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Coronavirus: An Economic Pandemic?
Coronavirus: An Economic Pandemic?
How COVID-19 could alter Canada’s oil and gas industry, tourism, education, and public health.
Also in Canada, and many other countries around the world, the epidemic is a threat to the livelihood of millions: the people who mine the raw materials China buys, the corporations that depend on Chinese-made goods as part of their global supply chain, and the service industries that rely on Chinese travellers and investors. Even Finnish fur farmers say they face “catastrophe” because Chinese buyers aren’t coming to their big spring auction.
More locally, COVID-19 is a threat not just to hockey, but to Canada’s oil and gas industry, tourism, education, and public health.
We forget what a market China is for oil and natural gas as well as coal. But Chinese demand has dropped sharply in the last few weeks, especially for LNG. Fewer people are travelling inside China, and almost none are flying to or from it. Some 50 airlines have ceased flying there, and 20 others are running reduced schedules because they lack passengers.
Meanwhile Chinese factories are struggling to resume production while their workers are locked down at home (or still stuck out of town since the Lunar New Year). China’s coal mines are still largely shut down and transportation is sharply limited in many parts of the country. Apple has warned of a drop in revenue because its Chinese factories can’t produce or ship iPhones, and it closed all 42 of its Chinese stores. Not as many containers are reaching Chinese ports, and fewer freighters are leaving for foreign destinations. So oil prices are down, and so is the price of LNG.
…click on the above link to read the rest of the article…
Coronavirus and credit – a perfect storm
Coronavirus and credit – a perfect storm
This article posits that the spread of the coronavirus coincides with the downturn in the global credit cycle, with potentially catastrophic results. At the time of writing, analysts are still trying to get to grips with the virus’s economic impact and they commonly express the hope that after a month or two everything will return to normal. This seems too optimistic.
The credit crisis was already likely to be severe, given the combination of the end of a prolonged expansionary phase of the credit cycle and trade protectionism. These were the conditions that led to the Wall Street crash of 1929-32. Given similar credit cycle and trade dynamics today, the question to be resolved is how an overvaluation of bonds and equities coupled with escalating monetary inflation will play out.
This article sees worrying parallels with the collapse of John Law’s Mississippi scheme exactly 300 years ago. By tying in the purchasing power of his livres to the value of his Mississippi venture, Law ensured they both collapsed together in the space of only six months.
The similarities with our Keynesian experiment are too great to ignore. Could a simultaneous collapse of fiat currencies and financial assets happen again? If so both the money bubble and financial asset bubble could be fully deflated into worthlessness by this year’s end.
The epidemic
“Ring-a-ring o’ roses / A pocket full of posies / A-tishoo! A-tishoo! / We all fall down.”
Some folk attribute this old nursery rhyme to the plague in England of 1665. But it seems singularly appropriate for coronavirus or COVID-19, about which, as yet, we know little. Its origin is, allegedly, a mutation of a virus from a snake, bat or pangolin. Alternatively, one school of thought believes it escaped from a biological warfare laboratory in Hunan.
…click on the above link to read the rest of the article…
Hubei Doctors Warn Of Even-Deadlier Coronavirus Reinfection Causing Sudden Heart Attacks
Hubei Doctors Warn Of Even-Deadlier Coronavirus Reinfection Causing Sudden Heart Attacks
Doctors working on the front lines of the novel coronavirus (COVID-19) outbreak have told the Taiwan Times that it’s possible to become reinfected by the virus, leading to death from sudden heart failure in some cases.
“It’s highly possible to get infected a second time. A few people recovered from the first time by their own immune system, but the meds they use are damaging their heart tissue, and when they get it the second time, the antibody doesn’t help but makes it worse, and they die a sudden death from heart failure,” reads a message forwarded to Taiwan News from a relative of one of the doctors living in the United Kingdom.
The source also said the virus has “outsmarted all of us,” as it can hide symptoms for up to 24 days. This assertion has been made independently elsewhere, with Chinese pulmonologist Zhong Nanshan (鍾南山) saying the average incubation period is three days, but it can take as little as one day and up to 24 days to develop symptoms.
Also, the source said that false negative tests for the virus are fairly common. “It can fool the test kit – there were cases that they found, the CT scan shows both lungs are fully infected but the test came back negative four times. The fifth test came back positive.” –Taiwan Times
Notably, one of the ways coronaviruses cripple the immune system is via an HIV-like attachment to white blood cells, which triggers a ‘cytokine storm‘ – a term popularized during the avian H5N1 influenza outbreak – in which an uncontrolled release of inflammatory ‘cytokines’ target various organs, often leading to failure and in many cases death.
…click on the above link to read the rest of the article…
Fiat Chrysler To Shut Serbia Plant As Covid-19-Shock Paralyzes Global Supply Chains
Fiat Chrysler To Shut Serbia Plant As Covid-19-Shock Paralyzes Global Supply Chains
It’s certainly plausible that the global economy is in the early stages of grinding to a halt. Already, we’ve noted that two-thirds of China’s economy is offline, with major industrial hubs idle and 400 million people quarantined.
The next phase of the supply chain chaos is to spread to regions that are overly reliant on Chinese parts for assembly, such as a Fiat Chrysler Automobiles NV plant in Serbia.
Bloomberg reports Friday morning that the plant is expected to halt operations of its assembly line because of the lack of parts from China as the Covid-19 outbreak worsens.
Turin, Italy-based automaker’s Kragujevac factory in Serbia, which assembles the Fiat 500L, has to bring its production line to a halt due to lack of audio-system and other electric parts sourced from China.
We reported on Feb 6 that Fiat Chrysler was expected to close the plant if the virus continued to spread.
Four of the automaker’s suppliers have been impacted by China’s decision to shut down much of its industrial sector as part of a quarantine that’s expected to take a massive chunk out of GDP growth in the first half.
Fiat Chrysler CEO Mike Manley said four of the company’s suppliers in China had already been affected by the outbreak, including one “critical” maker of parts putting European production at risk.
The evolution of the supply chain disruption emanating from China is spreading outwards and to the West.
Wall Street is blind as a bat, or maybe their hope the Federal Reserve will keep pumping liquidity into the market will numb the pain of one of the most significant shocks expected to hit the global economy in the near term. This is mostly due to the world’s most complex supply chains, which as of late January, have been severed and will start affecting assembly plants in Europe.
…click on the above link to read the rest of the article…
Coronavirus likely now ‘gathering steam’
Coronavirus likely now ‘gathering steam’
Leaky international cordon may mean equivalent of worst flu season in modern times
The number of confirmed cases of the Wuhan coronavirus have continued to surge inside China, sickening tens of thousands, with a death toll of more than 1,000. But outside the Asian giant the numbers remain a fraction of that, a trend Harvard’s Marc Lipsitch views with suspicion. Lipsitch thinks it is just a matter of time before the virus spreads widely internationally, which means nations so far only lightly hit should prepare for its eventual arrival in force and what may seem like the worst flu season in modern times. Lipsitch, professor of epidemiology at the Harvard T.H. Chan School of Public Health and head of the School’s Center for Communicable Disease Dynamics, talked to the Gazette about recent developments in the outbreak and provided a look ahead.
Q&A
Marc Lipsitch
GAZETTE: We spoke about the Wuhan coronavirus outbreak about a week and a half ago. What do we know now that we didn’t know then?
LIPSITCH: We know that the spread is even greater than it was then. It was likely then that it would spread more widely, but there was still hope for containment. I think now that it’s in more countries — even Singapore, which is really good at tracing cases, has found some cases that aren’t linked to previous known cases — it’s clear that there are probably many cases in countries where we haven’t yet found them. This is really a global problem that’s not going to go away in a week or two.
GAZETTE: You indicated that the rapid increase in cases was largely due to existing cases that hadn’t been diagnosed rather than new infections. Is that still your sense, or is some of the daily increase in cases due to new transmission?
…click on the above link to read the rest of the article…
Is The Coronavirus (Covid-19) Now Unstoppable?
Is The Coronavirus (Covid-19) Now Unstoppable?
New data suggests so
Oh, boy…the scientific research on covid-19 (the new name of the Wuhan coronavirus) continues to reveal what a huge challenge containing this virus is.
A new report from Los Alamos Labs calculates its R0 at between 4.7 to 6.6. That is massively contagious!
It’s little wonder then why we’re seeing more and more reports of doctors and health workers falling sick, despite using proper PPE and contamination protocol.
China, which bumped up the number of total infected within the country by 33% last night, is clearly facing a public health nightmare of epic proportion.
As we keep saying, we think the true reality on the ground there is even much worse than the official numbers we’re being given.
That said, China’s totalitarian approach of mandatory home quarantine for hundred of millions of people is likely the best way to fight a virus this contagious.
Will other countries, like the US, be able to enforce such controls on their populations if required to combat covid-19? Could they, even if they tried?
A full-blown pandemic looks increasingly unstoppable at this point.
China Is Disintegrating: Steel Demand, Property Sales, Traffic All Approaching Zero
China Is Disintegrating: Steel Demand, Property Sales, Traffic All Approaching Zero
In our ongoing attempts to glean some objective insight into what is actually happening “on the ground” in the notoriously opaque Chinese economy which has been hammered by the Coronavirus epidemic, yesterday we showed several “alternative” economic indicators such as real-time measurements of air pollution (a proxy for industrial output), daily coal consumption (a proxy for electricity usage and manufacturing) and traffic congestion levels (a proxy for commerce), before concluding that China’s economy appears to have ground to a halt.
That conclusion was cemented after looking at some other real-time charts which suggest that there is a very high probability that China’s GDP in Q1 will not only flatline, but crater deep in the red for one simple reason: there is no economic activity taking place whatsoever.
We start with China’s infrastructure and fixed asset investment, which until recently accounted for the bulk of Chinese GDP. As Goldman writes in an overnight report, in the Feb 7-13 week, steel apparent demand is down a whopping 40%, but that’s only because flat steel is down “only” 12% Y/Y as some car plants have ordered their employee to return to work (likely against their will as the epidemic still rages).
However, it is the far more important – for China’s GDP – construction steel sector where apparent demand has literally hit the bottom of the chart, down an unprecedented 88%, or as Goldman puts it, “construction steel demand is approaching zero.”
But wait, there’s more.
Courtesy of Capital Economics, which has compiled a handy breakdown of real-time China indicators, we can see the full extent of just how pervasive the crash in China’s economy has been, starting with familiar indicator, the average road congestion across 100 Chinese cities, which has collapsed into the New Year and has since failed to rebound.
The Violent Collision of Market Fantasy and Viral Reality
The Violent Collision of Market Fantasy and Viral Reality
When the stampede tumbles off the cliff, buyers vanish and markets go bidless.
The shock wave unleashed in China on January 23 is about to hit the U.S. economy and shatter everything that is fragile and fantasy, starting with the U.S. stock market. The shock wave is still reverberating through the vulnerable Chinese economy, toppling all that is fragile: auto sales, sales of empty flats in Ghost Cities, shadow banking loans that cannot be paid, workers’ wages that won’t be paid, businesses that won’t re-open, supply chains dependent on marginal enterprises and most saliently, the faith of the people in their hubris-soaked, self-serving leadership.
The fantasy in the U.S. is that the shock wave doesn’t exist. Since the shock wave has been hurtling with undimmed force toward the shores of all-mighty American complacency beneath the Pacific, unseen, America’s laughable fantasy has spread through the thundering stampede triggered by the fools in the Federal Reserve in early October.
Not only is America’s economy invulnerable, so is its stock market. This fantasy has fueled a blow-off-top bubble of such classic proportions that even the fools in the Fed recognize it as a bubble. And even the fools in the Fed know blow-off-top bubbles always burst, and with rough symmetry: if the bubble rocketed higher in six weeks, it will crash to Earth in about six weeks.
If we look at the Fed’s balance sheet, we can discern the Fed fools’ implicit attempt to engineer a “soft landing,” i.e. stocks will remain at a permanently high plateau.The Fed balance sheet has gone nowhere for six weeks while the stampede in stocks gathered momentum:12/25/19 $4.165 trillion
1/1/20 $4.173 trillion
1/8/20 $4.149 trillion
1/15/20 $4.175 trillion
1/22/20 $4.145 trillion
1/29/20 $4.151 trillion
2/5/20 $4.166 trillion
…click on the above link to read the rest of the article…
China Vows To Put An End To “Lab Leakage Of Pathogenic Samples”
China Vows To Put An End To “Lab Leakage Of Pathogenic Samples”
Seemingly providing more anecdotal evidence that the Covid-19 outbreak was caused by an accidental leak of a bio-engineered virus and not by some freak of nature in Wuhan’s market, China’s Communist Party has issued a serious “Wartime Order” demanding more care and containment be taken with virus handling. Specifically:
“Strengthen laboratory management and resolutely put an end to the theft, leakage, and loss of pathogenic bacteria (poisons) and various samples…”
As we detailed previously, scientists have expressed concern about China’s ability to safely monitor this BSL-4 lab in Wuhan since it opened in 2017:
“an open culture is important to keeping BSL-4 labs safe, and he questions how easy this will be in China, where society emphasizes hierarchy. ‘Diversity of viewpoint, flat structures where everyone feels free to speak up and openness of information are important.’”
This lab is at most 20 miles from the wet market where the virus had been assumed to have jumped from animal to human.
However the idea that a Chinese lab could have a viral sample escape is well-documented – as mentioned, one lab in Beijing has had four separate incidents of the SARS virus leaking out accidentally.
“These narratives of escaped pathogens have common themes,” argued an analysis of biocontainment failures by medical historian Martin Furmanski in the Bulletin of the Atomic Scientists.
“There are unrecognized technical flaws in standard biocontainment…
The first infection, or index case, happens in a person not working directly with the pathogen that infects him or her, as in the smallpox and SARS escapes. Poor training of personnel and slack oversight of laboratory procedures negate policy efforts by national and international bodies to achieve biosecurity, as shown in the SARS and smallpox escapes.”
…click on the above link to read the rest of the article…
White House Doubts China’s Numbers: 100,000 Coronavirus Cases Unreported
White House Doubts China’s Numbers: 100,000 Coronavirus Cases Unreported
Summary:
- Japan reports first virus death
- President Xi says China will minimize impact from virus
- Chinese leadership scapegoats local officials
- Death toll and case count soared last night: There are more than 60k cases worldwide, and more than 1300 deaths
- EIA joins OPEC in warning about upcoming drop in oil use, the first in a decade.
- HHS Secretary says CDC will announce another confirmed COVID-19 case in US on Thursday
- 21 people in Spain released from quarantine
- US admin reportedly questioning China’s reporting
- White House reportedly “doubts” China’s coronavirus numbers
* * *
Update (1150ET): Citing a senior White House official, CNBC reports that the White House doesn’t have “high confidence” in the coronavirus numbers coming out of China.
The U.S. does “not have high confidence in the information coming out of China” regarding the count of coronavirus cases, a senior administration official told CNBC.
The official also noted that China “continues to rebuff American offers of assistance.”
The current thinking is there must be a reason why they won’t allow the CDC to send over personnel to help with the virus response.
Meanwhile, Jennifer Zeng tweeted out video of migrant workers being forced to sleep outside because of the draconian lockdown.
…click on the above link to read the rest of the article…
China Reports Huge Jump In New Coronavirus Infections, Deaths; Stocks Tumble
China Reports Huge Jump In New Coronavirus Infections, Deaths; Stocks Tumble
Summary:
- China’s Hubei province admits a massive spike in virus cases and deaths (14,840 additional cases and 528 additional deaths)
- The Sun reports first case confirmed in London, bringing UK total to 9
- UK hospital confirms worker found to be infected treated ‘small number’ of patients
- Russia releases two Chinese nationals who recovered from virus
- China Grand Prix likely to be cancelled
- Couple onboard ‘Diamond Princess’ tell CNBC situation is “frankly terrifying”.
- AFP publishes report exposing worsening shortages of food and supplies in Wuhan
- Cruise ship rejected by four countries allowed to dock in Cambodia
- Rumors of 10k in Wuhan not included in official count of cases
- NYT follows WSJ in exploring problems with Chinese testing kits
- Global Times says US should restart travel to China
- US officials complain about China still denying American help
- First ship-to-shore infection occurs in Japan from ‘Diamond Princess’
- State Department lets non-essential personnel and their families leave Hong Kong because of outbreak
* * *
Update (1855ET): Hubei just released its latest round of coronavirus outbreak figures, and in a stunning confirmation of the ‘conspiracy theory’ that China had altered the way it was reporting Covid-19 deaths and cases (in order to suggest that things were improving and you should buy stocks), Hubei province just came clean and the numbers are stunning.
The number of cases exploded by 14,840…
…and the number of deaths spiked by 538.
And here is their explanation:
With the deepening of understanding of new coronavirus pneumonia and the accumulation of experience in diagnosis and treatment, in view of the characteristics of the epidemic in Hubei Province, the General Office of the National Health and Health Commission and the Office of the State Administration of Traditional Chinese Medicine issued the “Diagnosis and Treatment Plan for New Coronavirus Infected Pneumonia (Trial (Version) “adds” clinical diagnosis “to the case diagnosis classification in Hubei Province, so that patients can receive standardized treatment according to confirmed cases as early as possible to further improve the success rate of treatment.
Hong Kong Coronavirus Expert Warns Outbreak Could Infect “Between 60%-80%” Of Humanity, Causing 51 Million Deaths
Hong Kong Coronavirus Expert Warns Outbreak Could Infect “Between 60%-80%” Of Humanity, Causing 51 Million Deaths
The city of Hong Kong and its 7 million+ residents have reason to be extremely anxious about the nCoV outbreak that has already caused more than 1,000 deaths on the mainland. Back in 2003, SARS ripped through the densely populated largely autonomous city and killed some 300 people, nearly half the total death toll from the outbreak.
Professor Gabriel Leung, the chair of public health medicine at Hong Kong University, was one of the first officials anywhere in China to suggest that the government was hiding, or simply hadn’t yet confirmed, the true extend of the outbreak.
Though Beijing has been touting a ‘slowdown’ in the number of newly diagnosed cases, few believe that the outbreak has actually crested, even as a huge percentage of the population in the world’s largest country has spent the last week huddled inside.
Which is why we feel Leung’s latest warning is worth our attention, and yours.
Riffing off of comments from WHO Director-General Dr. Tedros Adhanom Ghebreyesus, who said yesterday that the we might be seeing only ‘the tip of the iceberg’ in terms of number of cases, Leung said the scientific community’s ‘overriding concern’ is figuring out the ‘size and shape’ of the iceberg.
Leung added that most experts now believe the virus has a transmission rate of – or r-sub-zero – of 2.5, meaning the average infected individual will transmit the virus to 2.5 others. This also translates to an “attack rate” of 60%-80%, the Guardian reports.
“Sixty per cent of the world’s population is an awfully big number,” Leung told the Guardian in London, en route to an expert meeting at the WHO in Geneva on Tuesday.
On Tuesday morning, Chinese health officials confirmed nearly 100 new deaths, bringing the toll to 1,013 as of late Monday.
…click on the above link to read the rest of the article…
Chinese Firms Ask For Billions In Loans Amid Virus Outbreak
Chinese Firms Ask For Billions In Loans Amid Virus Outbreak
In response to the economic paralysis brought about by the coronavirus, Chinese banks are offering billions of dollars in loans to Chinese companies, according to two banking sources via Reuters.
About 300 Chinese firms, including top food delivery company Meituan Dianping and smartphone maker Xiaomi, have requested upwards 57.2 billion yuan ($8.2 billion) in loans to prevent a hard landing as China’s economy grinds to a halt.
The sources said the firms seeking loans are either the hardest hit or have an active role in the control of the virus outbreak.
Evercore ISI Chairman Ed Hyman warned last week that China’s GDP growth could post “zero for the first quarter … China is really slowing and that’s worrying people for sure.”
“We are so solid,” Hyman said. “It’s not the virus, it’s the trade that matters. People are not going out. They are not shopping, and that’s what’s hurting particularly China.”
The scale of disruption in China is already staggering and is already spreading worldwide… and fast, China is effectively shut down and goods are now stranded in floating quarantines.
As Goldman noted here, the overall impact on global growth is about a 2% cut in Q1…
Extended factory closings and supply chain disruptions have forced many companies to request loans for “fast-track approvals and preferential rates,” the sources said.
The sources reviewed several lists of companies that Chinese banks will be distributing loans to. They said no official data is showing total loans requested.
The list includes pharmaceutical firms and restaurants, who’ve requested help from banking authorities.
“Banks will have the final say on lending decisions,” one of the sources said. “The interest rates are likely to be on par with those offered to banks’ top clients.”
…click on the above link to read the rest of the article…
Controlling the Narrative Is Not the Same as Controlling the Virus
Controlling the Narrative Is Not the Same as Controlling the Virus
Are these claims even remotely plausible for a highly contagious virus that spreads easily between humans while carriers show no symptoms?
It’s clear that the narrative about the coronavirus is being carefully managed globally to minimize the impact on global sentiment and markets. Authorities are well aware of the global economy’s extreme fragility, and so Job One for authorities everywhere is to scrub the news flow of anything that doesn’t support the implicit official narrative:1. The coronavirus is only an issue in China; it’s contained outside China.2. The coronavirus will soon be contained in China, and global business will quickly return to normal.
In pushing this narrative, authorities around the world share the same goal: limit the damage to consumer confidence and markets, as the legitimacy of every regime from Beijing to Washington D.C. to Nairobi is based on maintaining these economic fictions:
1. Global growth will continue in an unbroken trend in the decades ahead.
2. This growth benefits everyone, not just elites.As I’ve noted in previous posts, the critical dynamic here is consumer confidence: consumers cannot be allowed to become hesitant or afraid lest they stop borrowing, borrowing, borrowing, buying, buying, buying and speculating, speculating, speculating.
Authorities outside China have no more interest in accurate death totals being released than Chinese authorities, and so official agencies and the corporate media dutifully parrot the implausibly low Chinese statistics as if they reflected reality.
But controlling the narrative is not the same as controlling the virus. The narrative is intangible but the virus is real-world. Authorities are betting that controlling the narrative about the virus is equivalent to controlling the actual virus.
…click on the above link to read the rest of the article…
“The Death Rate Is Up To 5%”: The Harrowing Admission Of A Wuhan Doctor
“The Death Rate Is Up To 5%”: The Harrowing Admission Of A Wuhan Doctor
A front-line coronavirus doctor tells of life in death in the ICU…
Translated by Sun Huixia and Dave Yin via The Straits Times,
WUHAN (CAIXIN GLOBAL) – In the coronavirus epidemic, doctors on the front lines take on the greatest risk and best understand the situation. Dr Peng Zhiyong, director of acute medicine at the Wuhan University South Central Hospital, is one of those doctors.
In an interview on Tuesday with Caixin, Dr Peng described his personal experiences in first encountering the disease in early January and quickly grasping its virulent potential and the need for stringent quarantine measures.
As the contagion spread and flooded his ICU, the doctor observed that three weeks seemed to determine the difference between life and death. Patients with stronger immune systems would start to recover in a couple of weeks, but in the second week, some cases would take a turn for the worse.
In the third week, keeping some of these acute patients alive might require extraordinary intervention. For this group, the death rate seems to be 4 per cent to 5 per cent, Dr Peng said. After working his 12-hour daytime shifts, the doctor spends his evenings researching the disease and has summarised his observations in a thesis.
The doctors and nurses at his hospital are overwhelmed with patients. Once they don protective hazmat suits, they go without food, drink and bathroom breaks for their entire shifts. That’s because there aren’t enough of the suits for a mid-shift change, he said.
…click on the above link to read the rest of the article…
