The China, the Global Growth engine

China is a Worlds producer of Goods that are exported globally in 24 hrs, but China are also importing goods & services (mostly from the USA), so much so that US (Netflix, and Disney) media companies are now testing and selecting actors and scripts that are leading in the Asia markets. 

Monitoring Global sentiment

• The ETF futures VIX, TVIX (volatility index) inversely track the performance of the markets. 

• The FAZ ETF is a daily Financial Bear 3X Share - It does the opposite of the Russell 1000 Financial Services index. 

• 20+ Treasuries - people want to hedge against risk

• Gold - people want to hedge against risk

Global Epidemics Starting in China

Pandemics - CORONA VIRUS starts as a flue, and becomes a cardiopulmonary vascular disease (Bronchitis > Phenomena) COVID-19 (Indicating it's the 19th strain that's been catalogued & documented. It starts cause the following mechanical impacts in markets. As this is a physical impact - It's mechanical, and the impact is experienced in waves, that spread out from the epicentre globally. So, the impact will start in China, and expand in waves to other markets, South Korea, Russia, Japan, Germany, France, UK, and then the US. The impact, and the recovery can be monitored as the impact spreads out. The impacts will be offset by IMF, Reserve Bank (US), Bank of England to add stimulus into the market. There are a basic lack of resources like toilet paper, face masks, hand-sanitizer, and baked beans. 

Key mechanical impacts to markets

1. Labour shortage - impact services and lead to revenue warnings

2. Impact on travel - more restrictions and leads to revenue warnings, reduction in oil consumption

3. Oil prices reduce - more restrictions on energy production, reduction on available oil supply

These affect the following industries negatively

• Building supply companies (i.e. home building supplies) - where people need labour to do home improvements

• Oil mining companies - where people mine oil, notably new 'Clean' energy companies are also negatively affected

• Motor car manufacturing companies - people will not purchase in unsettling times

• Transportation companies - where people move goods

• Building companies, and companies manufacturing Building equipment - where groups of people work together

• Food restaurant companies, Casino companies, Football companies, entertainment companies - where groups of people gather

• Airline companies, and airline manufacturers - where groups of people travel together

• Insurance companies providing travel insurance - where people cancel arrangements due to service cancellations

• Banks - where people go to get their money

• Crypto Assets will be used to buy into the markets as spare capital. Once the markets stabilise the Crypto Assets will rise again. 

These industries are positively impacted by epidemics

Pharmaceutical

Gold - it will be the main store of value

Automated companies - not reliant on human labour

Major epidemics originating from China

2019 - COVID-19

2008 - Avian Flu

2002 - Swine Flu 

2000 - Mad Cow's disease

Entomology of animal-human infection

In 2019 saw the rise of 'Wildlife Farms' in China. This was a grass-roots initiative to kick start rural farming communities with new income streams. The idea is simple farm 'exotic creatures' for speciality foods. However, with the lack of sanitary conditions and mixing the different animal species in close proximity causes spreading diseases between species and then onto the farmers. Following the outbreak in Wuhan, Chinese authorities closed down 50,000 farms in Wuhan province alone. These need to be kept close. China is not the only 'Wet farm'. These should be closed. 

Impact on social interaction

Will 2019 be the last year that people shake hands? People are self isolating, and keeping social distance of 3 meters (2 hand lengths) apart to stop the spread of infection. 

Vaccines - (https://www.biospace.com/)

The mRNA vaccine is in testing on 45 human volunteers as of the 16/03/2020, after noting the rise from 08/12/2019 - 28/01/2020. The vaccine is available only ~3 months after the virus was detected. It's produced by a German company BioNTech, and Phosun Pharma in China along with PFiser to to clinical trials to until April 2020, and distributed Globally by Polynun and Phosun in China respectively. The amazing speed for the development of the vaccine is remarkable, condensing 12 months of work into 3 months is an incredible feat of science & development. There are now 169,387 confirmed global cases of COVID-19 and 6,513 deaths. The number of patients who have recovered from the virus stands at 77,257, as of this morning. Once China is able to monitor & control the spread of such infections as hepatitis, syphilis, HIV, and tuberculosis (TB) the world will continue to be affected epidemics stemming from China.

Global Liquidity

The cost of capital is cheap. So any short term impacts are going to be low economic impact. Most notably Financial Services keep cash-flow very lean as   

Global Interest Rates

Interest rates are going negative

Global Inflation

Inflation is going up. 

Global Black Swans

2020

• Saudi Drone Attack on Military Commander in January 2020

• Downing of Passenger Flight by Iran in January 2020 

• Australia Bush Fires

• COVID-19

Global Growth

Growth is expected to slow globally. The 10 year T-Note (US10Y) yield is coming down. China is the worlds exporter and is directly affected. So China growth is slowing very quickly.

There are always at least 5 Black Swans swimming around

• Pandemics

• International Collaboration & Trade failures

• Potential international War

• Forest fire in Australia

Futures drop expectations are directly affected. This is opposite from the financial success of companies quarterly reporting. 

The futures signal the market direction, and have fallen due to the Coronavirus, which is still in it's early stages. 

2020 CoVID-19 - Epidemic Fallout

Analysts estimate a Moderate to severe pandemic is estimated impact is 570 Billion (base lined against the 1918 epidemic). 

The current mechanism of how the China COVID-19 virus spreads is still unknown. It will take 3 - 6 months to create a new flue vaccine.

The cost of a airborne disease like 1918 today is estimated to kill 33 Million people in 250 days. This would erode 4.8% of Global GDP ~3.6 Trillion $. 

Our strengths

• Better communications outcomes

• Better DNA sequencing outcomes (better treatment, and diagnosis). The Coronavirus has already been genetically sequenced.

• Better Organisation outcomes

The World Bank Reports.

Don't touch your face, don't shake hands. Use a Face mask, but it doesn't provide protection from an airborne virus but stops you from touching your face. Use hand sanitise to clean your hands as it spreads by touch. The risk of self reinfection is high with Flu as it mutates, and it's highly infectious. Get a flu jab to get protection.

Pandemic Spread

If you have the flu, then stay home.

• Asymptomatic spread happens where someone is infected, but doesn't show any symptoms as they are still in the incubation period. 

• Systematic spread - people infected are encouraged not to come into contact with others.

Carriers have a fever, but the incubation period is up to 10 days for the China Corronavirus

Monetary Impact

As governments slow international travel, it puts travel comes under pressure (Boeing comes under pressure), travel and leisure will be affected (like cinema chains). Companies like hotels, and casino's will be affected (anywhere people need to congregate). So Oil comes under pressure and demand will reduce. 

Pharmaceuticals only increase in value based on the speed of their successful response. 

Why did it happen

Eating warm white meat, and close interaction with wild migrating birds. Outbreaks happen due to hunting, when people come into contact with new strains of the influenza. This is seen in Asia, Russia, Middle East, Europe and America.