Europe. The economic impacts of a pandemic could possibly cause a worldwide economic downturn, recession or depression.

After the Dow dropped 300 on Friday, it's now down another 1000 based on coronavirus concerns. Hot spots have broken out in Iran, South Korea and Italy. Italy is concerning because they have no clue who patient zero is, hampering being able to make containment, both in Italy and maybe across Europe. The economic impacts of a pandemic could possibly cause a worldwide economic downturn, recession or depression.

I am certainly getting alarmed about the economic impact of this. It is hard to say exactly what caused the 3% drop today, but that is certainly significant.

 
I think this was due to a number of factors:

1) the rising number of cases in Iran, which has much less capability to contain an outbreak (and is surrounded by countries with large populations and porous borders that are equally limited, like Iraq, Afghanistan, Pakistan), and whose government is known for lying and lack of transparency;

2) cases emerging in Italy, which is part of the EU and the Schengen Treaty that allows free movement of people across the EU; and in South Korea;

3) the fact that despite China's draconian measures at containment (they locked down 60 million people!), a lot of companies have issued earnings guidance indicating drops due to disrupted supply chains and reduced demand;

4) the market hates uncertainty and the impact of this virus (not necessarily as a species-killer, but more the economic impact of people missing work, countries closing borders, affecting commerce, etc) is unknown. And;

5) the market may not have priced in the impact of Covid-19 on the global economy until recently. The prediction market for it seems to be that it would be something like SARS, which was fairly quickly contained, as opposed to something like swine flu, which was contracted by about 700m-1b people globally.

If you look at the raw number of deaths, I really feel like the panic is out of proportion, particularly if you compare it to other disasters or epidemics. Just as a comparison the WSJ looked at the impact of the Sichuan earthquake in May 2008, which killed 69k people in China, vs Covid-19 which has killed 2,618. The Sichuan earthquake didn't have any major effect on Chinese economic growth. The article went on to say that one of the main market fears is that draconian measures such as have been employed by most governments (closing borders, shutting down towns/cities, preventing the free movement of human labor) which is basically unprecedented in the history of epidemics (e.g. they didn't do that for swine flu, bird flu, SARS or MERS) will have a definite impact on global economic activity which is out of proportion to the actual human impact.

Certainly not trying to downplay it as information is very limited, but the limited data available suggests that the people at risk with Covid-19 would mainly be the same people at risk each flu season - people with weak or compromised immune systems, people with underlying medical conditions, as well as the very young and the very old. We should all take reasonable precautions (wash hands, avoid contact with people where possible, don't touch your face and eyes without washing your hands). Moreso those people at greater risk of respiratory illnesses like pneumonia. Carry a bottle of hand sanitizer and use it often. But I don't think we're at the point where we should look at others with suspicion just because they sneezed or looked Chinese 

That said, it's worth exploring the worst case scenario from an economic standpoint. The worst-case scenario economically would be something similar to the swine flu 10 years ago, which affected a billion people with a mortality rate of 0.02%. IF Covid-19 maintains its current mortality rate of 1-2%, 10 to 20 million people could die globally, most of them in third world countries with inadequate public health systems. Not quite a human slate-wiper, but it would certainly trigger a global recession.

Just my 2c...at least global stocks and US futures stabilized today. Might be some buying opportunities today.

You're right that it's possible to overstate things; it's pretty clear this isn't ebola with a higher transmission rate. And in general, nobody is really sure about the rate of transmission or the mortality rate. The data are extremely messy.

That said, a reasonable, plausible situation is a mortality rate about a percent higher than ordinary flu and a transmission rate 2-3 times as high. While that shouldn't cause terror in most healthy individuals who are infected, if the spread is not contained it could cause millions of deaths.  And of course (as you recognize) it could be a bad time to be a person with a weakened or compromised immune system.

That, as well as the economic impact of measures to contain it or prevent it from spreading. That's what has the market spooked. Particularly in a political climate against globalization, where governments are much more willing to do what would have been previously considered drastic actions like closing borders and halting commerce which they didn't do during the SARS and swine flu outbreaks.

I agree with the CDC, it's inevitable for this type of pathogen to eventually make its way to the US. The only question is the timeline and whether it will be a trickle or a flood. The fact that it can be transmitted via aerosolized secretions makes it a lot harder to fence it out, you might as well fence the common flu out. I think from what the CDC and also the WHO said, it's inevitable that it will make its way across national borders, the focus will probably have to shift from isolating individual cases to more disruptive strategies like school closings, cancellation of mass gatherings and other actions of that nature, as well as supportive care for patients diagnosed. That would keep things to a relative trickle and not to a flood.

Again certainly not downplaying the risk, but we in the US and in other developed countries who don't have compromised immune systems or preexisting respiratory illnesses should be at relatively low risk for it from a safety standpoint, at least compared to those unfortunates who live in less developed parts of the world where public health systems are inadequate as it is. I would say even someone with a weak immune system in the US would still be better off than a healthy person in Africa or the Middle East, where those people just won't receive the same level of supportive care as they would in our country. I would think the actions to try to prevent the pathogen from spreading would affect us all more than the actual pathogen itself. It's going to be different for those who are less fortunate enough to live in a less developed country. The graph below shows the mortality per 100k people for common type A influenza around the world.



https://www.worldlifeexpectancy.com/cause-of-death/influenza-pneumonia/by-country/

All those countries in red and green, if Covid-19 spreads in those regions it would be catastrophic for them.

[Donoghus]

Market's bumped back up this morning.

[Fafnir]

Given most scientists and experts basically are saying its now going to spread worldwide, yeah we should be concerned.

Its about harm mitigation at this point both in lives and economic damage. Which is why I worry our medical system isn't prepping aggressively for it due to desire to mitigate short term stock market fluctuations.

[dannyboy35]

per WCVB:

Coronavirus 'WILL' spread in the US, CDC says

U.S. health officials are issuing an elevated warning about the spread of coronavirus, according to The Washington Post.
“Ultimately, we expect we will see community spread in the United States," said Nancy Messonier, a top official at the Centers for Disease Control and Prevention, during briefings with lawmakers and reporters Tuesday.

Advertisement
“It’s not a question of if this will happen, but when this will happen and how many people in this country will have severe illnesses.”
Officials scrambled to halt the spread of a burgeoning virus Tuesday, from northern Italy where troops were dispatched to enforce quarantines and schools were shuttered, to South Korea, where some neighborhoods in a city of 2.5 million were brought to a near standstill.
New clusters of the illness popped up far from its apparent point of origin in China, fueling apprehension in world financial markets and political institutions. The spread fueled an increased sense of urgency among officials in some of the wealthiest nations in Europe and Asia, as well as in countries like Iran, with far fewer resources to stem the disease. But many remained uncertain about how best to contain it.
At a press conference during his visit to India on Tuesday, President Trump made a number of claims about the virus, which has sickened 80,000 and killed 2,700.
"I think that's a problem that's going to go away," Trump said of the virus, which has expanded this week in Italy, Austria, Croatia and Iran. In Iran, a day after the health minster appeared publicly to make clear that all was well, it was announced he had coronavirus.
In that news conference, Trump alleged that "we're very close to a vaccine."
However, there is no available evidence that a vaccine is "close," in fact, most infectious disease experts say developing a vaccine for the virus is roughly a year away.
Sen. Lamar Alexander (R-Tennessee), who chairs the Senate Health, Education, Labor and Pensions Committee, told CNN's Manu Raju Tuesday morning that "the vaccine for the coronavirus is moving more rapidly than any vaccine we have already tried to approve -- but it will take a year or 18 months. The way to stop (an outbreak) is quarantine and monitoring."
Trump also claimed in the news conference that all the U.S. coronavirus patients "are getting better ... they're all getting better."
Early Tuesday morning, Trump tweeted: "The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!"

He really nailed that.

   I suppose I won’t be concerned until it hits closer to home. Maybe someone I know. Not the kind of thing that concerns me. Do my best and then it’s out of my control. I’m more concerned with how my elderly parents are doing. Something really bad happens somewhere and everyone concentrated on that and not on people trafficking , child abuse etc.
  When someone starts literally balling about a specific issue miles away effecting people they have never met with sooooo much awful cruel stuff going on every minute I start to question the person’s sincerity ( not outwardly) or  if they are dealing with something else.

[Sophomore]

per WCVB:

Coronavirus 'WILL' spread in the US, CDC says

U.S. health officials are issuing an elevated warning about the spread of coronavirus, according to The Washington Post.
“Ultimately, we expect we will see community spread in the United States," said Nancy Messonier, a top official at the Centers for Disease Control and Prevention, during briefings with lawmakers and reporters Tuesday.

Advertisement
“It’s not a question of if this will happen, but when this will happen and how many people in this country will have severe illnesses.”
Officials scrambled to halt the spread of a burgeoning virus Tuesday, from northern Italy where troops were dispatched to enforce quarantines and schools were shuttered, to South Korea, where some neighborhoods in a city of 2.5 million were brought to a near standstill.
New clusters of the illness popped up far from its apparent point of origin in China, fueling apprehension in world financial markets and political institutions. The spread fueled an increased sense of urgency among officials in some of the wealthiest nations in Europe and Asia, as well as in countries like Iran, with far fewer resources to stem the disease. But many remained uncertain about how best to contain it.
At a press conference during his visit to India on Tuesday, President Trump made a number of claims about the virus, which has sickened 80,000 and killed 2,700.
"I think that's a problem that's going to go away," Trump said of the virus, which has expanded this week in Italy, Austria, Croatia and Iran. In Iran, a day after the health minster appeared publicly to make clear that all was well, it was announced he had coronavirus.
In that news conference, Trump alleged that "we're very close to a vaccine."
However, there is no available evidence that a vaccine is "close," in fact, most infectious disease experts say developing a vaccine for the virus is roughly a year away.
Sen. Lamar Alexander (R-Tennessee), who chairs the Senate Health, Education, Labor and Pensions Committee, told CNN's Manu Raju Tuesday morning that "the vaccine for the coronavirus is moving more rapidly than any vaccine we have already tried to approve -- but it will take a year or 18 months. The way to stop (an outbreak) is quarantine and monitoring."
Trump also claimed in the news conference that all the U.S. coronavirus patients "are getting better ... they're all getting better."
Early Tuesday morning, Trump tweeted: "The Coronavirus is very much under control in the USA. We are in contact with everyone and all relevant countries. CDC & World Health have been working hard and very smart. Stock Market starting to look very good to me!"

He really nailed that.

   I suppose I won’t be concerned until it hits closer to home. Maybe someone I know. Not the kind of thing that concerns me. Do my best and then it’s out of my control. I’m more concerned with how my elderly parents are doing. Something really bad happens somewhere and everyone concentrated on that and not on people trafficking , child abuse etc.
When someone starts literally balling about a specific issue miles away effecting people they have never met with sooooo much awful cruel stuff going on every minute I start to question the person’s sincerity (not outwardly) or  if they are dealing with something else.

This hasn't affected people in the US yet. I think the CDC is expressing concern because they feel certain that is going to change - and that whether we prepare adequately can affect the number of people who get sick or die. I think it's reasonable for ordinary people to just do the best they can, especially at this point. It's hard to know even what to do. But public health agencies, local governments, and hospitals should be working hard to get ready. The coverage is probably too alarmist - conflict, fear, and excitement drive engagement, so stoking it is a business imperative - but it's not a nothing event.

[Fafnir]

For normal people the expert advice actually pretty simple from what I've read. Have food/water/supplies for a potential two week quarantine period in your house.

Now depending on your family size and budget maybe that's not feasible but that is the advice, and it makes sense.

Its the hospital and supply chain issues that are difficult and require a more organized approach.

[nickagneta]

The virus has made its way to South America. Given the medical industry in South and Central America, the disease could spread like wildfire in areas of Latin America, though, hopefully, maybe the disease dies off in warm weather climates. That would be nice.

[fairweatherfan]

Dang:

In unprecedented move, Israelis advised to avoid all travel over virus fears https://t.co/obll52Ilbq

— The Times of Israel (@TimesofIsrael) February 26, 2020

[blink]

Dang:

In unprecedented move, Israelis advised to avoid all travel over virus fears https://t.co/obll52Ilbq

— The Times of Israel (@TimesofIsrael) February 26, 2020

yeah that is pretty unnerving

[nickagneta]

It's interesting to follow the release of new coronavirus news and the reaction it has on the Dow. I find it fascinating.

Dow seemed to bounce back this morning and was up ~350. Then news broke that Brazil got a case and Brazilian markets dropped 5% and the Dow went into a tailspin almost immediately after.

Yesterday was much the same as morning numbers were slightly positive until the CDC press conference and the Dow dropped over 900 points thereafter for the rest of the day.

The Israeli tweet was late afternoon so it's hard to tell if it affected the Dow staying low late or if it's repercussions will be felt tomorrow. Also, what coronavirus news will hit tomorrow and will it continue to affect trading?

Oh course, the Dow numbers could just be a correction in the market that was overdue and not driven by coronavirus fear, but looking at when news hits and how the market has moved after the release of that news kinda says otherwise.

Seems like a lot of fear in the market over this.

[ozgod]

It's interesting to follow the release of new coronavirus news and the reaction it has on the Dow. I find it fascinating.

Dow seemed to bounce back this morning and was up ~350. Then news broke that Brazil got a case and Brazilian markets dropped 5% and the Dow went into a tailspin almost immediately after.

Yesterday was much the same as morning numbers were slightly positive until the CDC press conference and the Dow dropped over 900 points thereafter for the rest of the day.

The Israeli tweet was late afternoon so it's hard to tell if it affected the Dow staying low late or if it's repercussions will be felt tomorrow. Also, what coronavirus news will hit tomorrow and will it continue to affect trading?

Oh course, the Dow numbers could just be a correction in the market that was overdue and not driven by coronavirus fear, but looking at when news hits and how the market has moved after the release of that news kinda says otherwise.

Seems like a lot of fear in the market over this.

Markets hate uncertainty and they're not sure how to price in the impact of the pathogen itself, as well as the government actions to try and contain it. There's a lot of unprecedented things governments are doing.