Archives of “Coronavirus” tag

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Check this out to put the coronavirus impact into perspective

  
  Analysis
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This is one perspective, there will be others.

  • When the SARS epidemic hit in 2003 China had an economy size aroiund USD 1.7 tln
  • Today it is nearly an order of magnitude larger, around USD 13.7 tln
  • & China’s economy accounts for around a third of global GDP growth

ps.  this from Apple’s Tim Cook on what is happening with his business in China this week:

  • “We have closed one of our retail stores and a number of channel partners have also closed their store fronts. Our sales within the Wuhan areas are small, but retail traffic has also been impacted cross the country (China) in the last few days.”

Bolding mine.

Multiply the impact on traffic to Apple stores across the economy.

china coronavirus

OPEC said to be discussing extending output cuts until at least June

  
  Analysis
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OPEC is said to be alarmed by the coronavirus outbreak

OPEC

Reuters is reporting on the matter, citing three OPEC sources, in saying that the bloc aims to extend the current oil output cuts through to June at least.

Adding that members are also discussing on deepening the cuts if oil prices or demand should fall significantly on the coronavirus outbreak.
There is little doubt that the virus will weigh on oil demand in Q1 at the very least but if it does have a prolonged impact, OPEC may have to live with lower oil prices until the world adjusts to the situation in the long-term.
I mean, if they can’t even properly comply with current quotas – what more if they choose to deepen cuts further. It’d be all talk but no action.

Coronavirus fears unlikely to turn the Fed into doves

  
Analysis, Economy
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The view from TD is that forecasting the extent of coronavirus contagion to the global economy or ‘risk’ is difficult.

But:
  • “we don’t expect the Fed to go more dovish simply because the market has become more nervous”
  • yield on the 10 yr is significantly lower since the start of the year
  •  “We don’t think the Fed is going to be a catalyst for a continued move lower in Treasury yields” 
However, the Fed will keep an eye on developments re the virus, on market sentiment and potential cascade for risk-off.
They’ll also keep an eye on what this guy wants, right?
The view from TD is that forecasting the extent of coronavirus contagion to the global economy or 'risk' is difficult.

Asian stocks slide as coronavirus fears spook markets : Nikkei 225 closes lower by 2.03% at 23,343.51

  
Analysis, Global Indices
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Asian stocks slide as coronavirus fears spook markets

Nikkei 27-01

There’s still a high degree of uncertainty involving the new coronavirus outbreak situation and that is keeping markets very nervous to kick start the week.

Chinese markets may be closed but A50 futures are taking a beating – even down by over 5% earlier – as risk aversion continues to flow throughout markets.
US 10-year yields are down to their lowest level since October, 4.8 bps lower on the day at 1.635% as we look towards European trading. Meanwhile, the likes of the yen and gold are bid as safety flows are the name of the game to start the day.
USD/JPY sits at 109.05 currently while commodity currencies such as the aussie and kiwi are also being weighed lower, alongside the offshore Chinese yuan.

Are Asian stocks due further falls post Lunar New year? Probably, yes.

  
  Analysis
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Coronavirus has a fear factor

According to a quick google search around 50,000+ people die from the flu each year. It is mainly the old or the already unwell who are most susceptible to the virus. In 2003 the total number of SARS death was 700+ from a total sample of 8000+ cases. Here is a quote from the World Health Organisation on a person’s chances of dieing from SARS during the outbreak if they caught the disease.

The likelihood of dying from SARS in a given area has been shown to depend on the profile of the cases, including the age group most affected and the presence of underlying disease. Based on data received by WHO to date, the case fatality ratio is estimated to be less than 1% in persons aged 24 years or younger, 6% in persons aged 25 to 44 years, 15% in persons aged 45 to 64 years, and greater than 50% in persons aged 65 years and older

So far, 17 people have died due to the Coronavirus and this is a concern. The total number of coronavirus cases is rising all the time and the fear factor alone should weigh on equity markets. People will not want to travel around if they can avoid it as the disease spreads. I was surprised that on January 22 the Asian markets closed higher, even though the case load doubled. The Jan 23 response made much more sense to me in the Asian markets as they fell sharply lower ahead of the Chinese New Year Holidays. Sadly, it now seems almost inevitable that we will have a sharp increase in cases over this travelling time.
Triple top in Nikkei 
Coronavirus has a fear factor

A triple top in the Nikkei makes an attractive level for shorts if and when the coronavirus fear factor takes hold. Furthermore, it is still too early for folks to fully grasp the implications of the disease and unknowns remain.

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