How Will Markets React to Mexico's Swine Flu Panic? 19 comments
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Mexico is in a panic over swine flu, and other countries may not be far behind. What will this mean for stocks? Even though fewer than 2,000 people have been identified as swine flu victims so far, the panic is beginning to affect world commerce.
That's not good news for stocks.
If some leading stocks fall on the news, most or all stocks probably will follow, regardless of how strong they've been technically or fundamentally.
In Mexico, restaurants, movie theaters and churches are closing, hotels are anticipating reservation cancellations and in Mexico City, at least, most people are staying home. Retailers are hurting.
Around the world, airlines and airports are gearing up to screen passengers for flu-like symptoms. Flight cancellations may not be far behind if the flu spreads and panic swells. It wouldn't take much more of a slowdown in commerce to undermine energy and other commodity prices.
What are traders to do?
Buy long-term puts that expire in, say, December or January, as a hedge. If stock prices fall, most puts prices will rise as volatility rises.
Buy the stocks of hospital and nursing home companies, home health and hospice companies and ambulance operators. Funeral home operators may see their profits rise. Some medical supply and pharmaceutical companies may benefit, but they also could be hurt if hospitals' beds are filled with patients who don't need their products.
Sell stocks, or hold on if you think this, too, will pass quickly.
A swine flu panic and epidemic would be one of those unexpected and unpredicted events known as "Black Swans". While a worldwide epidemic has been feared forever, the timing has been totally unpredictable. And the magnitude of the problem won't be known for awhile.
Meanwhile, wash hands frequently.
Don't panic.
Don't breathe.
Update link. Asian shares mostly lower; swine flu, US futures. MarketWatch.
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Like SARS the full reaction tends to be overly dramatic. However, erring on the side of caution is good when it comes to your health. Likewise, it's a good policy when it comes to your money as well.
The authors idea of hedging is always a good policy. Think of it as a booster shot in case things go drastically wrong.
As I post this, the SP500 futures are down a bit more than 2% at 849.10. Hardly a catastrophic decline so far, but if it carries through to the open it will bring us well off recent resistance around 875.
One can only wonder if this situation will become the catalyst that brings this bear-market rally to its much-anticipated (and arguably deserved) conclusion?
Sadly, I agree with Haerdt, although most disease outbreaks get a ridiculous amount of coverage.
As far as the markets, maybe the broken window analogy crowd will see some benefit. I'm sure vaccine makers are happy.
How about uncertainty with the financial markets!! TOXIC ASSETS, INCREASING MORTGAGE DEFAULTS, INCREASING CREDIT CARD DEFAULTS, INCREASING AUTO LOAN DEFAULTS, THE ONSLAUGHT OF COMMERCIAL REAL ESTATE DEFAULTS, VOO DOO ACCOUNTING PRACTICES, LACK OF CLARITY, PHONY BANK STRESS TESTS.............!!!!!!!
THIS IS WHAT SHOULD SCARE YOU, NOT SWINE FLU.
There is nothing like calamity, manmade or by nature, that awakens the animal spirit of human.
I was thingking since January something like this might happen as the US and Europe goes into self-flagelation intead of rising up to the challenge of this economic crisis of the 21st century.
9/11 was the catalyst for the 2002 to 2007 bear rally - albeit after a capitulation sell-off.
Will this be the needed catalyst to wake up the whole world except China perhaps (China has been awake since Oct 2008) from this 19 months of global economic crisis? A sad affair for many of us humans.
Is Swine Flu A Biological Weapon?
Paul Joseph Watson
Prison Planet.com
Monday, April 27, 2009
There are some factors that suggest the swine flu killing people in Mexico may be a biological weapon, but obviously no such conclusion can be drawn at this time. The World Health Organization and the U.S. government have been quick to deny such claims.
The swine flu virus is described as a completely new strain, an intercontinental mixture of human, avian and swine viruses. Tellingly, there have been no reported A-H1N1 infections of pigs.
According to a source known to former NSA official Wayne Madsen, “A top scientist for the United Nations, who has examined the outbreak of the deadly Ebola virus in Africa, as well as HIV/AIDS victims, concluded that H1N1 possesses certain transmission “vectors” that suggest that the new flu strain has been genetically-manufactured as a military biological warfare weapon.
Madsen claims that his source, and another in Indonesia, “Are convinced that the current outbreak of a new strain of swine flu in Mexico and some parts of the United States is the result of the introduction of a human-engineered pathogen that could result in a widespread global pandemic, with potentially catastrophic consequences for domestic and international travel and commerce.”
> Washing your hands may not do much. They are not
> clear as to the transmission besides it seems to
> pass from human to human not pig
> to human now. If it is a normal flu transmission,
> this means transmission from airborne bodily
> fluid like coughing and sneezing may be possible.
Talk about scare tactics, maybe they need funding.
A Canadian Farmer, back from a Mexican vacation, has infected his herd with the Virus. This has supposedly been confirmed by the Canadian authorities.
Whether it is the same or a mutation is unknown.
When you are dead, you do not care about anything.
It supposedly consists of the genetic materials of Swine, Birds and Humans. Its like has never been seen before. How it managed to jump species is unknown. Reports of it being Man Made are being denied...what else are they going to say?
The old standbys for preventing its spread are being employed but no one has yet to identify how it is being spread.
I'll tell you this much, we will be in dire straights if Mexicans start pouring into the USA just to get out of Mexico.
Obama and his liberals better send troops to close our Borders quickly.
Haerdt: Death certainly has a way of "distracting" people.