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Discussion Starter #1
My thoughts if the virus spreads globally:
Asian stocks - Down Hard

U.S. stocks - Down Hard (mkt is overvalued anyway and it's about time for a correction. Note that some pharma and other healthcare stocks could buck the trend while hotels, casinos and airlines will probably get hit the worst.

U.S. treasuries - Up (flight to safety)

U.S. dollar, Swiss franc, Jap yen - Up (see above)

Chinese yuan - Down hard

Gold - Up (everyone likes gold in a crisis)

Crude Oil - Down (lower global demand)

Thoughts?
 

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Wile E Coyote, Genius.
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Well, one way or another, this will put a major crimp into Chinese imports to the US.

So could spur investment into rebuilding the US factories that actually make things.

i think the job market in the US improves because of this and because you need replacements if a few million workers succumb.

And there would be massive government spending into the response, which will push the economy higher.

To make sure any goods transported from anywhere are safe, I think there needs to be a LOT of tractor trailer drive through irradiation decontamination stations. (The driver leaves the vehicle of course, during this.).

and 3M and whoever else makes respirators, goggles etc, should do a lot of business.
 

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Discussion Starter #4
There's no logic in economics. If you don't believe me, take a class. If the jerks on Wall Street want it to tank, they'll tank it. The Chinese Chicken Flu is as good an excuse as any other.
In the short run you are correct, fear, greed and Wall Street control the markets. In the end the fundamentals win out. If the Chinese flu turns out to be another SARS then markets will recover quickly. If it's something worse then expect a world-wide recession.
 

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My thoughts if the virus spreads globally:

Asian stocks - Down Hard



U.S. stocks - Down Hard (mkt is overvalued anyway and it's about time for a correction. Note that some pharma and other healthcare stocks could buck the trend while hotels, casinos and airlines will probably get hit the worst.



U.S. treasuries - Up (flight to safety)



U.S. dollar, Swiss franc, Jap yen - Up (see above)



Chinese yuan - Down hard



Gold - Up (everyone likes gold in a crisis)



Crude Oil - Down (lower global demand)



Thoughts?
My thoughts are, your comment in another thread about watching ETFs and how the foreign markets would set the prices was brilliant.

Sent from my Note 8 using Tapatalk
 

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My thoughts if the virus spreads globally:
Asian stocks - Down Hard

U.S. stocks - Down Hard (mkt is overvalued anyway and it's about time for a correction. Note that some pharma and other healthcare stocks could buck the trend while hotels, casinos and airlines will probably get hit the worst.

U.S. treasuries - Up (flight to safety)

U.S. dollar, Swiss franc, Jap yen - Up (see above)

Chinese yuan - Down hard

Gold - Up (everyone likes gold in a crisis)

Crude Oil - Down (lower global demand)

Thoughts?


Thoughts:

Yuan values are controlled by China not really by market forces.

What does "Hard" mean? Does that mean S&P's are down 30, or 60, or 200 or 800? Same with gold. What kind of market decline (or collapse) are you predicting?
 

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Discussion Starter #7
Thoughts:

Yuan values are controlled by China not really by market forces.

What does "Hard" mean? Does that mean S&P's are down 30, or 60, or 200 or 800? Same with gold. What kind of market decline (or collapse) are you predicting?
It's not truly a prediction. I don't know any more about the virus than anyone else. These are just guesses as to what the markets would do if the virus causes a global pandemic.

"Hard" for the S&P would be a 10-20% correction. We are overdue for one anyway and stocks have high valuations relative to earnings. If there's a global recession then maybe 30%. I wouldn't expect a 1929 style total market collapse.

Gold up $200 - $300 / oz perhaps. There are several opposing forces at work. Jewelry demand in Asia should plunge if millions are infected and thousands die. Industrial demand could drop too. However, I think the gold bugs would buy enough to drive the price upward. Just a guess.

The Chinese generally like a weaker yuan because it helps China to export more. Given the current situation in China, I'm not sure many nations would criticize the Chinese for letting the yuan depreciate.

I bought a little bit of bullion through a gold ETF today and got slightly short the Chinese stock market through another ETF. Depending on what happens over the weekend and how stocks react on Monday I may start lightening my exposure to U.S. stocks.
 

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It's not truly a prediction. I don't know any more about the virus than anyone else. These are just guesses as to what the markets would do if the virus causes a global pandemic.

"Hard" for the S&P would be a 10-20% correction. We are overdue for one anyway and stocks have high valuations relative to earnings. If there's a global recession then maybe 30%. I wouldn't expect a 1929 style total market collapse.

Gold up $200 - $300 / oz perhaps. There are several opposing forces at work. Jewelry demand in Asia should plunge if millions are infected and thousands die. Industrial demand could drop too. However, I think the gold bugs would buy enough to drive the price upward. Just a guess.

The Chinese generally like a weaker yuan because it helps China to export more. Given the current situation in China, I'm not sure many nations would criticize the Chinese for letting the yuan depreciate.

I bought a little bit of bullion through a gold ETF today and got slightly short the Chinese stock market through another ETF. Depending on what happens over the weekend and how stocks react on Monday I may start lightening my exposure to U.S. stocks.


Sounds reasonable to me!
 

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To make sure any goods transported from anywhere are safe, I think there needs to be a LOT of tractor trailer drive through irradiation decontamination stations. (The driver leaves the vehicle of course, during this.).

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So to kill virus’s, you need like 500,000 Rad ( for 1 log Inactivation , ie 90% inactivation). I can’t imagine the amount of shielding required, it would probally have to be a tunnel through a mountain. The level required to sterilize a truck in 5 minutes would kill a person in half sec a second. you would need shielding that blocks 99.99999999% of the radiation to meet occupational exposure levels. And that level of radiation destroys a lot of other materials.

But why? Has someone linked this virus to harbor freight tools? Children’s toys? Why do we disinfect cargo?
 

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D. Gibbons is a bad man
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Well, one way or another, this will put a major crimp into Chinese imports to the US.

So could spur investment into rebuilding the US factories that actually make things.

i think the job market in the US improves because of this and because you need replacements if a few million workers succumb.

And there would be massive government spending into the response, which will push the economy higher.

To make sure any goods transported from anywhere are safe, I think there needs to be a LOT of tractor trailer drive through irradiation decontamination stations. (The driver leaves the vehicle of course, during this.).

and 3M and whoever else makes respirators, goggles etc, should do a lot of business.
The Chinese seem to have learned a lot from SARS and have been very proactive so hopefully we won’t see an extended period of disruption in China.
Irradiation of foods (largely spices) these days is a bit more complex than just driving a trailer through a plant. The batches involved are not large and there is a massive amount of shielding.
 

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OK, not radiation then.
Another method?

Sanitizing gas maybe? Ozone? Chlorine dioxide?
Ozone has been tried and failed ( to disinfect rooms vs say surgical instruments). Chlorine dioxide is might be too corrosive, but has worked in the past In similar situations. Downside is it must be produced on site, being too unstable for storage at significant concentrations , and I don’t know if activated hydrogen peroxide is possible on this scale but I doubt we will ever find that manufactured good are a vector.
 

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The Chinese generally like a weaker yuan because it helps China to export more. Given the current situation in China, I'm not sure many nations would criticize the Chinese for letting the yuan depreciate.
China is in a real conundrum right now. If the offshore yuan stays in the 6.90 to $1.00 USD range, that's decent (good) for Chinese consumers. Means there's less food inflation, and other similar markets.

However, not so good for exports. They are likely to become more expensive, and nations which are currently net importers of Chinese products are going to become more nervous over transportation/importation of more Chinese products.

The boards here are indicative of this. This board is a fairly well informed community. And we've already brought up these concerns and discussed them fairly intelligently. Imagine what happens in another 2 weeks or so IF the USA ends up with 100 confirmed cases and 3-5 deaths.

What's going to be the prevailing opinion of the general population over made-in-China products at that point? Remember who's going to be carrying the message (MSM). We already know we have a sensationalist news media where there's an unspoken rule of "If it bleeds, it leads".

So China has to deal with a set of policy choices where none are good:

1. Your marketplace for your exports starts to become increasingly nervous & skittish due to a potential global pandemic which originated in your country.
2. You NEED the foreign exchange from the exports. So China has to make the offshore yuan cheaper (say above 7.00 yuan to $1.00 USD). But then China has broken the Trade Deal 01 & Trump has to take action. Remember, there's not much slack left in the System.
3. IF China exports drop, that's fewer jobs. And that means political instability in China.

OR (go the other way)

4. China HAS to maintain internal political instability at all costs. No matter what.
5. That means you have to keep the offshore yuan in the 6.9 to $1.00 USD range. Otherwise the population is going to start having food instability. There's already a feeling (which appears to be growing) that both the local governments, and the central government are incapable to handling this situation.
6. Result (IF things keep going downhill) will be more political instability.
7. But a side effect is that the China export machine starts to break down. That means less foreign currency, and that's really bad short & medium term for China.

One more thought: If I'm right, the 2020 Chinese New Year runs 01.21.2020 thru 02.20.2020. What is going to be the transportation environment when everybody tries to go back to work?

Just a few thoughts.....
 

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Discussion Starter #16
China is in a real conundrum right now. If the offshore yuan stays in the 6.90 to $1.00 USD range, that's decent (good) for Chinese consumers. Means there's less food inflation, and other similar markets.

However, not so good for exports. They are likely to become more expensive, and nations which are currently net importers of Chinese products are going to become more nervous over transportation/importation of more Chinese products.

The boards here are indicative of this. This board is a fairly well informed community. And we've already brought up these concerns and discussed them fairly intelligently. Imagine what happens in another 2 weeks or so IF the USA ends up with 100 confirmed cases and 3-5 deaths.

What's going to be the prevailing opinion of the general population over made-in-China products at that point? Remember who's going to be carrying the message (MSM). We already know we have a sensationalist news media where there's an unspoken rule of "If it bleeds, it leads".

So China has to deal with a set of policy choices where none are good:

1. Your marketplace for your exports starts to become increasingly nervous & skittish due to a potential global pandemic which originated in your country.
2. You NEED the foreign exchange from the exports. So China has to make the offshore yuan cheaper (say above 7.00 yuan to $1.00 USD). But then China has broken the Trade Deal 01 & Trump has to take action. Remember, there's not much slack left in the System.
3. IF China exports drop, that's fewer jobs. And that means political instability in China.

OR (go the other way)

4. China HAS to maintain internal political instability at all costs. No matter what.
5. That means you have to keep the offshore yuan in the 6.9 to $1.00 USD range. Otherwise the population is going to start having food instability. There's already a feeling (which appears to be growing) that both the local governments, and the central government are incapable to handling this situation.
6. Result (IF things keep going downhill) will be more political instability.
7. But a side effect is that the China export machine starts to break down. That means less foreign currency, and that's really bad short & medium term for China.

One more thought: If I'm right, the 2020 Chinese New Year runs 01.21.2020 thru 02.20.2020. What is going to be the transportation environment when everybody tries to go back to work?

Just a few thoughts.....
Is it the onshore or offshore yuan that the PRC has the most control over? I thought the offshore was non-deliverable and its price was more of a market determined price than the onshore rate. I guess I should know this since I used to work in finance at a large corporation.
 

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I put in automatic sales orders on my stocks if they dropped more than 10% (discounting dividend payments) that automatically expires in 60 days.

Now I just have to figure out what to do with the mutuals
 

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Discussion Starter #19
Stocks rebounded today but I think it's more of a dead cat bounce. This virus thing won't be over any time soon. I sold some NASDAQ ETFs in my IRA yesterday but otherwise I'm looking for more confirmation that a correction has begun. U.S. stock index futures, which are an indicator of how the actual market will open in the morning, opened slightly lower this evening.
 

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In the short run you are correct, fear, greed and Wall Street control the markets. In the end the fundamentals win out. If the Chinese flu turns out to be another SARS then markets will recover quickly. If it's something worse then expect a world-wide recession.
Off topic but what would that look like?
 
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