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Blain’s Morning Porridge – 17 Feb 2020: Virus pain and Softbank

Blain’s Morning Porridge – 17 Feb 2020: Virus pain and Softbank

“Lord, give me strength to deal with London cyclists…”  

A quiet day’s play in prospect with a US holiday, and its UK mid-term holiday all week. The Covid19 Coronavirus is likely to remain the dominant issue to worry the markets. Infections continue to increase, the Chinese are pumping funds into struggling regions, and passengers are being “rescued” from Cruise liners. But there is lots of other stuff to worry about: like what happens when bonds are downgraded to junk (see Kraft story), where the UK is heading, the fact Italy and Greek bonds yield about the same, and a host of other stuff I’ve already forgotten about this morning.

The Virus is what we’re watching first. As a result of desperate efforts by the authorities, the narrative is beginning to shift – we’re likely to see the discussion move from potential infection scenarios and containment, and into the realms of economic reality as real cause and effect economic reality stories emerge. Evidence of creaking global supply chains is fast emerging. China home sales have tumbled. JCB, manufacturers of the eponymous digger, are shuttering production because of a lack of parts from China. Large swathes of Chinese industry never reopened after the lunar New Year holiday because migrant workers stayed in the home villages. Chinese shoppers, the mainstay of shopping villages like Bicester, are said to be conspicuous by their absence. 

There is less talk about end of the world epidemic scenarios, and the story is now being pushed off the front pages. Yet it’s scary just how little we yet know for sure about the virus in terms of just how infectious, dangerous and mutable it might be. The only thing we know for absolute sure – it’s going to have massive real economic consequences – which means it’s a genuine Black Swan, rather than some nebulous “Grey” event some pundits have been talking about. 

…click on the above link to read the rest of the article…

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