Author: admin

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

• Total number of confirmed cases now 900+, 26 dead.
• China restricts travel for 40+ million people as the death toll surges.
• 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.
• UK and US governments tell citizens to avoid outbreak zones.

* * *

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.

Shanghai Disney Resort closes from Saturday till further notice. pic.twitter.com/fOCvPRi52O

— Xinqi Su 蘇昕琪 (@XinqiSu) January 24, 2020

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.

Though it’s slightly out of date, this map is the most up-to-date accounting of the geographic dispersion of the virus.

S&P Global Ratings has issued a statement claiming that, if the situation worsens, the outbreak could knock 1.2 percentage points off China’s GDP. Yet, as the number of cases explodes despite the travel ban, the World Health Organization is insistent that the situation hasn’t risen to the level of a global pandemic – at least not yet.

Back in Wuhan, the center of the outbreak, conditions are deteriorating rapidly. Video purportedly showing the hospital at the center of the outbreak paints a picture of widespread misery as health care workers collapse on their feet, infection rates explode even among those responsible for treating patients. Local media has also reported that there aren’t enough testing kits and medical workers available to diagnose new cases.

There have even been reports of patients showing concerning symptoms being turned away from hospitals. Nice to see that their good ol’ socialized health care system is clearly so well-prepared for such an outbreak. Desperate for money and supplies, hospitals in Wuhan have resorted to begging the government and the public for help.

In the meantime, reports claim that China’s censors are removing all frightening videos from domestic social media outlets. There have been reports of people in Shanghai and in Wuhan being herded into makeshift quarantine camps erected near hospitals around the country. In some places, authorities are scrambling to build whole new hospital wings as fast as they can. Chinese officials are scrambling to build a whole new hospital in just five days.

China is building a new 1,000-bed hospital in five days to treat victims of the new deadly coronavirus.

Get the latest on the #coronavirus here 👉 https://t.co/j01UaC8ySA pic.twitter.com/Af3YjVciML

— Sky News (@SkyNews) January 24, 2020

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

WATCH: Video shows the situation at a hospital at the epicenter of the coronavirus outbreak; it has now been removed from China’s social media platform pic.twitter.com/uC5QYY9Z0a

— BNO News (@BNONews) January 24, 2020

Brutal https://t.co/nFao4ADFPZ

— Quoth the Raven (@QTRResearch) January 24, 2020

Not fucking good https://t.co/83jaih5eNr

— Quoth the Raven (@QTRResearch) January 24, 2020

Especially for those who have been turned away, the mood on the streets of Wuhan is turning into full blown panic as hundreds of worried patients plead with hospitals for help. ‘Please help us’ the city’s leadership begged as it implored its neighbors for help.

Typically, LNY is the most important holiday in China and celebrations typically begin the night before, which this year is Friday night.  Chinese who work typically make it home in time to prepare a meal of fried dumplings and sticky rice cakes before hosting reunion dinners with family. At midnight, Chinese typically set off firecrackers to ring in the new year.

But this year, an anxiety-laden quiet is expected instead.

“We won’t have a new year celebration tonight. There’s no feeling for it, and no food,” a Wuhan resident named Wu Qiang, told the NYT.

Qiang added that his family is so on edge, that a simple sneeze from his son set off alarm bells at home.

“I think he’s O.K., but now even an ordinary sneeze makes you worry,” Mr. Wu said. “You start to think every cough or sneeze might be the virus.”

Another woman put it more bluntly.

“Today should be the Chinese people’s happiest day,” she said, “but this sickness has destroyed that feeling.”

Whatever impact the virus had on markets seemed to reverse after the WHO decided not to label the virus a global pandemic. But as the videos and images flooding out of China look increasingly concerning, one analyst warned that the massive response to suppress the virus could be a double-edged sword.

After the State Department issued, then retracted, a travel warning yesterday, the American Embassy in Beijing advised travelers from the US to avoid Hubei Province and the surrounding area. The notice was classified as a Level 4 advisory, the most serious travel warning issued by the US government: Other Level 4 warnings issued by the State Department cover travel to Syria, North Korea, Afghanistan, Iraq, Venezuela and Yemen, among other places.

In the US, infections have popped up in Washington State and in Texas, where a student at Texas A&M is believed to have been infected.

“Drastic steps, such as city-wide quarantine measures, can be a double-edged sword when it comes to market impact,” ING senior rates strategist Antoine Bouvet wrote in morning note. “On the one hand they signal the authorities are taking the problem seriously and help containment, on the other hand, they help paint a dramatic picture to investors unfamiliar with dealing with this sort of risk.”

Authored by David Hutt via AsiaTimes.com,

When Britain leaves the European Union (EU) later this month, it will be free to chart its own independent course in foreign affairs and fulfill years of promises to build a truly “global Britain.”

That will likely entail a historic realignment of its foreign policy interests from the Middle East and Africa to the “Indo-Pacific,” one of the three “primary centers of the global economy and political influence”, after North America and Europe, according to the United Kingdom’s last National Security Capability Review published in March 2018.

The Indo-Pacific is currently home to most of the world’s largest and fastest growing economies, as well as the center of US-China geopolitical competition, which isn’t likely to dampen down anytime soon.

Where and how a refocused UK will fit into the Indo-Pacific isn’t immediately clear. Australia and Japan are two of the UK’s closest security allies, while London is also apparently keen to raise its profile among Southeast Asia’s ascendant nations, some of which are former British colonies.

Britain opened its new mission to the Association of Southeast Asian Nations (ASEAN) in Jakarta on January 15, and hopes to become an independent dialogue party to the 10-member bloc after it leaves the EU.

Unrestrained by the EU, London can soon design its own trade deals on its own terms with Indo-Pacific countries, and chart an independent foreign policy that isn’t constrained by the EU’s other 27 members.

At the same time, however, an independent Britain will be desperate for new trade deals, for which London might be forced to sacrifice some of its foreign policy goals and values.

Britain’s Prime Minister Boris Johnson gives a speech at the vote count center in Uxbridge, west London, December 13. Photo: AFP/Oli Scarff

UK Prime Minister Boris Johnson secured a resounding victory at December’s general election and his majority in Parliament should give him the political support needed to refashion the nation’s foreign policy.

His chief special adviser, Dominic Cummings, has promised to lead a monumental shakeup of the Defense Department, while the Conservative Party-led government announced in December that it will oversee the largest Defense Review of Britain’s foreign policy since 1989.

“The very nature of the UK’s future profile as an international leading actor is likely to be defined in the Asia-Pacific as a result of the country’s choices on how to engage with its complex security landscape,” wrote Alessio Patalano, an East Asian security specialist at King’s College London, in a report last year.

“As the region continues to ascend to prominence in international affairs, the UK faces a hard choice. It has to decide whether it intends to actively shape the regional security landscape, or merely to contribute in managing its transformation,” he added.

There is clearly interest in an Indo-Pacific concept within Whitehall.

The aforementioned National Security Capability Review noted that “the Asia-Pacific region is likely to become more important to us in the years ahead,” while stressing that closer attention must be paid to Japan, with which the UK signed a Joint Declaration on Security Cooperation in 2017.

A policy paper published in December 2018 by the Ministry of Defense, Mobilising, Modernising & Transforming Defence, stated that “the Pacific region is becoming ever more important to the UK, with growing trade links and regional security issues that have global implications.”

Such is the interest in a new “Indo-Pacific” strategy that a Commons Defense Committee inquiry on “UK Defense and the Far East” was held in June of last year.

A British Royal Marine looks out to sea. Photo: Crown Copyright 2019 / AFP

Patalano, who spoke at the inquiry, has advised London to formally change its terminology from the outdated “Far East” to the newer “Indo-Pacific”, just as the US has done since 2017.

Such a shift in focus wouldn’t be revolutionary. Britain still maintains a garrison of Gurkha troops in Brunei and a logistics station in Singapore, while there was talk last year of building a new base in Asia.

It is a member of the “Five Eyes” intelligence-sharing organization, and also part of the Five Power Defense Arrangements (FDPA) with Australia, New Zealand, Malaysia, and Singapore.

It is also “the sole formal multilateral defense arrangement in the region… [and] the cornerstone of our security partnership in Southeast Asia,” according to a Ministry of Defense statement from last year.

Indeed, British personnel are stationed at the FPDA’s Integrated Area Defense Headquarters in Malaysia, and conduct regular exercises with Malaysian and Singaporean troops.

With that presence, Britain has not been shy to flex its military muscles.

In 2018, it deployed warships to the region for the first time in five years, when the HMS Albion took part in a freedom of navigation operation near the disputed Paracel Islands in the South China Sea, a maneuver which Beijing labeled as a “provocative action.”

But building trade ties will be just as important as flexing military muscles. Asian states already account for roughly a fifth of Britain’s annual trade, according to UK data.

The HMS Albion sailing into a port in Vietnam’s Ho Chi Minh City in a file photo. Photo: British Royal Navy

Almost half of Japanese investment in Europe goes to the UK, while Britain is also a major export destination for many smaller Indo-Pacific states which are keen not to see trade dip after Brexit.

But negotiating new free trade deals won’t be easy, and suggestions that Britain can simply copy-and-paste existing deals the EU has completed with other nations, such as with Japan, are optimistic at best.

Shifting Britain’s strategic focus towards Asia, at the expense of other parts of the world, won’t be easy or cheap, and will likely face some pushback within Whitehall.

A more active Indo-Pacific strategy might require a new military base in the area, perhaps in Australia, which appears keen on the idea. Australia’s defense chief suggested last year that Britain should be “more militarily engaged” in the region.

Nick Carter, head of the British armed forces, said last month that the government must be bold and prepared to “shatter some Shibboleths…[as] we have returned to an era of great power competition, even constant conflict.”

Defense Secretary Ben Wallace has promised to lead a major defense review (“the biggest review… since the end of the Cold War,” according to Johnson) to “reassess the nation’s place in the world, covering all aspects of international policy from defense to diplomacy and development.”

It remains to be seen whether Johnson will also bring the Department for International Development, in charge of managing Britain’s international aid, under the management of the underfunded Foreign Office.

Some experts warn that by merging the two departments, Britain’s recently successful aid program will become just another facet of its foreign policy, potentially replacing long-term ambitions for short-term geopolitical gains.

Still, Johnson says any changes won’t affect London’s commitment to spend 0.7% of gross domestic product (GDP) on overseas aid.

But reorienting Britain’s foreign policy to the Indo-Pacific won’t be easy, to be sure, even with the government’s large majority in parliament.

New British Prime Minister during a visit to China in 2013. Photo: Facebook

Any new and muscular Indo-Pacific strategy will have to deal with the issue of a rising China, one big reason why the US re-focused its interest in the region since 2012.

For years, London has spoken about the need for international law to be followed in the Indo-Pacific, an unsubtle nod to China’s expansionist occupation of parts of the South China Sea.

As the Indo-Pacific is slowly but surely carved into two competing spheres of influence between the US and
China, having a third option of Britain – especially given its close alliance with Japan, another moderator in regional geopolitics – could be desirable for the region’s smaller states.

Much will depend on whether Britain engages or repels China.

Britain remains one of the largest recipients of Chinese investment in Europe, yet China only accounts for 3.5% of British exports, according to UK data. London, no doubt, will be eager to push ahead with a free-trade agreement (FTA) with China.

But China only tends to sign FTAs with countries that have products, like minerals or specialist machinery, which it needs to import. Britain doesn’t offer many such goods, so Beijing will be in no rush to conclude a deal, Rana Mitter, director of the University of Oxford China Centre, noted this week.

Moreover, London is desperate to sign a FTA with the US, but Washington could demand that it include a “poison pill” clause, like that in the new US-Canada-Mexico trade agreement, which allows the US to pull out if the UK signs a trade deal with China, Mitter postulated.

Washington is also demanding that the UK pull out of any contracts with Chinese telecommunications firm Huawei due to spying concerns, a demand the Johnson government has so far tried to fudge.

Finally, somebody at Davos is talking about something other than the weather…

Davos’s wealthiest denizens have reportedly been laser-focused on the issue of climate change and it’s potential impact on the global economy and markets this year – and the Trump vs. Greta drama has only stoked interest – but apparently at least one of the hundreds of reports combing the town’s ritzy resorts has found a couple of bankers willing to discuss what’s really bothering the industry.

And to our complete lack of surprise, that boogeyman is negative interest rate.

Now that the Fed has finished with its ‘midterm adjustment’, no other central bank in the developed world is going to have the courage to lift rates off the zero bound, particularly as the Continental economy careens toward a recession.

But as the rate compression continues to punish European banks, placing them at a significant disadvantage to their American peers (just look at what’s going on with Deutsche Bank), some of the wealthy customers whom the banks have leaned on to try and make up for their lost revenues are deciding to pull their money and stash it under the mattress instead.

Because at least then they won’t need to pay points on their deposits.

According to CNN, several Swiss private bankers roaming the halls of Davos have said that clients have asked to withdraw large sums of cash so they can store it themselves, in a vault or in some other type of secure facility. The trend is beginning to wear on Switzerland’s reputation as a safe and amenable locale for the world’s wealthy to stash their cash.

“A lot of people [are] thinking about what they should do, and alternatives to this,” said Adriel Jost, head of economics at Wellershoff & Partners, a consultancy based in Zurich.

Davos denizen Norman Villamin, chief investment officer for private banking at Switzerland’s UBP, said a limited number of clients have moved their cash into private storage. Some may have sold their business or a home recently, and “can’t deploy the cash all in one go,” he explained.

Private banker Rahn+Bodmer also said some clients had asked for at least some of their money back in cash.

“We tell the client, watch out – it’s your money,” said R+B partner Martin Bidermann. Many have chosen to move their money anyway.

According to CNN, Swiss banks generally try to avoid passing costs on to customers like this, and will only charge such outrageous fees when net interest margin no longer exists. For five years, Swiss banks have struggled with some of the steepest negative rates in Europe, a monetary framework designed to keep the Swiss franc from appreciating (remember the explosion of volatility that ensued when the Swiss de-pegged the franc from the euro five years ago?).

But banks are being charged an outrageous rate to store excess reserves at the central bank. The SNB has maintained a policy rate of -0.75% at its December meeting, while signaling that rates will likely remain on hold at least through next year. This has forced many large Swiss banks, including Credit Suisse and UBS, to charge a negative interest rate on some of their largest customer deposits.

Of course, for clients who insist on holding their money in physical cash, devising a storage plan will take some work. Clients will  need to figure out the logistics of safely storing the money. It would also be wise to ensure the cash, which will eat into the profit margin of keeping it in a vault instead of a bank.

Interestingly, CNN noted that according to SNB data, the amount of cash in circulation hasn’t climbed in recent years. That could mean one of two things: either this ‘trend piece’ is based on conversations with one or two boastful individuals, or the SNB is being deliberately obfuscating.

Either way, if large cash deposits are flowing out of the banking system, at some point, the franc should depreciate, which in turn might put the SNB in the uncomfortable position of trying to justify for continuing with its negative rates even as the currency sinks.