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Stocks, Bond Yields Tumble As Fears Over Coronavirus Outbreak Spread  


Nicolas
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Dow futures are down over 100 points, AsiaPac equity markets are down harder, and Treasuries are well bid along with gold after a Chinese officials confirmed the coronavirus can be spread by human-to-human contact, and the deadly disease is spreading to other asian nations.

“Now we can say it is certain that it is a human-to-human transmission phenomenon,” Zhong Nanshan, a scientist who is leading a government-appointed expert panel on the outbreak, said in an interview on state-run television on Monday.

As The New York Times reports, cases have been reported outside China.

The authorities in Thailand detected the new coronavirus last week in two Chinese women who had flown from Wuhan to Bangkok on separate trips. The government said the women, aged 74 and 61, were in good condition.

In Japan, a Chinese man who returned from Wuhan on Jan. 6 was also confirmed to have the disease. He was discharged after five days in a hospital.

South Korea confirmed its first case of the coronavirus on Monday in a 35-year-old Chinese woman from Wuhan who arrived on Sunday at Incheon International Airport, which serves Seoul.

The woman was found with a fever, muscle pain and other symptoms while going through customs and was immediately quarantined for tests, said Jung Eun-kyeong, director of the Korea Centers for Disease Control and Prevention.

The woman was traveling with five other people intending to spend the Lunar New Year holidays in South Korea and Japan, Ms. Jung said. South Korean officials were running tests on anyone believed to have come in contact with the woman in the plane, she said.

https://twitter.com/Hipster_Trader/status/1219444045740695552
And fear of a SARS 2.0 outbreak have sparked risk-off trades in early Asia trading.

“There are now sufficient cases that it’s not going to die out by chance,” said Neil Ferguson, a public health expert at Imperial College London who has studied the new virus.

“The real question now is, how efficiently can this virus spread from person to person?”

Hong Kong’s Hang Seng is down notably…

As are US futures…

Bonds are bid…

Along with gold…

China’s leader, Xi Jinping, said on Monday that the outbreak “must be taken seriously” and that every possible measure should be taken to contain it, according to the state broadcaster CCTV.

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Nicolas
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Chinese virus attacks financial markets

 

Growing concerns over the outbreak of a mysterious pneumonia-like virus in China, which has killed 9 and infected hundreds more, has impacted currency markets and pushed the Chinese yuan lower. “It is starting to have an impact … on financial markets over the past 24 to 48 hours,” Adarsh Sinha, co-head of Asia rates and foreign exchange strategy at the Bank of America Securities told CNBC’s “Street Signs” on Wednesday.

On Tuesday, the Japanese yen — often seen as a safe-haven in times of economic uncertainty — strengthened sharply against the dollar to levels below 109.8. It last traded at 110.01. Meanwhile, both the onshore and offshore Chinese yuan have seen a steep weakening against the greenback and last traded at 6.902 and 6.9036, respectively. The yuan saw levels below 6.86 earlier in the trading week.

So far, more than 400 cases have been confirmed by public healthcare officials, with the bulk of them coming from China. Cases have also been confirmed in Thailand, South Korea, Japan and Taiwan. Concerns of the disease spreading were further fueled by the fact that millions are expected to be traveling within China and outside the country ahead of the extended Lunar New Year holiday that is set to begin on Saturday.

In particular, Nomura said the Korean won and Singapore dollar sold off broadly against the dollar at that time. The South Korean currency was last at 1163.99 per dollar while the Singapore dollar traded at 1.3497 against the greenback.

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Nicolas
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China locks down city of 11 million at epicenter of virus outbreak

BEIJING (Reuters) – China is putting on lockdown a city of 11 million people considered the epicenter of a new coronavirus outbreak that has killed 17 and infected nearly 600, as health authorities around the world scramble to prevent a global pandemic.

Health officials fear the transmission rate will accelerate as hundreds of millions of Chinese travel at home and abroad during week-long holidays for Lunar New Year, which begins on Saturday.

The previously unknown virus strain is believed to have emerged late last year from illegally traded wildlife at an animal market in China’s central city of Wuhan.

Cases have been detected as far away as the United States, stoking fears the virus is already spreading worldwide.

Wuhan’s local government said it would shut down all urban transport networks and suspend outgoing flights from 10 a.m. (0200 GMT) on Thursday, state media said. Domestic media said some airlines were operating after the deadline, however.

State media broadcast images of one of Wuhan’s key transport hubs, the Hankou rail station, nearly deserted, with gates blocked or barred. The government is urging citizens not to leave the city, except in special circumstances.

Guards were patrolling major highways, one resident told Reuters, although the shutdown notice had not mentioned private cars leaving the city, while videos on social media showed long queues at gas stations.

In contrast with its secrecy over the 2002-03 Severe Acute Respiratory Syndrome (SARS) that killed nearly 800 people, China’s communist government has this time provided regular updates to avoid panic ahead of the holidays.

Authorities had confirmed 571 cases and 17 deaths by the end of Wednesday, China’s National Health Commission said. Earlier, it said another 393 suspected cases had been reported.

Of eight known cases worldwide, Thailand has confirmed four, while Japan, South Korea, Taiwan and the United States have reported one each.

At least 16 people who had close contact with a Washington state man diagnosed with the virus are being monitored.

VIRUS SPREADING

In a report on Wednesday, Imperial College London said it estimated a total of 4,000 cases of the coronavirus in Wuhan alone as of Jan. 18, an infection rate based on the number of cases reported in China and elsewhere.

During a visit to Wuhan, Vice Premier Sun Chunlan said authorities needed to be open about the spread of the virus and efforts to contain it, the official Xinhua news agency said on Thursday, comments likely to reassure global health experts.

The World Health Organization (WHO) has said it will decide on Thursday whether to declare the outbreak a global health emergency, which would step up the international response.

If it does so, it will be the sixth international public health emergency to be declared in the last decade.

Some experts believe the new virus is not as dangerous as previous coronaviruses such as SARS and Middle East Respiratory Syndrome (MERS), which has killed more than 700 people since 2012.

“The early evidence at this stage would suggest it’s not as severe a disease as SARS or MERS,” Australia’s Chief Medical Officer Brendan Murphy told reporters on Thursday.

WHO Director-General Tedros Adhanom Ghebreyesus told reporters in Geneva that China’s actions so far were “very strong” but called on Beijing to take “more and significant measures to limit or minimize the international spread”.

He added, “We stressed to them that by having a strong action not only they will control the outbreak in their country but they will also minimize the chances of this outbreak spreading internationally. So they recognize that.”

Despite China’s response, stock markets across Asia were on the back foot on Thursday over the virus, led by drops of roughly 1.5% in Hong Kong and Shanghai while China’s yuan fell to a two-week low.

FLIGHTS, RAIL SUSPENDED

Wuhan is a transport hub as well as central China’s main industrial and commercial center. The virus also has been reported in other major cities including Beijing, Shanghai and Hong Kong.

There is no known cure for the virus. Symptoms include fever, difficulty in breathing and cough, similar to many other respiratory illnesses, and can cause pneumonia.

Chinese authorities are still investigating its origins, though they confirmed the outbreak began at a market in Wuhan with illegal wildlife transactions, and the virus can spread among people through respiratory transmission. Confirmed sufferers include 15 medical workers.

Many Chinese were cancelling trips, buying face masks, avoiding public places such as cinemas and shopping centers, and even turning to an online plague simulation game as a way to cope.

Taiwan’s China Airlines said it had suspended flights to Wuhan and Hong Kong’s MTR Corp said it had suspended sales of high-speed rail tickets to and from Wuhan.

A growing number of Chinese-listed companies, from biotech firms, drugmakers, mask producers to thermometer makers, say they are actively participating in a government-led war on the coronavirus.

Wuhan Guide Infrared Co told the official China Securities Journal it had donated 4 million yuan ($579,370) worth of infrared thermometer devices to the government of Hubei, the province at the center of the outbreak.

 

Airports globally stepped up screening of passengers from China and the European Centre for Disease Control and Prevention (ECDC) said in a risk assessment that further global spread of the virus was likely.

Australia and Britain are among the countries that have advised citizens against all but essential travel to Wuhan.

 

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Nicolas
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The Real Umbrella Corp: Wuhan Ultra Biohazard Lab Was Studying “The World’s Most Dangerous Pathogens”

Now that not one but seven Chinese cities – including Wuhan, ground zero of the coronavirus epidemic – and collectively housing some 23 million people, are under quarantine…

… comparisons to the infamous Raccoon City from Resident Evil are coming in hot and heavy. And, since reality often tends to imitate if not art then certainly Hollywood, earlier today we jokingly asked if the Medical Research Institute at Wuhan University would end up being China’s version of Umbrella Corp.

https://twitter.com/zerohedge/status/1220375954180231168

As it turns out, it wasn’t a joke, because moments ago it was brought to our attention that in February 2017, Nature penned an extensive profile of what it called the “Chinese lab poised to study world’s most dangerous pathogens.” The location of this BSL-4 rated lab? Why, Wuhan.

A quick read of what this lab was meant to do, prompts the immediate question whether the coronavirus epidemic isn’t a weaponized virus that just happened to escape the lab:

The Wuhan lab cost 300 million yuan (US$44 million), and to allay safety concerns it was built far above the flood plain and with the capacity to withstand a magnitude-7 earthquake, although the area has no history of strong earthquakes. It will focus on the control of emerging diseases, store purified viruses and act as a World Health Organization ‘reference laboratory’ linked to similar labs around the world. “It will be a key node in the global biosafety-lab network,” says lab director Yuan Zhiming.

The Chinese Academy of Sciences approved the construction of a BSL-4 laboratory in 2003, and the epidemic of SARS (severe acute respiratory syndrome) around the same time lent the project momentum. The lab was designed and constructed with French assistance as part of a 2004 cooperative agreement on the prevention and control of emerging infectious diseases. But the complexity of the project, China’s lack of experience, difficulty in maintaining funding and long government approval procedures meant that construction wasn’t finished until the end of 2014.

The lab’s first project will be to study the BSL-3 pathogen that causes Crimean–Congo haemorrhagic fever: a deadly tick-borne virus that affects livestock across the world, including in northwest China, and that can jump to people.

Future plans include studying the pathogen that causes SARS, which also doesn’t require a BSL-4 lab, before moving on to Ebola and the West African Lassa virus,

What does BSL-4 mean?

BSL-4 is the highest level of biocontainment: its criteria include filtering air and treating water and waste before they leave the laboratory, and stipulating that researchers change clothes and shower before and after using lab facilities. Such labs are often controversial. The first BSL-4 lab in Japan was built in 1981, but operated with lower-risk pathogens until 2015, when safety concerns were finally overcome.

And here’s why all this is an issue:

Worries surround the Chinese lab. The SARS virus has escaped from high-level containment facilities in Beijing multiple times, notes Richard Ebright, a molecular biologist at Rutgers University in Piscataway, New Jersey.

Below we repost the full Nature article because it strongly hints, without evidence for now, that the coronavirus epidemic may well have been a weaponized virus which “accidentally” escaped the Wuhan biohazard facility.

Inside the Chinese lab poised to study world’s most dangerous pathogens

A laboratory in Wuhan is on the cusp of being cleared to work with the world’s most dangerous pathogens. The move is part of a plan to build between five and seven biosafety level-4 (BSL-4) labs across the Chinese mainland by 2025, and has generated much excitement, as well as some concerns.

Hazard suits hang at the National Bio-safety Laboratory, Wuhan, the first lab on the Chinese mainland equipped for the highest level of biocontainment.

Some scientists outside China worry about pathogens escaping, and the addition of a biological dimension to geopolitical tensions between China and other nations. But Chinese microbiologists are celebrating their entrance to the elite cadre empowered to wrestle with the world’s greatest biological threats.

“It will offer more opportunities for Chinese researchers, and our contribution on the BSL‑4-level pathogens will benefit the world,” says George Gao, director of the Chinese Academy of Sciences Key Laboratory of Pathogenic Microbiology and Immunology in Beijing. There are already two BSL-4 labs in Taiwan, but the National Bio-safety Laboratory, Wuhan, would be the first on the Chinese mainland.

The lab was certified as meeting the standards and criteria of BSL-4 by the China National Accreditation Service for Conformity Assessment (CNAS) in January. The CNAS examined the lab’s infrastructure, equipment and management, says a CNAS representative, paving the way for the Ministry of Health to give its approval. A representative from the ministry says it will move slowly and cautiously; if the assessment goes smoothly, it could approve the laboratory by the end of June.

BSL-4 is the highest level of biocontainment: its criteria include filtering air and treating water and waste before they leave the laboratory, and stipulating that researchers change clothes and shower before and after using lab facilities. Such labs are often controversial. The first BSL-4 lab in Japan was built in 1981, but operated with lower-risk pathogens until 2015, when safety concerns were finally overcome.

The expansion of BSL-4-lab networks in the United States and Europe over the past 15 years — with more than a dozen now in operation or under construction in each region — also met with resistance, including questions about the need for so many facilities.

The Wuhan lab cost 300 million yuan (US$44 million), and to allay safety concerns it was built far above the flood plain and with the capacity to withstand a magnitude-7 earthquake, although the area has no history of strong earthquakes. It will focus on the control of emerging diseases, store purified viruses and act as a World Health Organization ‘reference laboratory’ linked to similar labs around the world. “It will be a key node in the global biosafety-lab network,” says lab director Yuan Zhiming.

The Chinese Academy of Sciences approved the construction of a BSL-4 laboratory in 2003, and the epidemic of SARS (severe acute respiratory syndrome) around the same time lent the project momentum. The lab was designed and constructed with French assistance as part of a 2004 cooperative agreement on the prevention and control of emerging infectious diseases. But the complexity of the project, China’s lack of experience, difficulty in maintaining funding and long government approval procedures meant that construction wasn’t finished until the end of 2014.

The lab’s first project will be to study the BSL-3 pathogen that causes Crimean–Congo haemorrhagic fever: a deadly tick-borne virus that affects livestock across the world, including in northwest China, and that can jump to people.

Future plans include studying the pathogen that causes SARS, which also doesn’t require a BSL-4 lab, before moving on to Ebola and the West African Lassa virus, which do. Some one million Chinese people work in Africa; the country needs to be ready for any eventuality, says Yuan. “Viruses don’t know borders.”

Gao travelled to Sierra Leone during the recent Ebola outbreak, allowing his team to report the speed with which the virus mutated into new strains. The Wuhan lab will give his group a chance to study how such viruses cause disease, and to develop treatments based on antibodies and small molecules, he says.

The opportunities for international collaboration, meanwhile, will aid the genetic analysis and epidemiology of emergent diseases. “The world is facing more new emerging viruses, and we need more contribution from China,” says Gao. In particular, the emergence of zoonotic viruses — those that jump to humans from animals, such as SARS or Ebola — is a concern, says Bruno Lina, director of the VirPath virology lab in Lyon, France.

Many staff from the Wuhan lab have been training at a BSL-4 lab in Lyon, which some scientists find reassuring. And the facility has already carried out a test-run using a low-risk virus.

But worries surround the Chinese lab, too. The SARS virus has escaped from high-level containment facilities in Beijing multiple times, notes Richard Ebright, a molecular biologist at Rutgers University in Piscataway, New Jersey. Tim Trevan, founder of CHROME Biosafety and Biosecurity Consulting in Damascus, Maryland, says that 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,” he says.

Yuan says that he has worked to address this issue with staff. “We tell them the most important thing is that they report what they have or haven’t done,” he says. And the lab’s inter­national collaborations will increase openness. “Transparency is the basis of the lab,” he adds.

The plan to expand into a network heightens such concerns. One BSL-4 lab in Harbin is already awaiting accreditation; the next two are expected to be in Beijing and Kunming, the latter focused on using monkey models to study disease.

Lina says that China’s size justifies this scale, and that the opportunity to combine BSL-4 research with an abundance of research monkeys — Chinese researchers face less red tape than those in the West when it comes to research on primates — could be powerful. “If you want to test vaccines or antivirals, you need a non-human primate model,” says Lina.

But Ebright is not convinced of the need for more than one BSL-4 lab in mainland China. He suspects that the expansion there is a reaction to the networks in the United States and Europe, which he says are also unwarranted. He adds that governments will assume that such excess capacity is for the potential development of bioweapons.

“These facilities are inherently dual use,” he says. The prospect of ramping up opportunities to inject monkeys with pathogens also worries, rather than excites, him: “They can run, they can scratch, they can bite.”

The central monitor room at China’s National Bio-safety Laboratory

If that wasn’t enough, here is January 2018 press release from the Wuhan Institute of Virology, announcing the launch of the “top-level biosafety lab.”

China has put its first level-four biosafety laboratory into operation, capable of conducting experiments with highly pathogenic microorganisms that can cause fatal diseases, according to the national health authority. Level four is the highest biosafety level, used for diagnostic work and research on easily transmitted pathogens that can cause fatal diseases, including the Ebola virus.

The Wuhan national level-four biosafety lab recently passed an assessment organized by the National Health and Family Planning Commission, according to a news release on Friday from the Wuhan Institute of Virology of the Chinese Academy of Sciences.

Virologists read data on a container for viral samples at China’s first level-four biosafety lab at the Institute of Virology in Wuhan

After evaluating such things as the lab’s management of personnel, facilities, animals, disposals and viruses, experts believed the lab is qualified to carry out experiments on highly pathogenic microorganisms that can cause fatal diseases, such as Marburg, Variola, Nipah and Ebola.

“The lab provides a complete, world-leading biosafety system. This means Chinese scientists can study the most dangerous pathogenic microorganisms in their own lab,” the Wuhan institute said.

It will serve as the country’s research and development center on prevention and control of infectious diseasesas a pathogen collection center and as the United Nations’ reference laboratory for infectious diseases, the institute said.

Previous media reports said the Wuhan P4 lab will be open to scientists from home and abroad. Scientists can conduct research on anti-virus drugs and vaccines in the lab.

The lab is part of Sino-French cooperation in the prevention and control of emerging infectious diseases, according to the news release.

The central government approved the P4 laboratory in 2003 when the outbreak of severe acute respiratory syndrome spread alarm across the country. In October 2004, China signed a cooperation agreement with France on the prevention and control of emerging infectious diseases. This was followed by a succession of supplementary agreements.

With French assistance in laboratory design, biosafety standards establishment and personnel training, construction began in 2011 and lasted for three years. In 2015, the lab was put into trial operation.

Finally, this is what the real Umbrella Corp looks like from space:

If nothing else, at least it got good reviews

 
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Nicolas
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Coronavirus Death Toll Hits 25 As Beijing Confirms 830 Patients Infected

Summary:

  • 8 Chinese cities, more than 23 million people, effectively under quarantine

  • Multiple cases across the world – from Scotland to Singapore and USA

  • 830 Infected in mainland China according to Chinese officials (Mainland China: 830 Taiwan: 1 Macau: 2 Hong Kong: 2 Vietnam: 2 Thailand: 3 Singapore: 1 Japan: 1 South Korea: 1 US: 1)

  • 25 Dead (following 1st death outside Wuhan)

  • WHO says “not the time to declare a global health emergency”

  • Patient in Texas recently traveled to Wuhan

  • WHO estimates coronavirus is about as contagious as the Spanish flu, more than twice as infectious as the common flu. 

https://twitter.com/badiucao/status/1220374770308374528

Update (1920ET): As Friday begins in Beijing, Chinese state media has announced that the number of confirmed coronavirus cases in mainland China has climbed to 830, while the number of deaths has climbed to 25. As Beijing expands its efforts to crack down on the virus ahead of the LNY holiday, media reports claim that Beijing has requested the closing of all indoor activities involving more than 100 people.

Meanwhile, more disturbing videos out of Wuhan are circulating online as reports about a growing number of sick health-care workers circulate in the Hong Kong press.

https://twitter.com/aschapire/status/1220410648418553861

In other news, US lawmakers are set to be briefed on the virus Friday morning.

* * *

Update (1750ET): Japan’s health ministry confirmed a second case of coronavirus on Friday, reported Reuters.

The infected man who lives in Wuhan, China, traveled to Japan on Sunday — has been hospitalized in Tokyo, the health ministry said in a statement.

Details are limited at the moment. There was no mention of how many people the infected man came in contact with before being quarantined. New reports out of the UK are claiming that 14 people are now being tested for the virus after earlier reports said 3 people in Scotland were under quarantine as suspected carriers of the virus.

Meanwhile, the number of cities in Hubei province facing a travel ban/lockdown/quarantine has been expanded to eight: Wuhan, Huanggang, Ezhou, Chibi, Xiantao, Qianjiang, Zhijiang and Lichuan.

SCMP has also released some more details about the first death outside of Hubei: An 80-year-old man died in the town of Hebei after spending two months in Wuhan visiting relatives.

Back in Wuhan, ride-share company Didi has suspended its service, as China’s finance ministry announced that 1 billion yuan ($144 million) would be used by Hubei authorities to halt the spread of the illness.

Also, in the latest sign that the regime in Beijing hasn’t kept its promise of complete transparency, the SCMP reports that health-care workers in Wuhan are getting sick at a rate that is faster than previously revealed. Initially, Chinese authorities insisted that health care workers weren’t being sickened, indicating that the virus didn’t spread via human to human contact. But we’ve since learned that this was a lie.

Fifteen cases of the coronavirus have been officially reported among health care workers in the city, though doctors say the real number is much higher.

Just as we expected, the situation in Wuhan has gotten so out of hand that videos of health-care workers collapsing from exhaustion are circulating online.

https://twitter.com/L0gg0l/status/1220489033052278784

If it seems like every person who managed to escape Wuhan is carrying the virus, here’s one possible explanation: the WHO estimated that the coronavirus has a Ro (a measure of how contagious a virus is) of 2, equivalent to the Spanish flu that sickened 500 million during the first half of the 20th century. The common flu, by comparison, has a Ro of 0.9.

* * *

Update (1600ET): Markets recovered on Thursday after the WHO declined to label the coronavirus as a global pandemic threat (though we suspect they might change their view once the market has closed).

But now that Beijing’s shock-and-awe approach to containing the viral panic appears to have convinced health officials that the virus won’t make it to the next generation of transmission, it’s worth remembering that Beijing’s attempt to quarantine more than 20 million people was hardly comprehensive.

For examples, look at this Vice story, which claims one woman evaded airport checks by taking medication that lowered a fever. According to Vice, the Chinese embassy in Paris is hoping to speak with her after she visited a Michelin-starred restaurant and shared the whole experience on WeChat.

The warning came after one woman from Wuhan took medicine to bring down her temperature to avoid detection as she boarded a flight to France, where she dined at a Michelin-starred restaurant.

The woman was heavily criticized for her actions after she posted photos and details of her trip on WeChat. On Wednesday night the Chinese embassy in France responded with a warning and asked the woman to contact their emergency phone number.

Some people won’t let the risk of contagion spoil their holiday plans.

* * *

Update (1530ET): 7News reports that an individual suspected of coronavirus infection has been quarantined in Sydney.

* * *

Update (1510ET): Investigators are reportedly examining another potential case of coronavirus in Texas’s Brazos County.

https://twitter.com/Fxhedgers/status/1220435765102043142

The patient recently traveled from Wuhan and is reportedly suffering from symptoms similar to those who have been infected by the virus .

Meanwhile, a passenger at LAX has been quarantined after showing symptoms of the virus. That patient arrived at LAX from Mexico City and exhibited “disturbing” symptoms, according to health officials, per Fox 5.

This development comes a day after Los Angeles County public health officials said it was “very possible” the area will see at least one patient, given the number of people traveling between the Southland and China.

*  *  *

Update (1325ET): The World Health Organization, after a second day of meetings, have decided AGAINST declaring an international virus alarm. The panel was reportedly split on the decision and may revise the decision but for now states that “now is not the time” to declare an emergency.

“Make no mistake: This is an emergency in China,” WHO Director-General Tedros Adhanom Ghebreyesus said.

“But it has not yet become a global health emergency. It may yet become one.”

*  *  *

Update (1300ET): CNBC’s Eunice Yoon just provided a shocking update to the status of the deadly virus in China:

“7 cities and 23 million people are effectively under quarantine.”

The cities under effective martial law – with all travel in, around, and out halted – are Wuhan, Huanggang, Zhijiang, Ezhou, Qianjiang, Chibi, and Xiantao.

https://twitter.com/CNBCTheExchange/status/1220409319839162368

That is more people quarantined than the population of Florida (21.6m).

Outside of China, cases keep appearing (map does not include recent cases in Scotland and Ireland):

*  *  *

Update (1150ET): If you haven’t cancelled those tickets to Wuhan yet, you might want to hold off: The State Department has just reverted its safety warning on travel to China to “exercise caution” from “reconsider your travel plans”.

Clearly, somebody in the Chinese government complained, and with US stocks deep in the red, it seems the Trump Administration was perceptive.

After all, the point is to convince the public not to panic.

* * *

Update (1130ET)As the number of confirmed coronavirus cases nears 650 (the latest count put the number at 647), the US State Department has decided to reassure Americans that they are ‘safe’ from the virus.

China has nearly competed its quarantine of four cities in Hubei, even as experts warn it won’t be enough. As millions prepared to travel, George Gao Fu, head of the Chinese Center for Disease Control and Prevention, warned the Chinese public to stay home during the holiday season, warning that this was a “crucial time” to stop the virus. 

With 444 confirmed cases, Wuhan remains the epicenter of the epidemic. Reports about another virus-related death are circulating on social media, along with a terrifying video of first-responders in full-body gear treating an individual who had seemingly collapsed in the middle of the road.

https://twitter.com/kamerknc/status/1220384112508272646

That’s not exactly reassuring.

Meanwhile, in Wuhan, shortages of medical supplies and facemasks are already prompting hospitals, universities and charities to reach out to the surrounding area for donations.

But sure – everything is under control.

* * *

Update (1045ET): Just in case you had plans to celebrate LNY at a fish market in Wuhan, the US government has published a travel warning advising Americans to ‘reconsider traveling to China’ amid the latest viral outbreak.

  • U.S. URGES TRAVELERS TO RECONSIDER CHINA VISITS DUE TO VIRUS

Even if you made it to Wuhan at this point, one might encounter difficulties trying to enter the city, especially as a foreigner.

* * *

Update (0950ET): The BBC is reporting that a suspected case of coronavirus has been detected in Scotland.

Note: These are only suspected cases – not yet confirmed.

https://twitter.com/JGBS/status/1220354286120468486

If confirmed, this would be the first case of the virus in the UK, and would indicate another intrusion into the developed world, this time in Europe.

The UK Health Secretary said Friday morning that the coronavirus is “increasingly likely” to hit Britain, the Times of London reports.

According to CNN, the number of coronavirus cases confirmed around the world has climbed to 622 (once again, the graphic below is ever-so-slightly out of date):

And the scramble for facemasks continues, with Hong Kong stores swiftly running out of stock, and black-market sellers engaging in widespread gouging of terrified customers.

https://twitter.com/tracyalloway/status/1220273869342167040

* * *

Update (0935ET): India’s foreign office said Thursday that an Indian nurse in Saudi Arabia has been diagnosed with the Wuhan coronavirus.

“About 100 Indian nurses mostly from Kerala working at Al-Hayat hospital have been tested and none except one nurse was found infected by Corona virus,” tweeted Vellamvelly Muraleedharan, Indian Minister of State for External Affairs, on Thursday.

https://twitter.com/MOS_MEA/status/1220301317391826951

https://twitter.com/MOS_MEA/status/1220331225748922368

Cases have also been reported in Russia, Hong Kong and Macau, in addition to all of the countries listed below:

https://twitter.com/pzf/status/1220353245534740480

Saudi Arabia’s economy depends on millions of migrant workers, a group that includes many Indians.

* * *

Update (0841ET): Beijing says the number of confirmed Wuhan cases in China has climbed to 634, bringing the global total to 641.

Here’s a breakdown of cases by region (though it might be slightly out of date, it gets the point across):

In keeping with China’s insistence that the Wuhan virus is far less deadly than the 2003 SARS outbreak, the SCMP reports that almost half of the 17 people who have succumbed to the virus so far were aged 80 or older, and most of them had pre-existing health conditions. All of those who died, 13 men and four women so far, were from the central province of Hubei, and were treated in hospitals in its capital, Wuhan, epicenter of the outbreak. Chinese authorities have quarantined most of the biggest sources in the province.

Here’s some more information on the victims, including the types of illnesses they faced:

At least nine of those who died had pre-existing conditions such as diabetes, coronary artery disease and Parkinson’s disease. Eight were in their eighties, two in their seventies, five in their sixties and one man was in his fifties. The youngest woman was 48 and had a pre-existing condition.

One 89-year-old man, surnamed Chen, had a history of high blood pressure, diabetes, coronary heart disease and other conditions. He began experiencing symptoms on January 13, including difficulty breathing but not fever. Five days later, he was admitted to the Wuhan Union Hospital with severe breathing difficulties, and tested positive for pneumonia. He died the following evening.

The 48-year-old woman, surnamed Yin, had suffered from diabetes and had also had a stroke. She first had a fever, aches and pains on December 10 and her condition slowly deteriorated. She was treated at two hospitals in Wuhan before she died on Monday.

Officials in Beijing have been cautious about making definitive statements about the origins and characteristics of the disease, including its incubation period, saying more investigation was needed.

“There’s still a need for further study of the virus over time,” said Gao Fu, director of the Chinese Centre for Disease Control and Prevention, at a press briefing on Wednesday.

“As for the impact on younger people, according to current epidemiology and what we know right now, they really aren’t susceptible,” he said.

Patients as young as 15 have been infected with the pneumonia-like virus, according to Wuhan health officials. There are now more than 570 confirmed cases, including some reported in Hong Kong, Macau, Taiwan, the United States, Japan, South Korea and Thailand.

 

* * *

Update (0800ET): CNA, an English-language news website based across Asia, has just reported that Singapore has confirmed the first case of the Wuhan coronavirus.

In a media briefing on Thursday evening, the Ministry of Health said the carrier is a 66-year-old Chinese man from Wuhan. The man arrived in Singapore with his family on Jan. 20 after flying in from Guangzhou via China Southern. The man reported having a soar throat on the flight, but no fever.

Earlier, St. Petersburg reportedly confirmed its third case of the Wuhan virus.

The man traveled to Singapore General on Wednesday, and was immediately placed in isolation. He tested positive for the virus at 6 pm local time on Thursday. Singaporean authorities have already begun a contact tree, and are isolating all those with whom the suspect had contact.

The diagnosis is just the latest indication that, even as more Chinese cities cancel LNY celebrations, too many Chinese, including Chinese from Wuhan, have already traveled abroad. And the week-long holiday doesn’t even start until Saturday.

This live NYT map of confirmed Wuhan cases appears to be out-of-date, despite having just been updated.

The number of confirmed cases is closer to 600. Still, it gets the point across.

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China Suddenly Increases Death Toll By Over 60% As Virus Jumps To Europe

Summary

Here’s a glimpse of new virus-related developments that occurred overnight.

  • China announces another 15 deaths in Hubei province

  • Total number of confirmed cases now 1,000+, 41 dead.

  • China restricts travel for 46+ million people across 16 cities as the death toll surges.

  • AFP reports that the virus has jumped to Europe, with three confirmed cases now in France.

  • Two deaths have been reported outside Wuhan.

  • Some residents displaying symptoms are being turned away from hospitals.

  • Hospitals in Wuhan make urgent pleas for help and supplies.

  • Beijing orders PLA medics to assist in Wuhan treating patients

  • UK and US governments tell citizens to avoid outbreak zones.

  • 63 suspected cases in US, Senator says 3 confirmed, with two reported so far in Illinois and California, and two suspected in Minnesota

* * *

Update (1720ET): Sky News reports that France has confirmed a third case of coronavirus.

https://twitter.com/SkyNewsBreak/status/1220832426051551233

* * *

Update (1700ET): All day we’ve been watching disturbing videos of hospital hallways littered with what appear to be dead bodies, yet the death toll from the Wuhan coronavirus hasn’t budged from 26 since Beijing reported the first two deaths outside Hubei yesterday.

Now we know why: As we suspected, the virus has been claiming more victims. But the local authorities, who promised ‘transparency’ in everything virus-related, apparently felt the need to wait until 4 am local time to drop this massive bomb: Another 15 people have died in Hubei as hospitals struggle with severe shortages of nearly everything, including doctors and nurses. That brings the total number of casualties to 41. In addition, another 180 cases have been discovered in Hubei, bringing the total number of cases over 1,000.

The latest figures show that the virus is more deadly than previously thought.

* * *

Update (1420ET): AFP reports, citing a minister, that two cases of coronavirus are now confirmed in France, as the virus officially spreads to Europe. The outbreak will give President Emmanuel Macron a desperately needed distraction from seemingly never-ending protests of his government.

Across China, fairs and other events celebrating the New Year holiday have been cancelled, meanwhile officials in Wuhan are scrambling to try a build a 1,000 bed hospital in Wuhan in under ten – some say five – days. Amid all of the terrifying videos showing what appear to be dead bodies piling up in a hallway in Wuhan (we shared the video below), reports out of Wuhan offer plenty of reason to fret: A previously healthy young man has succumbed to the virus – the first victim who wasn’t elderly or struggling with a serious co-occurring health problem.

Across China, more than 7,000 movie theaters have shuttered until further notice. CNBC reported that this could cost the Chinese box office more than $1 billion. Meanwhile, shares of Netflix rallied Friday on the belief that millions of Chinese might instead stay home and stream – even though Netflix doesn’t operate in China.

We joked about it yesterday, but today it has become a reality: Beijing has quarantined an entire province, with more than 46 million on lockdown across China.

As experts warn that there are probably closer to 4,000 cases in China alone, projections suggest that whatever governments – including China – are doing to fight the virus, it likely won’t be enough to stop a global outbreak.

The WHO is still waiting on making a call, claiming that it hasn’t yet seen enough evidence of human-to-human transmission, despite the fact that this is no longer in doubt. Yesterday, the organization estimated that the Wuhan coronavirus had a Ro rating – a measure of its infectious potential – of 2, making it more contagious than the flu, but less infectious than smallpox. Here’s a table for comparison.

After his administration succeeded in pumping the market off the lows with that FAA headline, President Trump tweeted about the outbreak, advising people not to panic because China “has been working very hard to contain the Coronavirus.”

https://twitter.com/realDonaldTrump/status/1220818115354923009

He might as well have tweeted: “DON’T PANIC” in big, red, friendly letters.

As Wuhan pleads for resources and the PLA mobilizes military doctors to hospitals in Wuhan and elsewhere, reports have emerged of doctors straight up dying from exhaustion, according to the Washington Post. The Post added that Wuhan is struggling with shortages of every conceivable medical supply, from masks, to rubber gloves to personnel.

Paranoia has led to facemasks flying off the shelves across Asia, and even in New York City’s Chinatown, according to media reports. Price gouging in Hong Kong has driven prices of individual masks above $10 dollars in some cases.

One reporter at WaPo reportedly overheard a doctor in Wuhan screaming into the phone at their supervisor, allegedly begging to be fired.

“I don’t want do this job any more. Just fire me! Kick me out, send me back home,” a doctor at Wuhan No. 5 Hospital yelled into the phone, frustration and exhaustion exploding out of him. “Don’t I want to go home to celebrate the new year?” he screamed in his Wuhan accent, presumably at his boss, that he’d done four back-to-back shifts as China made plans for the Lunar New Year holiday, which began Friday. “Don’t we want to live, too?”

At least one US senator, Florida’s Rick Scott, is pushing President Trump to declare a national public health emergency over the virus – but of course Trump won’t do that, at least until the market has closed.

* * *

 

Update (1320ET)CNBC’s Eunice Yoon has provided the latest horrifying update of the spread of the Coronavirus in China:

China quarantines 16 cities, total population 46 million

  • Wuhan: 11mln

  • Huanggang: 7.5mln

  • Xiangyang: 6.1mln

  • Yichang: 4.2mln

  • Jingmen: 3mln

  • Xianning: 2.8mln

  • Huangshi: 2.5mln

  • Suizhou: 2.2mln

  • Xiantao: 1.6mln

  • Ezhou: 1mln

  • Qianjiang: 962k

  • Enshi: 780k

  • Xiaogan: 780k

  • Zhijiang: 550k

  • Dangyang: 560k

  • Chibi: 530k

That is larger than the entire 39.5 million population of California.

*  *  *

Update (1220ET): Minutes after the NYC Mayor’s office issued a statement saying the risk of outbreak in the city was ‘low’, Gov. Cuomo’s office revealed that one case of suspected coronavirus in NY state had been confirmed negative, while three others are still being tested.

Stocks dipped to their lows of the session shortly after noon as investors finally realized that officials claiming that the virus is ‘under control’ were merely bluffing.

The Dow is now decidedly lower on the week:

The DoD said it’s following CDC guidance on the virus.

* * *

Update (1120ET): A senator has reportedly told the press that the CDC is about to confirm a third case of coronavirus in the US. Unsurprisingly, stocks aren’t taking the news too well.

  • SENATOR SAYS CDC ABOUT TO CONFIRM 3RD U.S. CASE OF CORONAVIRUS

That Senator has been revealed to be none other than Connecticut’s Dick Blumenthal, a lawmaker with such a reputation for vanity, that it’s hardly a surprise that he would murder stocks for his own political gain.

Following the briefing from health officials, Bloomy said the US needs “better relations with the Chinese” to help deal with the epidemic, a indirect slight at Trump.

And dozens more cases are still being investigated.

And just like that, stocks go “whoosh”.

Meanwhile, in New York City, Mayor Bill de Blasio is warning that the risk of a viral outbreak in his city is low.

* * *

Update (1010ET): The CDC has confirmed the second case of Coronavirus in a Chicago resident who recently traveled to Wuhan.

https://twitter.com/MarParNews/status/1220724239260618754

Other cases have been rumored in Texas and at LAX, but apparently none have been confirmed. The first case emerged earlier this week in Washington State. Fox News has confirmed that Senators are being briefed on the virus Friday morning.

Stocks have turned red on the news…here we go.

* * *

Update (0930ET): Yep, everything is under control. This should be over soon…

https://twitter.com/HuXijin_GT/status/1220714316325777408

Think Chinese authorities are immediately jumping on every case of coronavirus? Think again…

From the SCMP:

After more than a week of worry and multiple talks with doctors, a woman from Wuhan was relieved on Thursday when her uncle – a suspected coronavirus patient – was finally admitted to hospital.

Wang, who declined to give her full name, said her uncle began coughing on January 15. Five days later, he went to Tongji Hospital and after having a CAT scan was diagnosed with viral pneumonia, though the doctor said he could not be sure if it was the new coronavirus.

“They said it might be, but also might not be, but didn’t have any test kits to make sure,” Wang said. “They could only base the diagnosis on blood tests and the CAT scan.”

After being given some medicine, Wang’s uncle was sent home.

* * *

Update (0820ET): Over the past few hours, health officials in Nepal have announced that a student who has returned from Wuhan has been found to carry the virus. Meanwhile, officials in India are reporting three suspected cases.

As the response to the virus overwhelms hospitals in Wuhan, the central military command of the PLA, China’s army, has ordered medical personnel based in the city of Wuhan to travel to the city’s hospitals and aid doctors and nurses struggling to keep up with the influx of cases.

The order comes as experts estimate that some 4,000 individuals may have already been infected across the country.

According to the SCMP, 40 medical officers from the city’s military hospital have already started working in the intensive care unit of Wuhan Pulmonary Hospital. The 40 officers are reported to be an advance party and the General Hospital of the People’s Liberation Army in Beijing will send more in the coming days.

Staff at the PLA hospital swore an oath earlier this week promising to do everything they can to combat the virus.

A medical practitioner who worked at the PLA General Hospital said that the hospital would send staff from its infectious disease centre to help run the new hospital and quarantine centre in Wuhan once it was ready.

Meanwhile, video shows another medical team from Shanghai boarding a military transport destined for Wuhan.

https://twitter.com/alert5/status/1220724798382387201

Staff there held an oath-taking ceremony on Wednesday pledging they would do their utmost to win the battle against the new coronavirus.

“We all swore that we will follow the order, make sacrifices if necessary and do our jobs as required and would not be afraid to suffer or even to die,” he said. “[We were told that] we triumphed over Sars and we will win again this time.”

As we noted below, Wuhan is scrambling to build a makeshift hospital from scratch on the outskirts of the city as a quarantine and treatment center for coronavirus patients. Beijing’s ability to quickly expand capacity to treat infected individuals was said to be instrumental in the fight against SARS 17 years ago.

* * *

Asian markets closed on Friday for the Lunar New Year holiday, which officially begins on Saturday. But in China, the Communist Party leadership are scrambling to contain the virus as 13 cities in Hubei Province are now under quarantine, meaning more than 40 million Chinese will be forced to spend the holiday week at home, the South China Morning Post reports.

Health authorities reported 66 more suspected cases overnightas a result of broader criteria for people showing symptoms, bringing the total number of suspected cases to 236 as of Friday morning in Hong Kong. Among those cases, more than 100 are now in isolation. Across China, Hong Kong and Macau, authorities have closed schools and suspended the start of the new semester. Even Disneyland Shanghai has announced plans to close for the holiday.

https://twitter.com/XinqiSu/status/1220590219918901248

As authorities in Beijing try to convince the world that they have the outbreak under control, researchers in the US and UK have warned that the total number of cases might be closer to 4,000, according to the New York Times.

South Korea and Japan have each confirmed their second cases, while the US worries that a second case may have been discovered in Texas. Reports that an individual is under quarantine in Sydney have also emerged, while fears about a virus case in New Jersey have already been debunked.

https://twitter.com/SkyNews/status/1220657164462837762

Just as we expected, a shortage of facemasks that inspired hoarding and price gouging in Hong Kong has now spread across Asia, according to the Japan Times.

While they’ve disappeared from the Chinese Internet, videos showing sick or collapsing patients and health-care workers are flooding US social media.

https://twitter.com/BNONews/status/1220648525064822784

 

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56 Million Chinese On Lockdown As Virus Spreads To Australia, Malaysia

Latest videos from Wuhan, China

 

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Coronavirus Latest: 2,799 Global Cases Resulting in 80 Fatalities

  • In China there are now 2,744 confirmed cases as of 1200am on Jan 27, an increase of 39% resulting in 80 deaths, up 43%. This is  triple the 916 mainland China cases reported late on Friday. Across the globe, there are now 2,799 confirmed cases, including the 80 Chinese fatalities, so far nobody outside of China has died from the disease.
  • Some very unpleasant math: in China’s Hubei province where Wuhan is located, epicenter of the coronavirus breakout, there have been 1,423 cases and 76 deaths, resulting in a mortality rate of over 5%.
  • 5th US Coronavirus infection confirmed by CDC in 4 states (AZ, CA, IL, WA)
    • CDC calls the virus an  “emerging public health threat,” adding that the threat is “serious.”
  • Incubation is asymptomatic, contagious, and can be as long as 14 days
  • 5M may have left Wuhan for Lunar New Year
  • 1st case was Dec 1 NOT Dec 31 so infect pop may be much bigger
  • US, Russia, Thailand begin plans for evacuation
  • Premier Li Keqiang charged with leading government’s task force
  • 3 Beijing hospitals using AIDS drugs to treat virus
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S&P 500 reaction

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Why Are Markets Rallying Despite Coronavirus?

Equities Shrug Off Coronavirus Risks

Looking at the recent march higher in equities prices, there is little evidence to suggest the world is currently experiencing an outbreak of a deadly disease. The coronavirus infection named COVID-19, saw its first confirmed cases in China in December last year. Since then, the virus has spread to: all 31 provinces in China, across 16 countries in Asia, and across 28 globally with over 500 confirmed cases outside of China.

Death Toll Increase Mainly Confined to China

The hardest hit is China itself. The latest data released from the Chinese National Health Commission over the weekend noted that as of Sunday the number of new cases rocketed by over 2000 country-wide. 1900 of these in Hubei province. The death toll in China had jumped to 1,770. This was a 105 victim increase from the previous day. The majority of deaths in China continue to be located in Hubei province. This is home to the city of Wuhan where the virus was first confirmed.

Global Impact Reduced

Despite the increase in cases and deaths in China, the global spread has been far slower. Deaths outside of China are limited to 5 so far. The far lower mortality rate is a key driver behind the resilience in equities and commodities markets. As news of the virus broke, risk assets were hard hit initially  However, over the last few weeks, it has become clear that the harshest impact of the virus has been limited to China.

Chinese Data in Focus

Risk assets have been able to recover with the global impact of the virus now projected to be far less than originally anticipated. The main focus is now on how much damage the Chinese economy will suffer as a result of the virus. Incoming data sets over this month and next will be highly important. The risk is of plenty of volatility in risk assets. The PBoC has been active in easing to help buffer the economy. However, given the scale of the drop in activity there, data sets could be significantly weaker. This could then start to feed through into resumed downside in equities and commodities prices.

Technical Perspective

spx500

The SPX500 continues to rally into fresh highs. However, the break above the 3358.86 level has been labored. Price action is now moving within a rising wedge pattern. With the RSI indicator showing bearish divergence, there is now a risk of a reversal lower. This could see price quickly retesting the 3358.86 level. Below there, the next level to watch is the 3337.75 zone.

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IMF: Too early for accurate figures on coronavirus impact on global growth

The IMF is still reviewing its projections for growth in China while looking at the impact of the epidemic on the global economy, Georgieva told a news conference in Morocco’s capital Rabat, where she discussed preparations for IMF and World Bank Group meetings to be held in October 2021 in Marrakech.

The IMF said last month global growth is projected to rise from an estimated 2.9% in 2019 to 3.3% in 2020 and 3.4% in 2021. “We are still hoping that the impact will be a V shaped curve” with a sharp decline in China and sharp rebound after the countainment of the virus, she said. “But we are not excluding that it might turn to be a different scenario like a U curve where the impact is somewhat longer.”

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The Dow just logged its worst 2-day percentage drop in two years

The U.S. stock-market rally is unraveling, with a period of historic gains coming to a screeching halt, as fear that the coronavirus epidemic may reach America rattles Wall Street. The Dow Jones Industrial Average DJIA, -3.15% was off 929.92 points, or 3.3%, at its Tuesday nadir, at 27,030.88, a day after the blue-chip benchmark suffered a drop of more than 1,000 points, representing the third worst one-day point drop in the index’s 124-year history.

The Dow just logged its worst 2-day percentage drop in two years

The Dow finished Tuesday down nearly 880 points to mark its sharpest-ever two-session slide in point terms, losing about 1,910 points, according to Dow Jones Market Data. The fall also marked the largest two-day percentage slide for the index since the period ended Feb. 5, 2018. The skid puts the Dow 8.4% away from its Feb. 12 record-high close of 29,551.42. That means the Dow is approaching correction territory at 26,596.28, defined as a drop of at least 10%, but not greater than 20%, from a recent peak.

Meanwhile, the S&P 500 SPX, -3.03% and the Nasdaq Composite COMP, -2.77% finished sharply lower. The S&P 500 is off 7.6% from its recent record high on Feb. 19 and has shed nearly $1.74 trillion this week, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, in a Tuesday research note. The Nasdaq is off 8.6% from its Feb. 19 all-time closing high. Put another way, its recent decline is 1.4 percentage points from representing a correction. That would occur at the 8,835.46 level.

Bond investors fear that the coronavirus might result in a global economic slowdown that might wash up on U.S. shores as a full-fledged recession. MarketWatch economics writer Rex Nutting explained the potential for an uncontained outbreak of COVID-19 this way: “Much of the immediate economic impact of a pandemic can be traced to the efforts to contain it, rather than from the effects of the disease itself. As we attempt to quarantine those who might spread the disease, we shut down a lot of economic activity.”

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Trump blames health officials’ warnings in stocks drop

Trump blames health officials’ warnings in stocks drop

The president has reportedly cautioned aides against forecasting the impact of the virus over fears that stocks could fall further, The Washington Post said. Stocks plunged on Tuesday, with losses accelerating after health officials warned that the coronavirus is “likely” to continue to spread throughout the United States, warning that the American public should “prepare for the expectation that this is going to be bad.”

“Ultimately we expect we will see community spread in the United States,” Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, told reporters on a conference call.

The Dow and S&P 500 dropped more than 3% on Tuesday, for the indices worst 2-day drops since Feb. 2018 and Aug. 2015, respectively.

Stocks came under pressure even after National Economic Council Director Larry Kudlow said the coronavirus-triggered selloff has created a buying opportunity for long-term investors. “The virus story is not going to last forever,” Kudlow said on CNBC’s “The Exchange.”

“To me, if you are an investor out there and you have a long-term point of view I would suggest very seriously taking a look at the market, the stock market, that is a lot cheaper than it was a week or two ago.” He also reassured investors that the U.S. has “contained” the coronavirus and it will likely not be an “economic tragedy.”

On Monday the president tweeted that the coronavirus is “very much under control in the USA” and that the stock market is “starting to look very good.” Trump is expected to meet with aides on Wednesday to discuss the matter, the Washington Post said. The White House did not immediately respond to CNBC’s request for comment.

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We have all four boxes that triggered the 1987 “Black Monday” panic sell off

Here’s Why This Is Not A Stock Market Dip You Want To Buy

Still, there are stock market bulls encouraging traders and investors to buy the dip. In a CNBC interview Tuesday, top White House economist Larry Kudlow said: To me, if you are an investor out there and you have a long-term point of view I would suggest very seriously taking a look at the market, the stock market, that is a lot cheaper than it was a week or two ago.

While Donald Trump’s election chances figure into Kudlow’s calculus, some investors with money riding on it are still bullish too. JP Morgan’s year-end S&P 500 target of 3,400 projects the broad equities index to rise 10% above Thursday’s level. Markets are increasingly certain of a federal funds rate cut in March. The CME FedWatch tool indicates the Fed funds futures market forecasts a 70% chance the Federal Reserve will reduce interest rates at the March policy meeting.

Markets are increasingly certain of a federal funds rate cut in March. The CME FedWatch tool indicates the Fed funds futures market forecasts a 70% chance the Federal Reserve will reduce interest rates at the March policy meeting.

On Feb. 3, several days ahead of the stock market’s spectacular rout, Allianz adviser Mohamed El-Erian warned not to bet against coronavirus: The coronavirus is different. It is big. It’s going to paralyze China. It’s going to cascade throughout the global economy. And importantly, it cannot be countered by central bank policies. So I think we should… try and resist our inclination to buy the dip.

There could be more pain ahead for the stock market between now and the Fed’s March policy meeting. In fact, the market’s movements over the past week checked off all four boxes that triggered the 1987 “Black Monday” panic sell off.

That was the stock market’s worst one-day loss in history.

Here is what happened just before the crash:

1. The market makes huge gains beforehand…
2. Market euphoria reigns…
3. Sharp downturns precede the crash…
4. Financial innovation backfires…

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Markets tumble for the 7th day

Early European trade sees a recovery attempt following a carnage during the Asian session but so far all these recoveries were traps for the bulls. For sure investors are paralyzed with fear as number of ex-China cases increases dramatically – to nearly 1000 yesterday. With the virus now present across the globe we could be just ahead of numerous travel and business limitations, including mass cancelations of sporting and cultural events.

US500 tries to rebound from the 2900 handle but it already crashed through all the mid-term supports and the next strong support level is at a distant 2730 points.  

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World finance officials to consider how to cushion economies against coronavirus

* G7 officials to hold conference call

* China frets about new cases arriving from abroad

* South Korea president declares war on virus

* Interactive graphic tracking global spread of coronavirus: open Link in an external browser.

*

BEIJING, March 3 (Reuters) – G7 finance officials will on Tuesday discuss ways to bolster their economies against the impact of the spreading coronavirus outbreak, but are not expected to specifically call for new spending or coordinated interest rate cuts, a G7 official said.

Finance ministers and central bank governors from the group will hold a conference call at 1200 GMT to discuss the outbreak. But according to the official, who declined to be identified, a statement they are crafting does not detail any fiscal or monetary steps

Global stocks and oil prices have made some recovery afters policymakers indicated willingness to help ease the economic fallout from the coronavirus, while worries about the outcome of the Group of Seven heads’ discussion kept a lid on gains.

“This is a tug of war between hope and fear. Central banks are giving hopes with their potential stimulus,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.

“The question is what they will do? Monetary policy is already very loose and interest rates are very low,” he said.

Global stocks suffered a rout last week on growing fears that the disruption to supply chains, factory output and global travel caused by the epidemic could deal a serious blow to a world economy trying to recover from the U.S.-China trade war.

The G7 official, who has direct knowledge of the deliberations, told Reuters the officials would pledge to work together to mitigate the damage to their economies from the fast-spreading epidemic.

The language of an expected statement was subject to change as it was under discussion, the official said.

The coronavirus, which emerged in the central Chinese city of Wuhan late last year, has spread rapidly around the world over the past week, with more new cases now appearing outside China than within.

There are more than 90,000 cases globally, with more than 80,000 of them in China, and infections appearing in 77 other countries and territories, with Ukraine the latest country to report its first case.

China’s death toll is at 2,943 with more than 75 deaths elsewhere.

New cases in China have been falling sharply, with 125 reported on Tuesday, thanks to its aggressive measures to stop the spread of the disease.

After what critics said was an initially hesitant response to the virus, China imposed sweeping restrictions, including suspensions of transport, sealing off communities affecting tens of millions of people, and extending a Lunar New Year holiday across the country.

 

QUARANTINE ORDERS

Now China is increasingly concerned about the virus being brought back into the country by its citizens returning from new hot spots elsewhere, and authorities on Tuesday asked overseas Chinese to reconsider or minimise their plans to travel home.

All travellers entering Beijing from the hot spots of South Korea, Japan, Iran and Italy would have to be quarantined for 14 days, a top city official said. Shanghai has introduced a similar quarantine order.

The most serious outbreak outside China is in South Korea where President Moon Jae-in declared war on the virus, ordering additional hospital beds and more face masks as cases rose by 600 to nearly 5,000. Thirty-four people have died in South Korea.

In the United States, the virus is now believed to be present in at least four communities in the Pacific Northwest – two in northern California, one in Oregon and one in Washington state – and authorities there are having to go well beyond the quarantine of infected travellers and tracing of close contacts, which until now had been the response.

Six people have died in the Seattle outbreak. The U.S. Centers for Disease Control and Prevention lists more than 90 cases across the United States, a large bulk of them patients who were repatriated from the Diamond Princess cruise liner that had been quarantined in Japan.

Iran, another badly hit country, reported infections rising to 1,501, with 66 deaths, including a senior official.

The death toll in Italy jumped to 52 on Monday from 34 the day before and the total number of confirmed cases in Europe’s worst-affected country climbed past the 2,000 mark.

Germany reported 31 new infections, taking its tally to 188.
Writing by Robert Birsel; Editing by Simon Cameron-Moore

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Why Coronavirus Isn’t Such Terrible News For The S&P 500

 

With the market already down nearly 15% from its recent high, the coronavirus-triggered plunge may turn into one of the fastest bear markets to hit U.S. stocks ever. But, believe it or not, a passive investment in the S&P 500 may be the best way to ride out and ultimately profit from the storm.

As coronavirus spreads, the problems at these companies will worsen and cyclical sectors that track closely with global gross domestic product growth will also suffer. This morning, the industrial and materials sectors went into the red, posting negative returns for the past 12 months. They joined energy, down 31% over the year, as the only sectors to lose money. The S&P 500 is still ahead 7% from where it was a year ago.

Here’s the good news: Your index fund already predicted all of this.

Even before the coronavirus became a global crisis, the S&P 500 was under-weighted in the types of stocks that were most vulnerable to the outbreak and it was heavily over-weighted in the software, internet, online retail and social media companies that are likely to either weather the storm, or thrive.

 

Almost a quarter of the S&P 500 index is comprised of the ten biggest companies in America by market capitalization: Microsoft, Apple, Amazon, Facebook, Berkshire Hathaway, Alphabet (Google), JPMorgan Chase, Johnson & Johnson, Visa and Wal-Mart.

On the other hand, the types of businesses that are in free-fall, such as energy and retail, hardly make a dent as a weighting in the S&P 500. For instance, the entire energy sector entered 2020 at about the same weight as Apple alone. Thus energy’s 20% plunge over the past month is causing relatively minor pain. Retailers like Macy’s, Gap and Nordstrom that may struggle further are also minor weightings, in addition to small-sized drillers like Cimarex Energy, Helmerich & Payne, Cabot Oil & Gas and Devon Energy. Indexes tracking smaller stocks, like the Russell 2000, or beaten down value stocks, have also fallen more than the S&P. Year-to-date, they’ve dropped 11.7% and 14.3%, respectively, while S&P has shed 7.8%. The Dow Jones Industrial Average is off 14% from a record high close on February 12.

While holders of the S&P have sidestepped the worst stock implosions since the outbreak, they’re also big holders of potential beneficiaries.

Johnson & Johnson, UnitedHealth Group and Procter & Gamble are about 1% index weightings and they could see an uptick in sales as people all the world prepare for the virus’s spread. If more people begin to work from home, companies like Microsoft will benefit as demand spikes for its suite of cloud products including email and remote working services. Wireless carriers like Verizon and cell tower giants SBA Communications and American Tower will benefit from rising smartphone and internet activity. Any surge in online sales will help ecommerce companies like Amazon and logistics warehouse operator Prologis as well as another S&P 500 member Equinix, one of the largest data center real estate investment trusts. Streaming services like Netflix and internet giants like Google and Facebook will also see a boost in eyeballs from masses of homebound Americans.

You guessed it. Each of these companies has high weightings in the S&P 500.

 

The index is well-prepared for the coronavirus because it is designed to track changes in the economy, which may actually be accelerated by the outbreak. The S&P 500 weights companies by market capitalization, meaning it increases exposure to companies with improving business prospects and rising stock prices, and it decreases exposures to those with worsening fates.

Already, people have been avoiding department stores and brick and mortar retailers, and driving more efficient vehicles, cutting back on oil and gas consumption. Movie theaters are being made obsolete by streaming media services. By design, the S&P has done a near-perfect job keeping up with these changing economic trends and consumer habits.

 
Warren Buffet: 

 

 

In 2007, at the outset of the financial crisis, Berkshire Hathaway’s Warren Buffett famously predicted an ordinary investor in an S&P 500 index fund would beat just about any hedge fund on Wall Street. Buffett offered a $1 million bet—payable to charity—to anyone who thought they could pick hedge funds that would beat the index over the ensuing decade.

A hedge fund investor named Ted Seides took up Buffett’s wager. It wasn’t even close. Seides conceded a loss in 2015, waving a white flag of defeat before the decade was over. The S&P returned 8.5% annually over that ten-year stretch, while the average hedge fund failed to deliver half that return.

The reality is as follows: Market corrections like the current one are frightening. But sometimes, the smartest play is also the easiest. With an investment in the S&P 500, the house is on your side.

 

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Nicolas
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World stocks set for worst week since 2008 financial crisis

Warning signs still flashed, with Italian government bonds tanking again on Friday morning, after suffering their worst day in nine years in the previous session. Italy and Spain meanwhile imposed trading curbs, banning short-selling of dozens of stocks, to stem a market rout triggered by the coronavirus outbreak that saw European stock exchanges post their worst-ever losses on Thursday.

The MSCI world equity index, which tracks shares in 49 countries, hit a three-year low in Asian hours and is down 16% this week so far — its worst run since October 2008 when Lehman Brothers’ collapse triggered the global crisis. MSCI’s main European Index was up 2.7% at the open, after having fallen more than 20% over the past week.

Earlier, Japan’s Nikkei fell 10% before paring losses to close 6% lower. Australia’s S&P/ASX200 had its wildest trading day on record, falling past 8% before surging in the last minutes of trade to settle 4.4% higher at the close. MSCI’s broadest index of Asia-Pacific shares outside Japan wobbled 0.1% higher by late afternoon after falling more than 5% in morning trade. The slight recovery came as central banks from the United States to Australia pumped liquidity into their financial systems and as hopes grew that U.S. Democrats and Republicans could pass a stimulus package on Friday.

Italy is one of the worst-hit countries in Europe from the spread of coronavirus, with the death toll shooting past 1,000 people and the government ordering blanket closures of restaurants, bars and almost all shops. Oil steadied on Friday, after having dropped 7% on Thursday on U.S. President Donald Trump’s surprise travel ban and on a flood of cheap supply coming into the market from Saudi Arabia and the United Arab Emirates. Major currencies stabilised after furious dollar buying overnight, with the euro finding a footing around $1.1200 and the Aussie recovering to $0.6300.

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