CDZ Economic Impact of COVID19 (in a bit more detail)

[JimBowie1958]

There is a lot of inaccurate repeated information about COVID19, and some of it is done knowingly for partisan reasons, and some of it is done to reduce panic.

1) The Trump supporters need to raise the threshold of expectations for more deaths from this comparable to Europe with a one month time lag to serve their President well. They should not lower expectations regarding the lethality of COVID19 which will make the e3ventual death count look much worse for Trump when it finally gets here. I think the standard of measure for Trump should be something like comparing his effectiveness to that of the European union which is about the only other large democratic capitalist region comparable to the USA.

That makes Trump look like a genius and Republicans should go to it and stick like Super Epoxy Resin.

2) There have been four ranges of plausible outcome from COVID19 discussed since midJanuary.
a. Optimistic case - COVID19 gets contained to China. Well that didnt happen.
b. Achievable, but still hopeful - The worst of it is contained to the Far East. Nope, thank you EU.
c. Worst case - COVID19 spreads, but enough time was made to brace public health services for the full impact. Well, that is not happening either, thanks to Globalists controlling the EU.
d. Unthinkable case - COVID19 is uncontainable due to persistence in airbourne vectors (15 feet for more than 30 minutes) and long lasting dry surface conditions (9 days), and it spreads to pretty much all nations and impacts global trade by shutting down commerce in large blocks of countries.
We are clearly hitting the Unthinkable range of events.
Chinese scientists identify two strains of the coronavirus, indicating it's already mutated at least once

Chinese scientists identify two strains of the coronavirus, indicating it’s already mutated at least once​

3) The public health reaction impact is the exact opposite effect for global trade. The more that we restrict commerce and travel, the more we can contain the virus, but the worse it is for trade and the Global economy.
Eventually far left and also theocratic governments that are inherently incompetent will chose to let the disease spread and get a twofer; more Global trade (and more taxes from it) and fewer seniors (and reduced health care burdens from that).

4) The USA needs to bring back its production of medical supplies, from masks to antibiotics to other pharmaceuticals in general. The Chicoms have already threatened to cut us off from 90% of all virus treatment medicines and anti-biotics. Why let that situation continue?

5) COVID19 is not influenza. It has a lipid layer that protects the core DNA/RNA of the virus allowing it to survive where most influenza would not, and it is much more lethal than the flu. We are not tanking the global economy to stop the freaking flu, so stop looking stupid by saying that.

The Full Impact Of Raging Covid-19 Has Yet To Show Its Face

An article in the South China Morning Post reports scientists said in a recent paper that this new virus uses an outreaching spike protein to hook on to the host cell. Normally this protein is inactive. This finding suggests that 2019-nCoV [the new coronavirus] may be significantly different from the Sars coronavirus in the infection pathway it employs. Compared to the Sars’ way of entry, this binding method is “100 to 1,000 times” as efficient, according to the study. Just two weeks after its release, the paper has already become the most viewed ever on Chinaxiv.org, a platform used by the Chinese Academy of Sciences to release scientific research papers before they have been peer-reviewed.

It is important to acknowledge that propaganda has gone full tilt and China's Communist Party is not telling the truth. An article that explores "group-think" in China today delves into how decades have created a society conditioned to be manipulated. China is busy playing the long game and now pointing at other countries as having caused this and the World Health Organization (WHO) is in their pocket. The bottom-line is that a lot more testing is needed from open and honest countries before the truth. Sadly, when it comes to this Japan may even be unreliable because it has so much resting upon the upcoming Impolitic games. Italy and South Korea currently may be the best place to see how nasty things really get.​

 

[JimBowie1958]

Some informative articles.

"This Is The Most Frightening Disease I've Ever Encountered In My Career" Says Architect Of National Pandemic Strategy

An infectious diseases expert at the forefront of the search for a coronavirus vaccine said on Friday that it was the most "frightening disease" he's ever encountered, and that "war is an appropriate analogy" for what the country is facing, as "50 - 70 percent of the global population" may become infected.

Dr. Richard Hatchett, who sat on the White House Homeland Security Council in 2005 - 2006 and was a principal author of the National Strategy for Pandemic Influenza Implementation Plan, and currently heads the Coalition for Epidemic Preparedness Innovations, told the UK's Channel 4:

"This is the most frightening disease I've ever encountered in my career, and that includes Ebola, it includes MERS, it includes SARS. And it's frightening because of the combination of infectiousness and a lethality that appears to be manyfold higher than flu."

He feels this way "because of the combination of infectiousness, and a lethality that appears to be many-fold higher than the flu."

When asked what concerns him the most about coronavirus, Hatchett said:

"I think the most concerning thing about this virus is the combination of infectiousness and the ability to cause severe disease or death. And we have not since 1918, the Spanish Flu, seen a virus that combined those two qualities in the same way. We have seen very lethal viruses. We have seen certainly, Ebola, or Nipah, or any of the other diseases that CEPI, the organisation that I run, works on - but those viruses had high mortality rates - I mean, Ebola's mortality rate in some settings is greater than 80%. But they don't have the infectiousness that this does. They don't have the potential to explode and spread globally."

Hatchett added "I don’t think it is a crazy analogy to compare this to World War II. The World Health Organisation is using those kinds of terms. They have seen what this virus is capable of doing."

He then said that coronavirus has the "potential to cause a global pandemic if we're not already there."

Turning to how the virus has spread around the world, Hatchett said "Singapore and Hong Kong did not shut themselves down but they have mounted very aggressive responses. Contact tracing is very important. The voluntary quarantine of contacts is very important. The isolation of cases is important. I think there may be a time to close schools."​

 

[JimBowie1958]

Expert: COVID-19 isn't containable and Canada should focus on protecting seniors

TORONTO -- A leading Canadian infectious disease specialist says, despite global efforts, COVID-19 cannot be contained and authorities need to focus instead on creating a warning system to alert seniors when to go into isolation.

Dr. Neil Rau says it’s too soon to begin separating at-risk seniors from other groups, but an alert system needs to be put in place for when an outbreak arrives.

“Better to start protecting the vulnerable group by separating them from society at large rather than asking all of society to separate themselves from each other, because the economic consequences are so huge,” Dr. Neil Rau told CTVNews.ca on Friday.

 

[JimBowie1958]

The impact this will likely have on our health care system is enormous as well. We have to have testing kits available to anyone reporting symptoms in order to keep hospital beds available to people with serious cases of COVID19 and other injuries and diseases as well.

All Hospital Beds In The US Will Be Filled With Patients 'By About May 8th' Due To Coronavirus: Analysis

A sobering analysis of how coronavirus is likely to impact the US healthcare system suggests that hospitals will be quickly overwhelmed with patients, and that all available beds will be filled by around May 8th if the virus tracks with Italy's figures and 10% of patients require an ICU.


Liz Specht @LizSpecht
· Mar 6, 2020
I think most people aren’t aware of the risk of systemic healthcare failure due to #COVID19 because they simply haven’t run the numbers yet. Let’s talk math. 1/n


Liz Specht @LizSpecht
Let’s conservatively assume that there are 2,000 current cases in the US today, March 6th. This is about 8x the number of confirmed (lab-diagnosed) cases. We know there is substantial under-Dx due to lack of test kits; I’ll address implications later of under-/over-estimate. 2/n​

 

[JimBowie1958]

The impact of quarantines and economic isolation on people scares them more than the disease itself.

This can cause migration out of heavily impacted countries and spread the disease even more.

Leaked Quarantine Plans Create Chaos As Panicked Italians Sprint For The Exits, Threatening To Spread Virus

Pentagon Deploys Troops To California Border To Block Surge Of Possibly Infected Migrants

On Friday, the Washington Examiner reported that US border officials have blocked 'hundreds' of foreigners from entering the country at land ports of entry along both the Canadian and Mexico borders, according to a senior homeland security official.

"We've turned people away on both borders, hundreds of them. In total, during the course of the last month ... we're under 1,000, but you're in the hundreds, to give you a ballpark sense," said deputy secretary of DHS, Ken Cuccinelli.

Customs and Border Protection officials (CBP) say their duty is to "secure our nation’s borders, and measures such as the Crisis Response Force employment allow CBP to do just that."
​

Whole of Italy put on lockdown with Brits told 'Do not travel' | Metro News

The whole of Italy is being put on lockdown in a bid to try and stop the spread of coronavirus. A ban on public gatherings will now extend to the entire country while cinemas, theatres, gyms and pubs will be closed. Funerals and weddings will not take place while schools and universities will remain closed until April 3. People have been told to remain at home and movement is banned except for work and emergency reasons. The new measures will take effect from tomorrow morning.​

 

[Chuz Life]

Sad that Dimz are politicizing the outbreak for no reason other than a hatred for Trump and all things conservative.

So much wasted energy.

I work for a (US) medical device manufacturer.

Tomorrow, I will be volunteering my time and skills towards making suggestions for a way to simplify and modify our devices to expedite production, to minimize or eliminate any parts from China (or from other contaminated areas) and to try to meet anticipated increases in demand.

The company that I work for is a good one. They have donated huge amounts of supplies to victims of Floods, Hurricanes, Earthquakes and the like.

I think they will be very receptive to helping with the fight of this disease.

 

[JimBowie1958]

The economic impact of trying to control this disease spread is going to be enormous.

The Four Coronavirus Scenarios: The Bad; The Worse; The Ugly; And The Unthinkable

Summary

• The Covid-19 coronavirus could be more disruptive than markets are currently pricing in. Not in the least because the ‘true’ number of infected people remains uncertain, as the recent surge in cases exemplifies
  
  
• We outline four scenarios in which the virus increasingly becomes severe: The Bad; The Worse; The Ugly; and The Unthinkable
  
  
• We provide rough estimates for China’s growth trajectory in these scenarios although we stress that these are not our official forecasts since we are still working out the details
  
  
• The three main channels through which Covid-19 will affect the global economy are tourism, net exports, and intermediate goods
  
  
• In the ‘Bad’ scenario the virus outbreak does not last far beyond Q1. China’s GDP growth for 2020 could drop to below 5%, with production taking the biggest hit and a catch up in Q3 and Q4. This is our base case scenario, although with the recent surge in mind, the second scenario is becoming increasingly likely
  
  
• In the ‘Worse’ scenario, the virus outbreak lasts beyond Q1. In that case China’s GDP growth could end up below 4% in 2020
  
  
• In this scenario, next to China, Asia will bear the brunt of the prolonged outbreak due to its dependence on Chinas as an export market and intermediate imports as well as for tourism
  
  
• In China itself, defaults of non-financial corporates in China could start to rise rapidly
  
  
• This will lead to a decline in China’s long-term growth potential as private companies will suffer most, while less efficient SOEs will likely be bailed out. As a result, debt levels will balloon further, leaving China more vulnerable in the future
  
  
• There will also be downwards pressure on the Chinese currency as extra CNY liquidity is made available
  
  
• In the Ugly scenario, the virus spreads beyond China, and spreads to Asia as well as developed economies. Its effects will likely resemble the Global Financial Crisis of 2008/2009 more than the SARS outbreak in 2003
  
  
• The Unthinkable scenario is a far left tail scenario, in which the virus mutates and becomes a truly global pandemic <- we are here.
  

 

[JimBowie1958]

In the category of 'economic ripple effects', we now have a petroleum war between the Saudis and Russia.

Russia and Saudi Arabia spark unprecedented oil war amid coronavirus threats

As the global economy battles shaky terrain, triggered by the multiplying threat of coronavirus (officially known as COVID-19) that has left the oil industry in oversupply, Saudi Arabia and Russia have gone head-to-head in what analysts are calling an all-out oil war.

The tensions boiled over during the Organization of the Petroleum (OPEC) talks between exporting countries in Vienna last week. While OPEC recommended production cuts from April to the end of the year for its 14 members, in an effort to deal with the mounting oversupply spurred by the coronavirus impact, Russia signaled its rejection to that pact on Friday – a bold decision that shocked the energy arena.

“The failed agreement between Russia and Saudi Arabia indicates that we’re in the midst of a price war,” Nick Loris, Heritage Foundation fellow in energy and environmental policy, told Fox News. “Saudi Arabia has been discounting its sales at unprecedented levels to capture as much market share as possible in an effort to really stick it to Russia for failing to agree to production cuts.”

Saudi Arabia then fired its own shots back over the weekend, igniting a price war by boosting its own production. The kingdom plans to bolster its crude output to a surplus of 10 million barrels per day (BPD) next month, given that the current agreement comes to an end on March 31. As it stands, Riyadh has been producing an average of 9.7 million BPD in recent months.

The full blowback started to emerge Monday as oil prices fell by over a third, marking the biggest plunge since the 1991 Gulf War.

“This signals a move of Saudi Arabia away from market price to market share at a time when the market is already reeling from severe demand destruction as the result of both the warmest winter on record in the Northern Hemisphere and the impact of the coronavirus,” observed Chris Midgley, global head of analytics at S&P Global Platts. “We find ourselves in unprecedented conditions where the market will be looking toward which producer blinks first. While low prices will test Saudi fiscal balances, they have the lowest cost barrels and with low debt can pull on sovereign reserves and take the pain.”

It will also directly rattle the United States. U.S. oil prices had tumbled to a four-year low of $27.34 a barrel in anticipation of Saudi Arabia saturating the market with excess crude in its quest to take back market share.

“Our supply chains are disrupted from China, global growth is threatened and we are seeing a major exit in equity markets, first penalizing all energy firms, but spread across a number of sectors,” said Karen Young, a resident scholar at the American Enterprise Institute (AEI). “This is a major threat to the American economy but will hurt oil exporters around the world and those governments dependent on oil exporters for aid and financial support in the Middle East. Gas may be cheaper, but economic growth, on the whole, is threatened.”

According to John Wood, a defense and energy expert focused on Russia, much of Moscow’s movement pivots on its anger toward the United States.

“Russia has been losing market share to Saudi Arabia and the USA and wants to stop the bleeding. Further, Russia wants to punish the U.S. for interfering in its pipeline projects designed to cut out Ukraine and Poland through bringing online Nordstream 2 and Turkstream,” he claimed. “Clearly, Putin feels, as a result of five years of U.S. sanctions, the Russian economy can weather an energy war. The purpose is clear, retain market share and cripple the U.S. shale oil industry.”​

And let us not forget, ever, that the Saudis control the value of the US dollar with its policy of accepting only US dollars, and promoting it among other OPEC nations. If this changes for any reasons, the US dollar will be exposed to hyper inflation, and becoming worthless.

 

[JimBowie1958]

Meanwhile the European Unions economy has been on the ropes for more than a decade now. If neative bond rates, freezing bank accounts and the UK fleeing did not tell you that, then you need to read up on the failing EU.

But now with the COVID19 hitting them hard as hell, they are going to have more cases than China very soon, and this will be a second hit below the water line to the world economy as the EU is one of the biggest consumer markets in the world.

Can Europe’s Fragile Economy Withstand Another Shock?

The European economy is grinding to a halt. Fourth quarter GDP growth slowed to the lowest for almost seven years, and supply-side disruption from the coronavirus and new regulations in the auto sector will compound the weakness.

We expect activity to slow further before any sustained rebound sets in. Meaningful fiscal stimulus appears unforthcoming, and further support from monetary policy will be limited given policy is already close to extremes. Consumer spending, the mainstay of the economy, can only do so much to fend off a difficult external environment and the disruptive structural change in autos.

Euro Area Economy Already Close to Stalling in Q4

Thawing US-China trade tensions appears so far to have had no discernible impact on Europe’s trade-orientated economy. The German manufacturing recession deepened in the fourth quarter, and any renewed optimism on trade has been firmly outweighed by worries over the impact of the coronavirus. Moreover, while US-China tensions may have eased, trade policy uncertainties remain – from the lingering threat of auto tariffs to the more recent announcement of increased tariffs on European aircraft, effective as of March.

At just 0.1% QoQ in the fourth quarter, Euro area GDP growth was the slowest since Q1 2013. The German economy stalled due to trade and manufacturing weakness, and both France (-0.1%) and Italy (-0.3%) contracted with strikes, inventory run-down, and bad weather all playing a role. Euro area IP is contracting sharply, down -4.1% YoY in December and -2.8% for Q4, marking 14 consecutive months of shrinking output. The earlier improvement in the auto sector has also reversed, with new emissions-based taxes in place as of January triggering a 7.5% YoY decline in new passenger car registrations. Some of this reflects a payback from the very strong December readings as consumers bought cars ahead of the tax change. But German passenger car production is now at its lowest level in more than 20 years and unlikely to improve anytime soon.

Last year’s manufacturing weakness could finally be spilling over into the service sector with Euro area retail sales showing the largest MoM drop in December since 2011. Given consumer spending has been the main driver of Euro area growth in recent quarters, continued weakness in retail sales could trigger a significant shift in growth projections. It would raise questions on the continued resilience in the labour market. On the surface this looks robust, with the unemployment rate remaining the lowest for more than a decade at 7.4%, and employment almost 4% above the pre-crisis peak. Any repeat of December’s higher-than-expected increase in German unemployment claims would bode poorly for any pickup in growth in the coming quarters.
​

What consumer market will make up for the quarantining of China in the Global economy?

Wont be Europe.

European Stocks Crash Most 'Since Lehman', Enter Bear Market

 

[JimBowie1958]

The economic impact on the USA is varied and multi-layered.
1) Corporations that depend on China for production are kind of hosed right now, like Apple and Wallmart.
Apple Suffers "Doomsday" Plunge In iPhone Shipments Across China

Watch: Store Shelves Across The Country Are Emptying Fast

2) Credit in the financial markets is drying up.
"There Is No Liquidity" - Market Paralyzed As FRA/OIS Explodes

Over the weekend, we discussed the latest analysis by JPMorgan's Nick Panigirtzoglou according to which in addition to the literal lock up in equity markets (where S&P futures were halted limit down for hours overnight), credit and funding markets were starting to show signs of extreme stress, not only as a result of the sudden plunge in energy credits but due to a violent return of what appears to be systemic issues within the interbank funding market.

As the JPM quant summarized, "we see initial signs of emerging credit and funding stress. If these shifts in credit and funding markets are sustained over the coming weeks and months, especially in the issuance space, credit channels might start amplifying the economic fallout from the COVID-19 crisis."​

This means we will see corporations laying off people and closing doors because they need easily available credit just to pay their employees and stay in business. They dont operate out of their own funds any more, everything is credit.


And that is compounded by 'passive index investing' which is pretty much automated HFT type operations that buy and sell automatically with the average trends in the market.

Market Crash Reveals The "Liquidity Problem" Of Passive Investing

Risk concentration always seems rational at the beginning, and the initial successes of the trends it creates can be self-reinforcing.

Until it goes in the other direction.

While the sell-off last week was large, it was the uniformity of the price moves, which revealed the fallacy “passive investing” as investors headed for the exits all at the same time.

The Apple Problem
Currently, there more than 1750 ETF”s trading in the U.S., with each of those ETF’s owning many of the same underlying companies. For an ETF company to “sell” you product, they need good performance. In a late-stage market cycle driven by momentum, it is not uncommon to find the same “best performing” stocks proliferating a large number of ETF’s.

For example, out of the 1750 ETF’s in the U.S., there are 175, or 10%, which own Apple (AAPL). Given that so many ETF’s own the same company, the problem of “liquidity” is exposed during a market rout. The head of the BOE, Mark Carney, warned about the risk of “disorderly unwinding of portfolios” due to the lack of market liquidity.

“Market adjustments to date have occurred without significant stress. However, the risk of a sharp and disorderly reversal remains given the compressed credit and liquidity risk premia. As a result, market participants need to be mindful of the risks of diminished market liquidity, asset price discontinuities and contagion across asset markets.”

Howard Marks, also noted in ‘“Liquidity:”

“ETF’s have become popular because they’re generally believed to be ‘better than mutual funds,’ in that they’re traded all day. Thus an ETF investor can get in or out anytime during trading hours. But do the investors in ETFs wonder about the source of their liquidity?’”​

3) Panicking leaders are not helping things.

Italy's Salvini Calls For Short Selling Ban, Citing "Soros Who Built His Fortune Betting Against Italy"

It was just a matter of time before the ongoing financial and economic crisis spawned by the coronavirus pandemic morphed into a political intervention to save capital markets from evil short sellers, and sure enough, one day after Italy botched a quarantine of over 15 million people, effectively locking out all of Northern Italy while threatening any quarantine violators with up to 3 months in prison, moments ago Italy's former co-Prime Minister and current MP, Mattel Salvini, called for a short selling ban.​

People short selling is about the only way to protect your money in a downtrending market. Short selling doe snot CAUSE the downward trend, in fact it helps relive the problem buy adding more liquidity to the market.

4) Stock markets will continue to sell off as investors re-arrange their positions for a less global economy friendly future. This loss of investiment capital again harms credit availability.

$2.5 Trillion Wiped Out As World Stocks Crash Most Since 2008

Dow Dumps 2000 Points, Markets Extend Losses After Circuit-Breaker

Dow plunges over 2,000 points, oil collapses amid price war and coronavirus

5) Folks fasten your seat belts, because we are in one hell of a roller coaster.

The Virus Is A Time Machine

In the case of COVID19, the story is not about the numbers of cases or fatalities at any given point after two months and change, it’s about the disruption it will cause. We have a highly contagious virus that can cause death. That is all you need to know really. Feel free to claim that reactions and measures are over the hill, but no government has the option to say things are not all that bad and it’s business as usual.

They all tried again though. It’s in their job description. One of their tasks is to prevent panic, and yes, they use that to hide their ignorance behind, but they still must do it. But that’s alright, because all halfway smart people know what to do when a politician says not to panic.

However, they will still quarantine you and close borders, no matter what you think. Politicians are dead set to react too late, and then when they do, to order measures that are over the top and at best partly effective. But it’s not them, it’s the model they function within.

I first said this days ago, that it’s easy for people to look past that reality, but it’s always good to see Nassim Taleb share that view, that what you think about your own situation is not an option for politicians: <Saying the COVID19 Panic is dumb, is dumb.>...

And people comparing COVID 19 to seasonal flu are therefore way off base. It’s not apples and oranges, it’s apples and baseballs -if not baseball bats-. Both are round but they have little else in common. The seasonal flu has been around since at least 1899, when the first epidemic was reported, what ever that meant back then.

The COVID19 virus is, far as we know, 3 months and change old. So any numbers you can toss around, of so many people killed by one and not the other, are pretty much meaningless. They are completely different entities that just happen to perhaps look alike if you don’t look to close. You can bring up the comparison, but you don’t say a thing about COVID19 if you do.

There are more interesting things to say about COVID 19. Unlike seasonal flu (largely), this one is not standing still. That means it will take 12-18 months to develop a vaccine, while any given year’s vaccine vs that year’s “normal” flu takes a few weeks. That difference may not say it all, but it comes close.

The most striking characteristic of the virus may be, if not should be, its exponential (or quadratic, if you will) progress once it gets hold. Ben Hunt tweeted earlier today, in reaction to Rome shutting down a quarter of the entire country, that “Italy is a time machine that shows us our future. Why do we ignore it?” But it’s not just Italy. It’s a pattern, it’s a dynamic, it’s motion. All things that regular flu is not.

And here’s what that dynamic looks like:

First, South Korea till March 4. when it had 5,621 cases. Today it has 7,313. But it is suspicious; they have very few deaths AND very few recovered cases. Well over 90% of cases are unresolved, way more than in other countries. It also has by far the largest numbers infected per million people.

The above chart is Italy over the last 6 weeks. It could be the USA in May.

 

[Mac-7]

The impact this will likely have on our health care system is enormous as well. We have to have testing kits available to anyone reporting symptoms in order to keep hospital beds available to people with serious cases of COVID19 and other injuries and diseases as well.

All Hospital Beds In The US Will Be Filled With Patients 'By About May 8th' Due To Coronavirus: Analysis

A sobering analysis of how coronavirus is likely to impact the US healthcare system suggests that hospitals will be quickly overwhelmed with patients, and that all available beds will be filled by around May 8th if the virus tracks with Italy's figures and 10% of patients require an ICU.


Liz Specht @LizSpecht
· Mar 6, 2020
I think most people aren’t aware of the risk of systemic healthcare failure due to #COVID19 because they simply haven’t run the numbers yet. Let’s talk math. 1/n


Liz Specht @LizSpecht
Let’s conservatively assume that there are 2,000 current cases in the US today, March 6th. This is about 8x the number of confirmed (lab-diagnosed) cases. We know there is substantial under-Dx due to lack of test kits; I’ll address implications later of under-/over-estimate. 2/n​

The commie virus should be a wakeup call not only for our healthcare system but for the economic system also

we need to take positive steps to reduce trade with china

 

[Mac-7]

The economic impact on the USA is varied and multi-layered.
1) Corporations that depend on China for production are kind of hosed right now, like Apple and Wallmart.
Apple Suffers "Doomsday" Plunge In iPhone Shipments Across China

Watch: Store Shelves Across The Country Are Emptying Fast

2) Credit in the financial markets is drying up.
"There Is No Liquidity" - Market Paralyzed As FRA/OIS Explodes

Over the weekend, we discussed the latest analysis by JPMorgan's Nick Panigirtzoglou according to which in addition to the literal lock up in equity markets (where S&P futures were halted limit down for hours overnight), credit and funding markets were starting to show signs of extreme stress, not only as a result of the sudden plunge in energy credits but due to a violent return of what appears to be systemic issues within the interbank funding market.

As the JPM quant summarized, "we see initial signs of emerging credit and funding stress. If these shifts in credit and funding markets are sustained over the coming weeks and months, especially in the issuance space, credit channels might start amplifying the economic fallout from the COVID-19 crisis."​

This means we will see corporations laying off people and closing doors because they need easily available credit just to pay their employees and stay in business. They dont operate out of their own funds any more, everything is credit.


And that is compounded by 'passive index investing' which is pretty much automated HFT type operations that buy and sell automatically with the average trends in the market.

Market Crash Reveals The "Liquidity Problem" Of Passive Investing

Risk concentration always seems rational at the beginning, and the initial successes of the trends it creates can be self-reinforcing.

Until it goes in the other direction.

While the sell-off last week was large, it was the uniformity of the price moves, which revealed the fallacy “passive investing” as investors headed for the exits all at the same time.

The Apple Problem
Currently, there more than 1750 ETF”s trading in the U.S., with each of those ETF’s owning many of the same underlying companies. For an ETF company to “sell” you product, they need good performance. In a late-stage market cycle driven by momentum, it is not uncommon to find the same “best performing” stocks proliferating a large number of ETF’s.

For example, out of the 1750 ETF’s in the U.S., there are 175, or 10%, which own Apple (AAPL). Given that so many ETF’s own the same company, the problem of “liquidity” is exposed during a market rout. The head of the BOE, Mark Carney, warned about the risk of “disorderly unwinding of portfolios” due to the lack of market liquidity.

“Market adjustments to date have occurred without significant stress. However, the risk of a sharp and disorderly reversal remains given the compressed credit and liquidity risk premia. As a result, market participants need to be mindful of the risks of diminished market liquidity, asset price discontinuities and contagion across asset markets.”

Howard Marks, also noted in ‘“Liquidity:”

“ETF’s have become popular because they’re generally believed to be ‘better than mutual funds,’ in that they’re traded all day. Thus an ETF investor can get in or out anytime during trading hours. But do the investors in ETFs wonder about the source of their liquidity?’”​

3) Panicking leaders are not helping things.

Italy's Salvini Calls For Short Selling Ban, Citing "Soros Who Built His Fortune Betting Against Italy"

It was just a matter of time before the ongoing financial and economic crisis spawned by the coronavirus pandemic morphed into a political intervention to save capital markets from evil short sellers, and sure enough, one day after Italy botched a quarantine of over 15 million people, effectively locking out all of Northern Italy while threatening any quarantine violators with up to 3 months in prison, moments ago Italy's former co-Prime Minister and current MP, Mattel Salvini, called for a short selling ban.​

People short selling is about the only way to protect your money in a downtrending market. Short selling doe snot CAUSE the downward trend, in fact it helps relive the problem buy adding more liquidity to the market.

4) Stock markets will continue to sell off as investors re-arrange their positions for a less global economy friendly future. This loss of investiment capital again harms credit availability.

$2.5 Trillion Wiped Out As World Stocks Crash Most Since 2008

Dow Dumps 2000 Points, Markets Extend Losses After Circuit-Breaker

Dow plunges over 2,000 points, oil collapses amid price war and coronavirus

5) Folks fasten your seat belts, because we are in one hell of a roller coaster.

The Virus Is A Time Machine

In the case of COVID19, the story is not about the numbers of cases or fatalities at any given point after two months and change, it’s about the disruption it will cause. We have a highly contagious virus that can cause death. That is all you need to know really. Feel free to claim that reactions and measures are over the hill, but no government has the option to say things are not all that bad and it’s business as usual.

They all tried again though. It’s in their job description. One of their tasks is to prevent panic, and yes, they use that to hide their ignorance behind, but they still must do it. But that’s alright, because all halfway smart people know what to do when a politician says not to panic.

However, they will still quarantine you and close borders, no matter what you think. Politicians are dead set to react too late, and then when they do, to order measures that are over the top and at best partly effective. But it’s not them, it’s the model they function within.

I first said this days ago, that it’s easy for people to look past that reality, but it’s always good to see Nassim Taleb share that view, that what you think about your own situation is not an option for politicians: <Saying the COVID19 Panic is dumb, is dumb.>...

And people comparing COVID 19 to seasonal flu are therefore way off base. It’s not apples and oranges, it’s apples and baseballs -if not baseball bats-. Both are round but they have little else in common. The seasonal flu has been around since at least 1899, when the first epidemic was reported, what ever that meant back then.

The COVID19 virus is, far as we know, 3 months and change old. So any numbers you can toss around, of so many people killed by one and not the other, are pretty much meaningless. They are completely different entities that just happen to perhaps look alike if you don’t look to close. You can bring up the comparison, but you don’t say a thing about COVID19 if you do.

There are more interesting things to say about COVID 19. Unlike seasonal flu (largely), this one is not standing still. That means it will take 12-18 months to develop a vaccine, while any given year’s vaccine vs that year’s “normal” flu takes a few weeks. That difference may not say it all, but it comes close.

The most striking characteristic of the virus may be, if not should be, its exponential (or quadratic, if you will) progress once it gets hold. Ben Hunt tweeted earlier today, in reaction to Rome shutting down a quarter of the entire country, that “Italy is a time machine that shows us our future. Why do we ignore it?” But it’s not just Italy. It’s a pattern, it’s a dynamic, it’s motion. All things that regular flu is not.

And here’s what that dynamic looks like:

First, South Korea till March 4. when it had 5,621 cases. Today it has 7,313. But it is suspicious; they have very few deaths AND very few recovered cases. Well over 90% of cases are unresolved, way more than in other countries. It also has by far the largest numbers infected per million people.

The above chart is Italy over the last 6 weeks. It could be the USA in May.

Italy is deeply ensnared by china

so its pandemic is worse than some other countries

 

[MarathonMike]

The impact this will likely have on our health care system is enormous as well. We have to have testing kits available to anyone reporting symptoms in order to keep hospital beds available to people with serious cases of COVID19 and other injuries and diseases as well.

All Hospital Beds In The US Will Be Filled With Patients 'By About May 8th' Due To Coronavirus: Analysis

A sobering analysis of how coronavirus is likely to impact the US healthcare system suggests that hospitals will be quickly overwhelmed with patients, and that all available beds will be filled by around May 8th if the virus tracks with Italy's figures and 10% of patients require an ICU.


Liz Specht @LizSpecht
· Mar 6, 2020
I think most people aren’t aware of the risk of systemic healthcare failure due to #COVID19 because they simply haven’t run the numbers yet. Let’s talk math. 1/n


Liz Specht @LizSpecht
Let’s conservatively assume that there are 2,000 current cases in the US today, March 6th. This is about 8x the number of confirmed (lab-diagnosed) cases. We know there is substantial under-Dx due to lack of test kits; I’ll address implications later of under-/over-estimate. 2/n​

The commie virus should be a wakeup call not only for our healthcare system but for the economic system also

we need to take positive steps to reduce trade with china

The other issue uncovered by this outbreak is our dependence on Chinese drug manufacturers.

 

[JimBowie1958]

Well, a Chinese virologist has defected to tell the world that China created this COVID19 virus as a weapon and deliberately unleashed it on the world.

But some here can only think of that as a 'wild conspiracy theory'.

Growing Evidence that the "Novel Coronavirus" is a Military Weapon Researched/Modified by Chicom Ar

Wuhan province has several Chicom Army biowarfare facilities, and it looks like this one got out. PROOF: The "Novel Coronavirus" Infecting the World is a MILITARY BIO-WEAPON Developed by China's Army MORE: a new study shows that elements of HIV have been found in the new "novel coronavirus!"...

www.usmessageboard.com

Documented PROOF COVID19 is Lab Created

And now the Washington Compost joins in the Conspiracy Theory Corner. https://www.forbes.com/sites/kenrapoza/2020/04/14/the-washington-post-goes-rogue-china-lab-in-focus-of-coronavirus-outbreak/?fbclid=IwAR1KdNoXC3ANNMlk-tUfzKfgJsRblUg4qAfnS34ioe6GTUv-w-NwZD1Govo#3ee3b2201ee1 “I had never...

www.usmessageboard.com

I guess Truth is a conspiracy to some people.

 

[candycorn]

Well, a Chinese virologist has defected to tell the world that China created this COVID19 virus as a weapon and deliberately unleashed it on the world.

But some here can only think of that as a 'wild conspiracy theory'.

Growing Evidence that the "Novel Coronavirus" is a Military Weapon Researched/Modified by Chicom Ar

Wuhan province has several Chicom Army biowarfare facilities, and it looks like this one got out. PROOF: The "Novel Coronavirus" Infecting the World is a MILITARY BIO-WEAPON Developed by China's Army MORE: a new study shows that elements of HIV have been found in the new "novel coronavirus!"...

www.usmessageboard.com

Documented PROOF COVID19 is Lab Created

And now the Washington Compost joins in the Conspiracy Theory Corner. https://www.forbes.com/sites/kenrapoza/2020/04/14/the-washington-post-goes-rogue-china-lab-in-focus-of-coronavirus-outbreak/?fbclid=IwAR1KdNoXC3ANNMlk-tUfzKfgJsRblUg4qAfnS34ioe6GTUv-w-NwZD1Govo#3ee3b2201ee1 “I had never...

www.usmessageboard.com

I guess Truth is a conspiracy to some people.

It was not lab created. Stop lying.

 

[JimBowie1958]

Well, a Chinese virologist has defected to tell the world that China created this COVID19 virus as a weapon and deliberately unleashed it on the world.

But some here can only think of that as a 'wild conspiracy theory'.

Growing Evidence that the "Novel Coronavirus" is a Military Weapon Researched/Modified by Chicom Ar

Wuhan province has several Chicom Army biowarfare facilities, and it looks like this one got out. PROOF: The "Novel Coronavirus" Infecting the World is a MILITARY BIO-WEAPON Developed by China's Army MORE: a new study shows that elements of HIV have been found in the new "novel coronavirus!"...

www.usmessageboard.com

Documented PROOF COVID19 is Lab Created

And now the Washington Compost joins in the Conspiracy Theory Corner. https://www.forbes.com/sites/kenrapoza/2020/04/14/the-washington-post-goes-rogue-china-lab-in-focus-of-coronavirus-outbreak/?fbclid=IwAR1KdNoXC3ANNMlk-tUfzKfgJsRblUg4qAfnS34ioe6GTUv-w-NwZD1Govo#3ee3b2201ee1 “I had never...

www.usmessageboard.com

I guess Truth is a conspiracy to some people.

It was not lab created. Stop lying.

According to multiple sources including the defector from China of late who is a virologist and worked in a lab dealing with this crap, yes, it was created in a lab.