Friday 28 February 2020

Mr market has caught the flu

So the FTSE has moved down to near 6500 - a 13% decline in week. Perhaps, as ever things are overdone but the market was last at these levels consistently in 2014 and there was one spike to this level in 2016 - we all know why then.

For myself, well there maybe more posting as there is going to be a lot less business travel in the near future. The content I am seeing from City analysts broadly syas the current phase is likely to last 1 -2 months and to remind everyone that in China, where containment seems to haev worked, the factories and offices are opening again.

A friend of mine in Hong Kong has just gone back to work after five weeks enforced working from home. however, in the West it maybe that we escape or that we don't and have to endure a month or two of China style lock-down. It is hard to tell, hence the market reaction.

Also we should not forget in the wider macro environment China has just printed a couple of hundred billion of new currency, as has Japan. If the West somehow operates on, with higer interest rates we could counter-intuitively see a rush of hot money into Sterling and Sterling assets - again if we start to suffer like Asia, then this money will find a different outlet.

To me too the comparisons to Sars and Bird Flu are worrying - this flue is no more lethal but far more infectious - which seems to be the trend in these cycles. So how much worse could the next one be in 5 to 10 years?


Thud said...

In such a connected world the hysteria online etc is unprecedented and we are seeing the effects in the markets and shops etc, another couple of months and as the 'new normal' things will get back to usual business I expect.

E-K said...

Crippled markets could cause more deaths than the flu !

Surely there is a better way. Those young with known lung disorders and old retirees be quarantined and the rest of us left to sweat it out.

Face it. If you work in highly populated areas and use mass transport you're going to get it, no matter how careful you are.

The hysteria could do more damage than the disease itself.

E-K said...

Thud - believe it or not people will get bored of being scared as they do in war.

Thud said...

EK, I've been following this closely since the beginning and I've made what preparations I seem fit and yes....I'm bored already and I'm not prepared to go through life in fear.

E-K said...
This comment has been removed by the author.
E-K said...

We've been issued wipes and gel at work and I've been trying to do the right thing but it's impossible. There is ALWAYS contact with something and under certain circumstances (temperature and humidity) this virus is airborne and that's without coughs and sneezes.

There is absolutely no use in worrying.

Surely we must quarantine only the vulnerable: asthmatics, cancer patients, diabetics ... the old.

We're effectively ready to quarantine Mum (and easy thing to do in our case) and the best way to do this will be to treat her as though she is the infected and that we are trying to avoid transfer from her to us.

I think, as a society, we have the whole thing arse about face at the moment.

PJH said...

"... this flue is no more lethal... "

Bring back chimney sweeps ;-)

dearieme said...

It'll kill a lot of codgers. So the country will be less white, less sympathetic to capitalism, less Brexity, less likely to vote Conservative ... especially if the damn thing becomes endemic and culls the old every winter (say).

That's assuming it doesn't mutate to become more or less lethal, more or less infective. About those nobody knows anything.

Oh well, it was always going to happen some time. Now we'll find out how desirable it is that the people paid to do something about public health ignore public health and instead engage with private health conditions that happen to be common.

Am I alone in being impressed at the utter incompetence of the CDC in the US? Its bloody test doesn't work.

Raedwald said...

There are some surprises about ...

Yes, the incompetence of the CDC is one. Hubris, I guess

Second, the fact that kids are virtually unaffected by SARS-CoV-2.

Thirdly, Germany is also crap at readiness whilst the UK is top ranked by the Global Health Security Index. Der Spiegel is dribbling in envy at the Department of Health. Not only are their army drilling with broomsticks and with only two working helos, their emergency health system is shot to shit.

Fourth, Austria, which smirks with false pride at its medical skill, is 26th in world indices, trounced by Slovenia. My medical mate in Vienna reports staggering levels of compacency that harken back to the Imperial era ("My army corps is facing annihilation; the situation is desperate, but not serious"). Austria also has no testing facility of its own, having to rely, again, on Slovenia for Real-time reverse transcriptase polymerase chain reaction (rRT-PCR) tests for SARS-CoV-2

Corruption will come into play in mainland Europe, as it always has. The wealthy and powerful will use money / influence to divert care and government assistance to themselves, and consign the poor to bear the brunt of Covid. That's the European way.

Yet again EU common goods, paid for by taxation, are proving a paper tiger. Billions in money disappeared, and no beds, masks, laboratories or infrastructure to show for it. If fatalaties are high, I can some major popular dis-satisfaction, unrest and changes on the way.

James Higham said...

Good that everyone's so optimistic.

Anonymous said...

An oddity is that Africa, with all its Chinese coming and going, seems relatively immune. I don't know if that's a genetic immunity, a geographical one (hot countries) or just lack of health systems and therefore reporting.

Anonymous said...

@Anon, the last one and also the fact that Chinese are not coming and going very much right now.