Baltic Dry Index. 497 +17 Brent Crude 58.50 Spot
Gold 1643
Brexit now in effect.
Trump’s Nuclear China Tariffs Now in effect.
Covid-19 Cases 08/2/20 China 35,010 Deaths 726 (Maybe.)
Covid-19 Cases 15/2/20 China 67,101 Deaths 1,526 (Maybe.)
Covid-19 Cases 22/2/20 China 77,816 Deaths 2,260 (Maybe.)
The only thing to do with good advice is to pass it on. It is
never of any use to oneself.
Oscar Wilde
Rather than reinvent the wheel, this
weekend the best concise summary of the unfolding Convid-19 crisis reality.
Some things are too good not to share.
Be sure to visit Gail Tverberg’s site
for the excellent graphs and charts.
Easily overlooked issues regarding COVID-19
We read a lot in the news about the new
Wuhan coronavirus and the illness it causes (COVID-19), but some important
points often get left out.
[1] COVID-19 is incredibly contagious.
COVID-19 transmits extremely easily from person to person. Interpersonal contact doesn’t need to be very long; a taxi driver can get the virus from a passenger, for example. The virus may be transmissible even before an infected person develops symptoms. It may also be transmissible for a few days after a person seems to be over the virus; it is possible to get positive virus tests, even after symptoms disappear. Some people may have the disease, but never show symptoms.[2] The virus likely remains active on inanimate surfaces such as paper, plastic, or metal for many days.
There haven’t been tests on the COVID-19 virus per se, but studies on similar viruses suggest that human pathogens may remain infectious for up to eight days. Some viruses that only infect animals can survive for more than 28 days. China is reported to be destroying paper currency from the hardest hit area, because people do not want to accept money which may have viruses on it. Clearly, surfaces in airplanes, trains and buses may also harbor viruses, long after a passenger with the virus has left, unless they have been thoroughly wiped down with disinfectant.[3] Given Issues [1] and [2], about the only way to avoid spreading COVID-19 seems to be geographic isolation.
With all of today’s travel, geographic isolation doesn’t work very well in practice. People need food and medical supplies. They need to keep basic services such as electricity and garbage collection operating. Suppliers of food and other services need to come and leave the area and that tends to spread COVID-19. Also, the longer a geographic area is isolated, the larger the percentage of the people within the area that is likely to get COVID-19. The problem is that the people need to have contact with others in the area for purposes such as buying food, and that tends to spread the disease.[4] The real story regarding the number of deaths and illnesses seems to be far worse than the story China is telling its own people and the world.
The real story seems to be that the number of deaths is far greater than the number reported–perhaps 10 times as high as being reported. The number of illnesses is also much higher. At one point, facilities doing cremations in the Wuhan area were reported to be doing four to five times the normal number of cremations. Some of the bodies in the Wuhan area now need to be sent to other areas of China because there is not enough local cremation capacity.China doesn’t dare tell its people how bad the situation really is, for fear of panic. They want to tell a story of being in control and handling the situation well. The news media in the West repeat the stories that the government-controlled publications of China provide, even though they seem to present a much more favorable situation than really seems to be the case.
[5] Our ability to identify who has the new coronavirus is poor.
While there is a test for the coronavirus, it costs hundreds of dollars to administer. Even with this high cost, the results of the tests aren’t very reliable. The test tends to produce many false negatives. The virus may be present somewhere inside the person being tested, but not in the areas touched by swabs of the throat and nose.[6] Some people get much more severe symptoms from COVID-19 than others.
Most people, perhaps 80% of people, seem to get a fairly light form of the COVID-19 illness. Groups that seem particularly prone to adverse outcomes include the elderly, smokers, those who are obese, and those with high blood pressure, diabetes, or poor immune systems. Males seem to have worse outcomes than females.Strangely enough, people with East Asian ancestry (Chinese, Japanese, or Vietnamese) may have a higher risk of adverse outcomes than those of European or African ancestry. One of the things that is targeted by the disease is the ACE2 receptor. The 1000 Genome Project studied expected differences in ACE2 receptors among various groups. Based on this analysis, some researchers predict that those of European or African ancestry will tend to get lighter forms of the disease.
Bolstering this view is the fact that the SARS, which also tends to target the ACE2 receptor, tended to stay primarily in China, Hong Kong, Taiwan, and Singapore. While there were cases elsewhere, they tended to have few deaths.
[7] China has been using geographical quarantine to try to hold down the number of COVID-19 cases. The danger with such a quarantine is that once the economy is down, it is very difficult to come back to the pre-quarantine state.
Data shows that China’s economy is not reopening quickly after the extended New Year holiday finished.All businesses will be adversely affected by a lack of sales if they need to continue to pay overhead expenses. Small and medium-sized business will be especially adversely affected. Bloomberg reports that if a shutdown lasts for three months, there is a substantial chance that these businesses will run through their savings and fail. Thus, these businesses may be permanently lost if the economy is down for several months.
Also, restarting after a shut-down is more difficult than it might appear. Take, for example, a mother who wants to go back to work. She will likely need:
·
Public transportation to be
operating, so she has a way to get to work;
·
School to be open, so she
doesn’t need to worry about her child while she is at work;
·
Masks to be available, so that
she and her child can comply with requirements to wear them;
·
Stores providing necessities
such as food to be open, or she may be too hungry to work
If anything is missing, the mother is likely not to go back to work. Required masks seem to be a problem right now, but other pieces could be missing as well.
Businesses, too, need a full range of workers to restart their operations. If the inspector doing the final inspection is not available, the business may not really be able to ship finished products, even if most of the workers are back.
[8] A shutdown of as little as three months is likely to be damaging to the world economy.
Multiple things are likely to go wrong:(a) Commodity prices are likely to fall steeply, because of low demand from China. Oil prices, in particular, are likely to fall steeply, perhaps to $30 to $35 per barrel. Besides cutbacks in oil demand from China, there is the issue of a general reduction in long distance travel, because of fear of traveling with other passengers with COVID-19.
(b) US businesses, such as Apple, will find their supply chains broken. They won’t know when, and if, they can ship products.
(c) Debt defaults are likely to become more common, especially in China. The longer the slowdown/shutdown lasts, the greater the extent to which debt defaults are likely to spread around the world.
(d) The world economy is likely to be pushed into recession, without an easy way to get out again.
[9] The longer the shutdown lasts, the more likely there is to be a major collapse of the Chinese economy.
In the event of a long-term shutdown, it would seem likely that, at a minimum, a new leader would take over. In fact, there would seem to be a significant chance of major changes within the economy.For example, the provinces of China that are able to restart might attempt to restart, leaving the more damaged areas behind. In such a case, instead of having a single Chinese government to deal with, there might be multiple governmental units to deal with.
Each governmental unit might consist of a few provinces trying to provide services such as they are able, without the benefit of the parts of the economy that are still shut down. Each governmental unit might have its own currency. If this should happen, China will be able to provide far fewer goods and services than it has in the recent past.
[10] Planners everywhere have been guilty of “putting too many eggs in one basket.”
Planners today look for efficiency. For example, placing a large share of the world’s industry in China looks like it is an efficient approach. Unfortunately, we are asking for trouble if the Chinese economy hits a bump in the road. Using just-in-time supply lines looks like a good idea as well, but if a major supplier cannot provide parts for a while, then having inventory on hand would have been a better approach.If we want systems to be sustainable, they really need a lot of redundancy. Redundant systems are not as efficient, but they are much more likely to sustainable through difficult times. There is a recent article in Nature that talks about this issue. One of the things it says is,
A system with a single cycle is the most unstable because the deletion of any cycle-node or link breaks the sustaining feedback mechanism.
“A system with a single cycle” is basically similar to “putting all of our eggs in one basket.” “Deletion of any cycle-node or link” is something like China running into coronavirus problems. We probably need a world economy that consists of many nearly separate local economies to be certain of long-term world economy stability. Alternatively, we need a great deal of redundancy built into our systems. For example, we need large inventories to work around the possibility of missing contributions from one country, in the case of a problem such as a major epidemic.
Conclusion
The world economy may become very different, simply because of COVID-19. The new virus doesn’t even need to directly affect the rest of the world very much to create a problem. The United States, Europe, and the rest of the world are very much dependent on the continued operation of China. The world economy has effectively put way too many eggs in one basket, and this basket is not now functioning as expected.If China is barely producing anything for world markets, the rest of the world will suddenly discover that long supply chains weren’t such a good idea. There will be a big scramble to try to fill in the missing pieces of supply chains, but many goods are likely to be less available. We may discover quickly how much we depend upon China for everything from shoes to automobiles to furniture to electronics. World carbon dioxide emissions are likely to fall dramatically because of China’s problems, but will the accompanying issues be ones that the world economy can tolerate?
The thing that is ironic is that it is possible that the West’s fear of the new coronavirus may be overblown–we really won’t know what the impact will be with respect to people of European or of African descent until we have had a better chance to examine how the virus affects different populations. The next few weeks and months are likely to be quite instructive. For example, how will the Americans and Australians who caught COVID-19 on the cruise ships fare? What will the health outcomes be of non-Asians being brought back from Wuhan to their native countries on special planes?
For graphs and charts.
https://ourfiniteworld.com/2020/02/18/easily-overlooked-issues-regarding-covid-19/
Coronavirus: 'Narrowing window' to contain outbreak, WHO says
17 minutes ago
The head of
the World Health Organization (WHO) has expressed concern at the number of
coronavirus cases with no clear link to China or other confirmed cases.
Dr Tedros
Adhanom Ghebreyesus said the window of opportunity to contain the virus was
"narrowing".
Chinese
health authorities reported a decrease in deaths and new cases of the
coronavirus on Saturday.
But cases
are on the rise in South Korea, Italy, Iran and other countries.
Outside
China, more than 1,200 cases of the virus have been confirmed in 26 countries
and there have been eight deaths, the WHO says.
They include
two deaths in South Korea, which has the biggest cluster of confirmed cases
apart from China and a cruise ship quarantined in Japan.
On Saturday,
South Korea reported 142 new confirmed cases of the coronavirus, bringing the
national tally to 346.
---- On Friday, doctors in Italy said a 78-year-old man became the first person in the country to die from the new coronavirus, Ansa news agency reported.
Earlier
Italy had announced 16 more cases and its health minister said schools and
offices would be closed and sports events cancelled in the affected regions.
---- Dr Tedros said the number of coronavirus cases outside China was "relatively small" but the pattern of infection was worrying.
"We are
concerned about the number of cases with no clear epidemiological link, such as
travel history to or contact with a confirmed case," he said.
The new
deaths and infections in Iran were "very concerning", he said.
More
Iran confirms 13 more coronavirus cases, two deaths - Health Ministry
February 21, 2020 / 10:42 AM
DUBAI
(Reuters) - Iran confirmed 13 more new coronavirus cases and two deaths among
the group of new cases, Health Ministry spokesman Kianush Jahanpur said in a
tweet on Friday.
The new
cases comprised seven people diagnosed in Qom, four in Tehran and two in Gilan,
Jahanpur said in the tweet.
The total of
cases in Iran now stands at 18, with four of those people having died.
https://uk.reuters.com/article/uk-china-health-iran/iran-confirms-13-more-coronavirus-cases-two-deaths-health-ministry-idUKKBN20F1G2?il=0Tokyo postpones training for Olympics volunteers over virus fears
February 22, 2020 / 2:57 AM
TOKYO
(Reuters) - Organisers for the Tokyo 2020 Summer Olympics have postponed
training for volunteers because of the spread of the coronavirus in Japan.
Training was
scheduled to be held starting Saturday but will be rescheduled, the organising
committee said in a statement released late Friday.
The
postponement of training will not affect other preparations, and organisers are
not considering cancelling the games, the statement said.
Japan is
facing growing questions about whether it is doing enough to stop the
coronavirus, SARS-CoV-2, which emerged in central China late last year and has
spread to 24 other countries.
Some
investors are starting to worry the epidemic could scupper the Olympics, which
are scheduled to start in Tokyo on July 24.
More
Vietnam reports supply chain issues from virus, says may hit Samsung output
February 21, 2020 / 9:33 AM
HANOI (Reuters) - Vietnam’s manufacturing
sector is suffering supply chain problems caused by the coronavirus epidemic,
which may delay production of Samsung Electronics’ new phones, the Ministry of
Industry and Trade told Reuters on Friday.
“Car,
electronics and phone manufacturers are experiencing difficulty in acquiring
supplies and materials due to disruptions from the virus,” the ministry said in
an emailed statement.
“Vietnam
relies much on China for materials and equipment, which makes the country
become vulnerable when such outbreak happens,” it said.
More
Recruit, other event organizers pull the plug in Japan as virus concerns build
Kyodo, JIJI Feb 21,
2020
As the novel coronavirus continues to spread across Japan,
event organizers are increasingly hitting the cancel button out of concern they
might inadvertently contribute to the spread of COVID-19.Although the surge in cancellations has raised concerns about the economy and tourism, it is winning praise from risk management specialists who are calling on the public to cooperate with efforts to tame the growing epidemic.
On Friday, the ruling Liberal Democratic Party decided to postpone its annual convention at a Tokyo hotel on March 8 because of the outbreak. Around 3,000 people, including Diet members, were scheduled to attend. The LDP will continue to monitor the situation before it reschedules. In the meantime, it has decided to adopt its action plan for the year at a general meeting of all its Diet members next month.
Major job information provider Recruit Career Co. said Thursday it decided to call off its March job-hunting seminars for students graduating in spring 2021.
The unit of Recruit Holdings Co. said it made the decision for the students’ safety. Rival Mynavi Corp. is considering similar measures.
The move suggests the impact of the COVID-19 outbreak on students’ job-hunting activities, which usually shift into high gear in spring, is starting to expand.
Reports of cancellations apparently skyrocketed after the Tokyo Metropolitan Government announced Monday that it will bar thousands of general participants from running the Tokyo Marathon on March 1, restricting entry to elite runners. On the same day, the Imperial Household Agency said it canceled the annual birthday greeting for Emperor Naruhito, which was to be held on the grounds of the Imperial Palace on Sunday.
In Hokkaido, organizers of the Special Olympics Nippon National Winter Games, an athletics event for people with intellectual disabilities that was to be held from Friday to Sunday, called off the event out to prevent participants from catching the virus.
----On Thursday, the central government also announced the cancelation of Host Town Summit 2020, a pre-Olympics event that was supposed to take place in Tokyo on Saturday.
Organizers’ decisions to cancel have drawn positive reactions from social safety experts.
More
China’s passenger car sales tumble 92% in first half of February due to virus outbreak
Published Thu, Feb 20 202011:39 PM EST
Retail sales of passenger cars in China crumbled 92% on an annual basis in
the first 16 days of February, according to China Passenger Car Association
(CPCA), as the coronavirus outbreak slammed the brakes on businesses across the
country.China’s passenger vehicle sales recorded 4,909 units in the first 16 days, down from 59,930 vehicles in the same period a year earlier, data from CPCA showed, the first major figures to demonstrate just how hard the epidemic is hitting the world’s biggest auto market.
“Very few dealerships opened in the first weeks of February and they have had very little customer traffic,” it said.
More
China's Geely starts online auto sales as virus epidemic keeps buyers at home
February 21, 2020 / 8:53 AM
BEIJING (Reuters) - Chinese automaker
Geely [GEELY.UL] has launched a service for customers to buy cars online and
get them delivered directly to their homes, in a bid to drum up sales as the
coronavirus outbreak prompts buyers to stay away from showrooms.
Other carmakers like Tesla (TSLA.O), BMW (BMWG.DE) and Mercedes-Benz (DAIGn.DE) have also started to promote products heavily online in recent weeks as the health crisis escalated and authorities warned people to stay away from public places.
Consumers can order and customize their cars on Geely’s website, it said in a statement. It will also offer test drives where potential consumers will be able to arrange a drive starting from their home address in coordination with local dealerships.
The coronavirus has killed 2,236 people and stricken more than 75,400 in mainland China, and strict public health measures to contain its spread have severely disrupted business and consumer activity.
---- Geely, which is China’s most
globally-known automaker thanks to its investment in Volvo and Daimler (DAIGn.DE),
said that car production in February is around one-third of its usual monthly
output, but around 90% of workers will return to work by the end of this month,
Yang said, adding the automaker has bought facial masks for workers and
dealers.
More
This weekend’s musical diversion.
Vivaldi again but in a minor key. He was most often composing to showcase his
orphan musicians at the Ospedale della Pietà, in hopes that many the wealthy patrons attending might
hire them.
Vivaldi Violin Concerto in E minor, RV281 | Fabio Biondi Europa Galante
Ospedale della Pietà
The Ospedale della Pietà was a convent,
orphanage,
and music school in Venice.
Like other Venetian ospedali, the Pietà was first established as a
hospice for the needy. A group of Venetian nuns, called the Consorelle di Santa
Maria dell’Umiltà, established this charitable institution for orphans and
abandoned girls in the fourteenth century. By the seventeenth and eighteenth
centuries the Pietà - along with the three other charitable Ospedali Grandi
- was well known for its all-female musical ensembles that attracted tourists
and patrons from around Europe.
----The composer Antonio
Vivaldi was appointed a violin teacher in
1703 and served in various roles through 1715, and again from 1723 to 1740.
To see what is in front of
one’s nose requires a constant struggle.
George Orwell.
The monthly Coppock Indicators finished January
DJIA: 28,256
+97 Up. NASDAQ: 9,151 +152 Up. SP500: 3,226 +130 Up.
All higher again, but it’s not a buy signal I would take. The rally is
all down to the Fed monetizing at a rate of about 100 billion a month. I
continue to look on the Fed’s latest stock bubble as an exit rally, made all
the more urgent by the still increasing coronavirus crisis.
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