Stocks Give Up “Virus Is Contained” Gains

So much for the belief that this is all “contained.”

The farcical thinking in last night’s futures trading has been erased as it is clear the Novel Coronavirus is anything but “contained.”

With Trannies hit hard (Boeing not helping) and the rest of the cash markets giving up gains…

And with bond yields plumbing the post-Soleimani missile strike spike lows, stocks have a lot of explaining to do here…

Source: Bloomberg

As Goldman warns, the situation could worsen in the near term, given lags between initial infection to the reporting of cases, and the intensity of travel in the coming week within and around China. In particular, 2020Q1 consumption growth in the region faces downward pressure if trips are canceled and travel is curtailed.

While the severity of the economic impact is unknown, it is likely to be short-lived should it follow the pattern of historical cases. In the SARS case and other recent outbreaks (e.g. H1N1, H7N9), the trough in activity typically occurred 1-3 months following the outbreak.

Increased public awareness, advancements in health technology, and better practices among both health professionals and government agencies may be mitigating factors relative to prior outbreaks such as the 2003 SARS episode; however, transportation links and travel intensity within China have increased significantly over this period which potentially could broaden transmission.

And in case you still believe this is ‘contained’, Wuhan Hospital has set up a temporary tent to cope with a large number of patients That May Appear]…

【武汉医院搭起临时帐篷】
【应付可能出现的大量病人】

1月22日，武汉多家医院已全面戒备，搭起临时帐篷，隔离可能出现的大批病人。当地人形容跟生化危机一样。 pic.twitter.com/cP72wtAlqx

— 自由亚洲电台 (@RFA_Chinese) January 22, 2020

Locals describe it as the biochemical crisis.