In a matter of weeks, the world went from looking at the coronavirus outbreak in China from a distance, to being locked down and in full crisis mode.
We are entering pretty crazy times and think it will take a while before we get everything back to normal again. I wanted to share a few things that have caught my attention since the start of the virus.
1. It is amazing that a few people and institutions had a clear understanding of the biggest risk to the world. It was not nuclear war but pandemics!
2. Some reporters & experts have been warning the world of the seriousness of the outbreak since early on. They are good to keep track as the crisis evolves.
- The daily – Donald McNeil - Lucky a friend sent me this podcast at the end of Feb.
- You are likely to get the coronavirus - the Atlantic
- Richard Hatchett & Scott Gotlieb - Look at the dates
- Balaji Srinivasan - Great follow on twitter
3. The spread and containment of the virus varies widely from country to country. Success cases look like China, South Korea and Singapore. Complicated cases seem like Italy and Iran for now. I think the impact on each country will vary widely depending on their containment measures, healthcare infrastructure as well as their population demographics.
- Track the virus spread by country - Johns Hopkins
The shock to the global economy of country-wide lockdowns, travel bans, and panic purchases will slowly begin to take its toll. Revenues will tumble, costs will be slower to come down, businesses will go bankrupt and there will be an increase in unemployment. Meanwhile, the financial markets have been wreaked in recent weeks in a velocity unseen since the late 20´s. We are now almost 30% down from the peak in January in the S&P500.
There is a lot of bad news out there, and the expectation is that things will get worse (take today´s Fed announcement + market reaction). I think that from a markets perspective, we still have not reached peak panic and that the economy is just barely starting to feel the shocks.
It’s going to be a rough year...we should prepare for things to get tougher after this initial shock.
I actually do see some light at the end of the tunnel:
- We have faced pandemics in our history and have been able to overcome them with identification, containment and cures through advances in technology. I think this time is no different!
- There is a roadmap of countries already getting the situation under control (China/Sk). Their learnings will be key for other to win as well.
- We may get some good news as we get warmer weather in spring / summer. The most important thing is for healthcare infrastructure to have enough slack to take care of incoming patients.
- When we do have the situation under control, I believe things will quickly go back to normal. People will still want to eat, drink, travel, and enjoy life as we have in the past.
- This crisis will present amazing opportunities for long term investments. If you have some liquidity, it’s good to have a plan and execute it as quality assets become cheaper.
For now, lets take it easy in our homes for a while and try to stay healthy.
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