We expect the market to open seriously down this morning for several reasons, not the least of which is the seriousness of COVID-19 is dawning on people other than us.
As of writing time, Dow futures were down 178 points on the Dow, but we will see how the Fed plays the repo and reverse-repo game that has been flooding cash into markets. Another factor: It’s a shortened trading week and Europe got off to a lousy start.
The moment of anagnorisis (recognition) is not here…yet. But the numbers are brutal. Let’s run through them:
The number of deaths is up to 1,874 while the number of confirmed cases is up to 73,336. Our back of the envelope scribs hint at 114,37 cases and 2,654 dead by Saturday, though it may be Sunday. CNBC calls it this way: Japan is on ‘cusp’ of outbreak, France warns of pandemic risk.
The Princess Cruise ship in Japan is also continuing to devolve: 454 onboard cases. Some passengers are headed for Omaha.
While many passengers elected to come back to the US when they had a chance, others thought the quarantine would be over by now, so they stayed. Stupidly, we think, not realizing the health-conscious Japanese are not going to let potential cases land in their country. When there are two weeks with zero new cases onboard? Well, yeah, then there’s something to talk about. Now, though? We just don’t see the ‘Mericans hitting the Ginza yet.
Let’s Focus on Xi’s Problem.
You don’t want to be the President of China this week. Xi Jinping is walking the edge of a razor with his country.
IF he lets everyone in quarantine go back to work this week, he will save exports, diminish global supply chain impacts and keep the global economy from imploding.
BUT if everyone goes back to work – and we already know the quarantines are not long-enough based on video leaks – THEN Xi will face an even BIGGER problem when the back-to-work crowd begins spreading the disease like wildfire.
We hate to mention it, but how long does the virus remain active on surfaces of goods (and packaging)? This is one data point where the CDC guidance has been woefully lacking.
My consigliere pointed out three weeks back (or longer) while governments are putting on the “happy-face” and telling people not to worry, behind the scenes it has been apparent to us that utter panic is afoot.
If THIS Isn’t Enough…
Xi’s other big worry is showing up “out west” where that locust plague that is set to drive down global food stocks has shown up.
What’s a Sensible Personal Defensive Posture?
It depends who you ask. The U.S. Government’s performance so far has been terrible. While a sensible thing to do in early to mid-January would have been to tell Americans that there would be a 10% risk of a two week quarantine by June – based on early projections – instead, government has made sequential errors, as we see it.
Failing, for example, to throttle-back international air travel early, and lots of other easy decisions which – while they would have devastating impacts on the bubble stock market – would nevertheless have potentially reduced ultimate body counts by this time next year.
Five cases of the virus have been confirmed in British Columbia and yet my son was simply waived-through returning Monday from a concert up there.
Maybe its the “old newsman genes kicking in” – or the odd way the Universe seems to take care of me – but from the perspective of this morning, it’s damn strange how I turned into a serious tool collector two or three years back. And then? I started collecting all manner of “how to make it books.” 3D printer, spools of filament…all that I could think for for a “civilization restart.” Tools one might need out here in the sticks.
As a Nation we don’t think long and hard-enough about how much crap comes from China. My consigliere pointed out over the weekend (in response to my Fall-Back Bike and Fix-It Shop plans), that so far as we know, there’s not a single bicycle inner tube being made in the USA, anymore. Nor bike tires, let alone the good ones made with Kevlar linings and such. (If you know otherwise, let us know…that might b e an interesting stock play, for sure!).
Already this morning I’ve gone through another couple of hunksy’s on the Zon. I looked at everything I could think of around here: We have the gas power tools in working order (again, curious how that timing worked out!!!).
When I looked at what I expect to see break this year there were several items that went on the “let’s purchase now, rather than later” list.
For example, my 50-foot air hose retractor reel in the shop is on its last legs. I can repair (*again) but sooner, or later, it would be replaced. The new one, I expect, will also be “made in China” but if I get five years out of it, that’d be fine.
Liquid rubber roof patch (Five gallon bucket) is another interesting bet. Since I just chased down one roof leak, I’m in no hurry to play that game again. And while most roofing materials are still made in the USA, we will likely see a lot of “context switching” depending on how far “down” China goes.
In other words, if you make roofing material today, what are the Chinese goods that might come off line that could be manufactured with (roughly) the same equipment? Business will follow the money – and demand.
Suddenly, my recent (November of last year on) picking up of Popular Mechanics “Shop Notes” from the 1930’s through 1960″s has become fortuitous, as well. In depth articles on raising your own chickens. And since we have to keep raccoons away, T-posts and Chicken Wire down at Tractor Supply are also largely made where?
Granted, a lot of this is “stuff” we would have purchased later in the year, anyway. And when you consider it, the virus outbreak may be having some of the impacts of modern advertising: Pulling future demand into the present.
We don’t know how long the shelves will remain full, but for now, the massive outbreak of “consumer locusts” has not gotten wind of how serious things could become as we move into summer. Infections compound – and so does the death toll..
So, when I order a tub, or two, of PVC pipe cement, it’s because while I expect it to be in good supply, it may only be a matter of time until the U.S. supply chain impacts begin to get really serous.Whnat happens when “online and overnight” hiccups?
When they do? I expect we will see a very large inflationary hit on all manner of products. Yeah, the output from China can (and would) be replaced. But, it sure as hell won’t happen overnight. And in the interest, we like our comforts.
So, I’m back to eyeing (another) $400-class 65-inch TV. Two-day delivery right now. By September? Will there be any?
Not a pleasant wake-up to Monday-on-Tuesday, but trying to keep one move ahead of the mob is something we’ve done very well here since 1997. And we hope to do a good bit longer.
Is there more? Oh, hell yeah.
For example, you need to block some time to do a Google search on “cytokine storm” and various supplements. It will quickly become apparent what may be useful to at least slow down a storm. And what about anti-diarrheals? Yes, we got some of that landing today. Ever read up on how bismuth works in vivo? Time’s a wasting. How’s your stock of chicken soup?
And most important of all? Hibi-clens, bleach, nitrile gloves. and a full freezer so you can cut off the outside world for a couple of months, if it comes to that.
We don’t say that it will…don’t misunderstand. But I’d rather spend $500 on “what-if” contingencies NOW and have what might be useful, than NOT have something and really, really need it later.
A trip to the lumber yard this week will top off cabinet-making supplies. Our weekend “making” article will be focusing a bit on how to make useful things around the house.
Do you have this year’s garden seeds in hand, yet? L-O-C-U-S-T-S!!! Got it?
We plan to have ours in the ground in the next three weeks. Oddly, I bought our soil amendments last fall…again way early and knowing they would be used. (Still, Elaine thought I was nuts at the time, but I know from 71 years that if you listen with your heart, everything will work out just fine. We are all blessed if we just ask and listen.)
Sure, we’ll do some short-news snips now, but I can’t tell you how important it is to thinking strategically at this time in world history. Those who can and do ought to quickly become apparent. there’s always been a “quick and the dead.”
Useless News Mostly
We are continually amazed at what mind-numbing crap passes for news when personal futures can see a real by-God threat on the horizon. Two if you count virus and locusts/global food shortage. Remember: Sun’s doing cold on us…less blooms to come.
The best politicians money can buy: Bloomberg to join Democratic debate amid poll surge. Cue Vanna White “ Big money! Big money!” while off-stage someone yells ‘Re-screwing Bernie!!!’
There go our travel plans, lol: Amsterdam considers banning tourists from cannabis cafes. We’ll have to figure some other way for the world to go up in smoke, I reckon.
Where to send your resume: Fortune’s 100 best big companies to work for. Anyone need a prigish writer who works from home?
Off to work on the 1929 replay charts for Peoplenomics tomorrow…
Write when you get rich/ Keep your moral up and your head down. The NY Fed just rolled $78.55 billion in via repo;s.