We've seen epidemics before, but the masses keep forgetting. Whether it was SARS or MERS or Swine Flu or Cholera, the stock market generally takes a 5-10% tumble, then recovers.
Clearly, you should have sold all your cruise line stocks two months ago. Carnival, which owns Princess, for one, has lost 50% in this period. Airline stocks have dropped anywhere from 25-50%.
Why is all this happening? Well, to begin with, several sources were already predicting a recession in 2020. Nothing to do with Donald Trump. The worry was about a global credit crisis.
Then came the coronavirus, now called COVID-19. A contributing factor this week was a feud between Russia and Saudi Arabia regarding the price of oil. Read my blog yesterday for the details, but all reports seem to indicate that both sides are not backing down, and petroleum could drop to $20/barrel. Russia supposedly spends $42/barrel just to produce the oil. But the government in reality owns the oil companies, and they think they can hold on longer than Saudi Arabia, which also owns the oil wells. Oh, in that World Cup game, Russia won, 5-0.
Interestingly enough, this was not part of their one-upmanship game, but there will be collateral damage to the USA, for many of those fracking operations which have driven the country to now be #1 in production will go bankrupt. While some have guessed that it takes fracking as much as $50 to produce a barrel of oil, chances are it could be cheaper than what it costs Russia. However, Russia is a country and won't go bankrupt. So while the people and a wide variety of companies will look forward to cheaper energy (natural gas rises and falls in tune with oil) prices, in the long-term, Saudia Arabia and Russia will better position themselves against the USA.
But the primary fear factor today is COVID-19. The masses have so seriously been consumed that it is hard to find toilet paper at Costco and big box outlets. So what did this un-panicked individual do yesterday? He went to his computer and paid Amazon a lot to have shipped to him two dozen rolls of toilet paper. I was desperate. I'm down to two rolls! Ah, but reassurance. I got an e-mail today that the first batch will arrive today!
Let me speculate on what could happen over the next few weeks:- No spectators at Japan's bimonthly (this is one of those confusing words that can mean twice a month or once every two months--this time it refers to an event that occurs six time per year) sumo tournament.
- Will March Madness (has to do with the NCAA basketball tournament) follow suit?
- In both cases, television revenues will dominate, so no one will lose money.
- The whole country of Italy is now quarantined.
- total new deaths over the past 24 hours (in parentheses: current fatality percentage)
- World: 203 (3.53%)
- China: 17 (2.20%)
- Italy: 97 (5.05%)
- Spain: 18 (2.73%)
- France: 11 (2.14%)
- Iran: 43 (3.3%)
- South Korea: 3 (0.72%)
- USA: 8 (4.03%)
- For Italy, like the USA, it could be that the cluster of cases could be focused on the older population, or, the country has yet to comprehensively test the populace. Another factor is that Italy has the oldest population in Europe. The median age is 47.3. U.S.? 38.3%. Why is the death rate in the USA so high? The hotspot is in a state of Washington's seniors community.
- It's looking like, though, that the overall death rate will eventually settle at around 2%, as originally speculated. However, if you're 80 or over, it is around 15%. 30 and younger? 0.2%.
So, if you're 80 or older, should you still consider cruising from Los Angeles to Singapore in October on your way to Dubai? On my continued optimism that world-wide COVID-19 cases will begin to drop by the early summer, I suspect the Grand Princess will actually sail then. This will of course be a ship to be avoided. However, people from Hawaii keep returning to the California Hotel in Las Vegas, even after that hotel survived several bouts of the dreaded norovirus. The ship will be safe of COVID-19. The price per balcony room should be at a particularly attractive low. I still have a few months to anticipate and possibly act.
Well, anyway, as the world mortifies, I continue in my 6th month of euphoria and today enjoy my honohono orchids and water lilies:
It's now two weeks since I returned from Thailand, so, while I haven't exactly been confined in quarantine, should be free of any potential COVID-19 threat (if I came back from the Congo, the Ebola quarantine period is 42 days). Perhaps I'll go play poker tonight. Sometimes it's nice to be retired and not have the workstyle of that person cleaning my window to my right, or any job.
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