Saturday, April 26, 2003

SARS vs. Recovery, III

Excerpt from
HAWAII: Don't talk about it! There's a report on westhawaiitoday.comthat island health authorities are advising drivers not to talk on VHF or UHF radios about SARS.
SARS Blamed: Comments of a leading analyst about SARS cut into the US markets on Thursday.
Euro Airs Hit: Reuters is reporting this morning that SARS worries are - in part - behind declines in airlines and travel groups on European bourses this morning.
CDC: Zero Change: The latest reports from CDC indicated yesterday at there are still just 39 cases in the US.
WHO: What???: The number of probable cases reported by WHO Thursday was 4439, with 263 deaths and 2117 recovered.  If you're a Pollyanna the mortality rate is deaths divided by probable cases - 5.9%, but if you're an alarmist, the death rate is deaths divided by number of people who actually recovered - a 12.4% mortality rate which is far above what's in the mainstream press yet.
Get skinny and live? Sources tell us that while there's not much hard fact coming in yet from China, initial appearances are that overweight people are harder hit than people who are just slightly under-nourished. It's only a murmur out of our sources, but one worth thinking about - especially in light of the animal experiments that suggest people who are a little on the skinny side tend to far outlive those who are on the chunky side...
Cheney Reports: We've also heard from well informed sources that just about every federal agency conceivable, perhaps more than 20, are rushing to get reports onto VP Dick Cheney's desk by Monday or Tuesday or next week. Apparently the Administration is worried about some kind of public awareness emerging in the very short term - perhaps weeks - and they're trying to ready a plan to cope. That's why Cheney has been out of sight - and yes - you're not the first one to wonder about the timing of the disease hot on the heels of the Iraq victory. Is this some kind of a 'warning shot?' Question to ponder: Who fired it?
Global Markets: Using our proprietary Global Aggregate Index, it's clear that the beginnings of a global recovery have been forming in the past month or two, but with the latest SARS reports in Asia, we note that Hong Kong is down almost 10% compared with the first day of trading this year - and the same goes for Japan. (Sony's earnings at the low end of hype, didn't help much today, either.)

From the collected pieces, what emerges is a view of a world that could descend into a permanent malaise should SARS gain ground in Europe and the US.  Asia is already on the verge of panic.  If that occurs, a second major leg down of the global economy will get underway and we can kiss the idea of recovery good bye.
Who Loses: We think the airlines, hotels, car rental outfits, and large retail chain eateries (with the possible exception of the locally run beanery) will all suffer should the SARS worries turn into widespread panic. Stocks like Disney, Hilton, Marriott, and of course the airlines, could be hit.
Who Wins: We see the likelihood that the majority of Americans will spend more time at home. Companies like 3-M (masks), Michaels Stores (hobbies and crafts to do while quarantined, along with Home Depot and perhaps home entertainment stocks. Will 'son of webvan' emerge?
What to do NOW: If you don't have a 30-day supply of food and water in your home, it might be a good thing to slowly accumulate.  We've always kept a week or two on hand, but we're slowly expanding our personal stores to allow us at least 21-days in event of quarantines.  Not that it will help escape a "round up", but it also won't hurt. Besides, looks like hurricane season will be early this year in our area so food, water, batteries, and the ham rig are always nice to have around. If you don't want to go that route, figure out which grocery stores in your area will deliver - and be ready to lay in a big order if things look threatening.
Most Important: Watch the WHO statistics - we expect somewhere between 88-133 people to be added to the probable cases count today, and as long as the case count is going up 2-4% per day it will mean present containment methodologies are not working.  The daily updates are usually posted between 11:00 A and 12:30 P EDT at  Read the numbers and chart your own best course. If the numbers decline quickly, we can expect a real barn-burner rally, but the opposite is also true. The markets don't like uncertainty, and until resolved, we expect things to remain trendless to a downward bias as people pull bets off the table.

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