BREAKING :Apple orders for 45m AirPods at risk from coronavirus

Apple’s plan to drastically ramp up AirPods production is under threat from the coronavirus outbreak, which has forced suppliers in China to halt operations for two weeks and could leave them short of components even after work resumes on Monday, multiple sources told the Nikkei Asian Review.

The U.S. tech giant had ordered its suppliers to produce up to 45 million units in the first half of the year to keep up with surging demand for the wireless earphones.

Now, however, the current stock of AirPods is running low, with most of the finished products reserved for Apple’s own online and offline stores, the sources said. Currently, the standard AirPods are still in stock, according to Apple’s official online store, while there is a one-month waiting period for the premium AirPods Pro launched last September.  

Luxshare Precision Industry, also known as Luxshare-ICT, Goertek and Inventec, the three key manufacturers of the AirPods, have halted the majority of production since the Lunar New Year break began, two people familiar with the matter told Nikkei. The three companies now have at most two weeks’ worth of materials and components needed for AirPods assembly, and must wait for component makers across China to restart operations in order to receive fresh supplies, the people said.

“Because of the virus outbreak, it has already been about two weeks since the assemblers have shipped any new AirPods series,” said a person familiar with the situation. “All of the stores and carriers selling Apple products are really counting on suppliers to resume work next week.”

The three major AirPods assemblers, like other Apple suppliers, are scheduled to resume work on Monday, but their production utilization rates may reach just 50% at best in the first week given the current conditions, a source familiar with the matter said. (more…)

Chinese doctor and early coronavirus whistleblower dies

Dr. Li Wenliang was one of 8 doctors visited by policy after early warnings on virus

Dr. Li Wenliang was one of 8 doctors visited by policy after early warnings on virus
Ophthalmologist Dr. Li Wenliang become somewhat of a folk hero in China as one of the 8 doctors who was disciplined by police after warning fellow doctors to wear protective clothing because of a new SARS virus.
He was then visited by policy and the Public Security Bureau where he was told to sign a letter where he was accused of “making false comments” that had “severely disturbed the social order”.
On the weekend, he revealed he had contracted the virus himself after testing negative a number of times.
“Today nucleic acid testing came back with a positive result, the dust has settled, finally diagnosed,” he said in a video that was widely watched.
State media is now reporting that the 34-year-old died today. He had a wife and five-year-old daughter. There are reports that his wife is sick as well.
What a tragedy.

Treasury yields turn flat across the curve, risk currencies pare gains

10-year Treasury yields are now flat on the session


The early trading in the bond market is hinting at some indecision about the risk mood. Treasury yields turned flatter about two hours ago before recovering some poise and is now back to flat levels again on the session.
As a result, USD/JPY has pared gains to 109.81 currently and we are seeing a similar story for the aussie as AUD/USD falls to a session low of 0.6743 after having traded around 0.67455-65 earlier in the day – just take note AUD/JPY is at key resistance levels as well.
European equities have pared back some of its earlier gains too but are still keeping higher in trading so far. This may yet lead to some mixed tones between stocks and bonds again but just be mindful of the market saying that “the bond market is always right”.

How quickly can the globe shake off the ‘Wuflu’?

Question of the day, via Bloomberg

Question of the day, via Bloomberg
This is an interesting question that was on Market’s Live Blog this am and I thought I would share it out today on my post to get the benefit of some seasoned readers views. Yesterday I posted on ‘Dr Copper’s’ remedy for the Wuflu and how, so far, initial signs were good. Global equities have been leading the way with a strong recovery since Monday on rumours of a vaccine very close to being developed. The market is shrugging off the Wuflu worries amidst two different narratives. Narrative 1 is that this is no worse than the flu. Narrative 2 is that this is an underreported killer. Most people I am reading on the flu have either of these narratives or a bit of a blend. Narrative 1 is winning for now.
What will be the longer term impact of Wuflu?
Wuhan Flu
A number of economists have been trying to asses the impact of the coronavirus. The main question is this,  ‘has this coronavirus outbreak been a blip in the year that we can just ignore?’Are we back to how it was before the coronavirus now? Or will there be knock on effects down the line?’ 
Has the market priced in more relief than we will see?
Hubei Province, financial impact
In other words has the recent rally in commodities and equities been on relief that the coronavirus will be contained rather than on its actual impact ?
What about the potential supply disruptions to factories that is still to come from countries with China as a key part of the supply chain? Has this been overlooked in relief that it now appears the globe is not going to be consumed by a killer virus.
Take the long view
So, what do you see as the longer term asset impact of the coronavirus, say in 3-6 months from here. Let’s assume, for the sake of argument, that the coronavirus is contained from here on in and the current relief for equities and commodities last. 

European equities open higher to start the day

Virus? What virus?

  • Eurostoxx +0.7%
  • Germany DAX +0.9%
  • France CAC 40 +0.8%
  • UK FTSE +0.6%
  • Spain IBEX +0.5%
Equities are continuing to brush aside coronavirus fears as the good news on US-China trade earlier sets up the perfect platform for a risk-on push in Europe to start the day.
It will now be a question whether or not the momentum can be sustained all the way through US trading as well later today. So far, virus headlines are being brushed aside but just be wary that there are cautionary signs of the fallout that the virus impact is having.
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