When such a deadly virus hits, the first stage is always containment, as has occurred rapidly in China. But when it starts to spread past its origin more rapidly, it gets a life of its own. At this stage of the coronavirus’s spread, it’s better to focus on mitigation through sanitation and less direct social contact. Governments should support businesses and stop closing things down to make the economy and panic worse.
That’s where it seems we are suddenly today, after the coronavirus accelerated into Italy after doing the same in South Korea last week. The last week has seen the fastest acceleration outside of China.
The pandemic stage starts when the disease simultaneously starts spreading in multiple countries and regions. That’s why many experts say that stage has just started.
And yes, the “markets on crack” are finally waking up…
South Korea is down today 3.9%, and the same goes for Australia, at 2.3%, and Hong Kong, at 1.8%, with other Southeast Asian countries and India down 1% or more.
The Nasdaq opened up down 3.3%, the Dow down down 2.9% and the S&P 500 down 2.7%.
The major European indices are down similarly, from 3.2% to 3.9%.
The Shanghai Composite is down the least, 0.3%, with signs of marked slowing of the infections in China.
The coronavirus has now broken out in 31 countries. Cases in South Korea are now at 833, with 233 just on Monday, and 7 now dead. Holy crap!
Japan added over 60 in just the last week.
In Italy, the new shocker is cases reported, at 140 and rising.
Venice shut down a major carnival in response, and people weren’t happy about that.
Milan locked down 50,000 people.
Four infected U.K. passengers from the Diamond Princess ship (which had 695 infections) in Japan came home, with three of them already dead. A woman in the U.K. was harshly beaten for defending an Asian friend from strong racial attacks by a group of Brits.
Overall, reported deaths are now at 2,442; infections are at 76,936. Of course, the actual number of infections is much, much higher, as many more people with mild symptoms don’t go to hospitals or doctors at first. It’s like the classic “under the surface” picture of an iceberg.
Three well-connected experts have told me or sources I know that the infections are more like 10 times what China is reporting – suggesting as much as 800,000 infections.
One of them is my friend John Thomas, of The Mad Hedge Fund Trader. He has agreed to share with our subscribers a report on a conversation he had on a plane with an expert doctor from Wuhan, the town of origin. You can get it at this link: https://www.madhedgefundtrader.com/ht-hsdent/.
A study by Imperial College London estimates two-thirds of cases have not been reported. That would suggest at least 230,000 infections. A study by doctors from Henan Province, north of Wuhan, revealed that a woman with no symptoms over 19 days spread the infection to five family members.
The normal incubation period without symptoms has been estimated at two weeks… now it looks like it can be longer, up to 24 days. This long incubation period is the most dangerous part of this disease – not its lethality rate compared to others. It means that it can spread faster without being visible to contain or mitigate easily… and that’s exactly what appears to be happening.
The global areas most projected to get hit at this point are East Asia, Mongolia, East Russia, Northeast India, South Africa, Northern Europe, New Zealand, and the very low population in the upper northwest of Canada. Bill Gates has warned that this could end up killing 10 million in Africa. The U.S. and Australia look the least vulnerable thus far – where the great majority of our subscribers are.
The Big Test
Conversely, there have been no reported cases in recent days in 24 of 31 provinces in China, including Beijing and Shanghai.
In the last day, there were only 398 in Hubei Province (Wuhan), down from 630. Hence, they are relaxing some business and travel bans there. That brings hope that this can be contained and mitigated as it spreads faster globally.
The stock markets are projected to be down over 800 after the open on the Dow this morning. The biggest fear is the breakdown of supply chains in China and now globally in places like Korea and Japan.
Important bottom trendline support will be tested today. I will have an update on that on Wednesday. Stay tuned!