Swine Flu Threatens Already Weak Global Economy

Just as global markets seem to be recovering from an economic sickness, a biological one looms. “Swine flu,” a type of flu bug transmitted from pigs and mutated into a human strain known as “H1N1,” has so far claimed the lives of over 80 people in Mexico, and sickened more than 1,400 there since April 13. Sunday, the U.S. reported its twentieth case of the flu, including 8 New York-based high school children, and it’s already spread throughout the world to Europe and Asia.

Last Time Round

An economic crisis followed by a quick bout of virulent influenza is a situation we’ve seen before. In 2002, an Asian flu virus known as severe acute respiratory syndrome, or SARS, claimed the lives of 774 people and sickened another 8,096, according to the World Health Organization. While that’s a relatively small number of people compared to Asia’s total population, the virus wreaked havoc on Asian stocks, which were just recovering after the 1998 emerging markets crisis.

In less than 12 months, Hong Kong’s Hang Seng plunged 17.3%, to 8634.45, while the Japanese Nikkei fared worse, dropping 33%, to 7831.42. Other emerging market indexes fared similarly.

Spring is a common season for animal flu viruses to emerge. In March last year, another Chinese avian flu bug, which was a mutated form of the H1N5 avian strain, claimed the lives of four school children in Hong Kong and gave investors the jitters for a bit.

At the time, one Asia-based market participant recalled the SARS incident clearly. “When SARS hit Hong Kong, this place became a ghost town. I remember myself and a mate being the only people in the entire Lan Kwai Fong [nightlife district] drinking on a Thursday night,” said Gavin Parry, a director of Helmsman Global Trading in Hong Kong.

Potential Swine Flu Causes & Effects

Sunday, Canadian health officials said that swine flu is unlikely to be as deadly as SARS, mainly because they have spent years preparing for such an outbreak, even as the U.S. government issued a standard “medical state of emergency.” That’s probably true for the U.S. and much of Europe, too: developed countries are traditionally much less affected by flu epidemics than undeveloped ones.

As a result, on the political front renewed debates over Mexican border-control policy in the U.S. are also likely to spring up from the malaise.

Given the feeble state of global markets right now, any drop in consumer spending could have potentially serious consequences. Airline stocks, tourism companies (particularly ones which serve Latin American countries), and as a result, oil companies are all likely to feel any lingering effects of the flu bug. Producers such as Exxon (XON), BP (BP) and PetroChina (PTR), which have only just recently begun climbing again after a massive sell-off in oil, may fall back 10 - 15%.

In terms of buying opportunities, Helmsman’s Parry was advising his clients Monday morning in Asia to “break out the old SARS list of names that make face masks” for some short-term momentum, such as Japanese Hogy Medical (HGYMF.PK).

But the most likely securities to feel selling pressure are the emerging market ETFs. During the SARS crisis, U.S.-listed ETFs such as iShares MSCI Emerging Markets ETF (EEM), Vanguard Emerging Markets ETF (VWO), and Morgan Stanley Emerging Markets Domestic fund (EDD) were not yet thought up. Swine flu may pose the first serious challenge to these recently listed ETFs’ growth prospects.

In particular, Latin America-focused ETFs such as iShares S&P Latin America 40 Index (ILF) and iShares MSCI Mexico (EWW) look like they may take the brunt of the selling over the next week. The Mexican peso will also feel selling pressure, which could set off a round of further complications. Indeed, in Mexico the virus is already taking an economic toll, as the domestic government has ordered the closure of bars, movie theaters and churches. Officials stopped short of closing down work places, however.

Bloomberg reports one taxi driver citing a fifty percent drop in income since the virus was officially declared on April 24. “People don’t even want to leave their houses,” the driver told Bloomberg. “It was bad enough with the economic situation, and now it’s even worse.”

Comments

[Kristjan Ve...:]

Although there is a lot of talk about preparation I wouldn't put my money on the virus not spreading further. See, the problem is that viruses tend to mutate - once a vaccine/cure is developed, the viruses combine and recombine with other similar viruses, and voila, you've got yourself a swine flu that jumps from person to person.

By the way, another subtype of H1N1, the Spanish flu, killed anywhere from 20 to 100 million people in the beginning of the last century: en.wikipedia.org/wiki/...

Apr 27 07:28 AM

[kelm:]

Time will tell. What is odd is that the deaths are all in Mexico with only mild symptoms being reported elsewhere not requiring hospitalization. That could indicate that there is some other risk factor at work.

As for market reaction. Today is a throw away day as a lot will be sold and bought based on erroneous information. Example, FEED sold off yet there is no talk of hogs being sick, no talk of mass culls required, and FEEDs activities are all in China where there is no incidence yet. This could actually help them as China may restrict imports. So we need to wait and see. Mexico was already struggling due to the drug wars going on with tourism virtually shutting down. This will make it a lot worse.

Apr 27 10:38 AM

[The Geoffster:]

BHO says not to worry. Meanwhile Jews and Arabs are terrified that something that comes from pigs will enter their bodies. Maybe those Old Testament dietary laws need to be heeded.
www.cnn.com/2009/HEALT...

Apr 27 11:04 AM

[Just Say Whoa!:]

>Maybe those Old Testament dietary laws need to be heeded.

Is that the one about not eating shellfish?

I bet Red Lobster is quaking in their boots at the thought of people adhering to OT dietary laws, haha!

Apr 27 11:45 AM

[Gregman2:]

It couldn't happen at a better time...when it rains, it...

Apr 27 11:57 AM

[Traffic:]

Already weak.

Apr 27 12:03 PM

[TLassen:]

get a sense of perspective people.
Everyday the 'common flu' kills more people than anyone cares to know. Meanwhile our sensationalist media has found something else to frighten and scare people with. Stop putting sentimenents to market reactions. The market moves up or down due to complex set of rules (of which media spin is only a small part of it), not because 'investors' worry about a breakout of the swine flu.
please.........

Apr 27 12:14 PM

[chleoku:]

looks like this swine flu would accelerate the Dow 5000 prediction:

www.wealthalchemist.co.../

Apr 27 12:16 PM

[debtacid:]

If swine flu is such a threat to the economy, the media would be ignoring it and downplaying it, not hyping it. I smell a big red herring. A diversion to keep the sheeple's focus off the economy.

Apr 27 12:26 PM

[Daniel Harr...:]

I agree with those who think that the health/human aspect, though obviously tragic re: individual cases, is not nearly as serious as the media hypes it up to be. But that doesn't mean it can't seriously damage an ailing economy, or that there isn't money to be made by being aware of where capital is harnessed if that is the case.

The question is how far the virus spreads, and more to the point, how long it goes on for. A week will be pretty insignificant; after about a month you'll see impact on consumption numbers.

Apr 27 12:36 PM

[trotsky:]

On Apr 27 07:21 AM bfras921 wrote:

> the only swine we need to worry about are the slime in power in washington
>
>
> they blame corporations and they are the root of the worlds problems
>
>
> i better watch out what i say less the gestopo arrest me
hey bfras921:
Corporations hold the corruptoid, overpaid politicians in the palms of their slimy hands. The MSM works overtime to spew mindwash to the contrary, which you greedily chug down.
Can you not spell the word LEST, or do you just not know it really? There ought be an IQ minimum for getting an account here.
Ironic you also tried to type Gestapo.. the 3rd Reich Gone Underground is who sits atop the largest pile of loot to this day, and they can use it pretty damned effectively..
Do your homework:
www.infowars.com/who-a.../

--another Lefty vegetarian who favors dismantling the phoney-arsed Dem Party, which mindbogglingly continues not to thank the Greens for having warned us of A) moronic mortgages and B) moronic wars.. and so on, and so on.. btw, Newsom stole the Mayoral eclection in SF. Truly a corrupt party.

(see also
seekingalpha.com/news/...
)

"Fascism should more properly be called corporatism because it is the merger of state and corporate power." - Benito Mussolini.
(source= www.informationclearin... aka "It's the Corporate State, Stupid" )

Apr 27 12:45 PM

[MarvinMBA:]

I never comment on any specific stock but it seems to me a product that will function with any migrating format of influenza could be important. Please take a look at NNVC.OB for their product line...I think they are on the right track..MarvinMBA

Apr 27 01:52 PM

[TLassen:]

Your article describes the 33% percent drop of the Nikkei in 2002-2003 following the Avian Flu/SARS outbreaks. Well the S&P dropped significantly at the same time period as well. My problem with this simplistic view is the commonly made mistake of cause and effect. The statistical correlation between two variables does not imply causasion. (variables: Avian Flu and StockMarket performance) My point is that the markets are far more complex and there are many more variables at play. While I do agree with you that may be some impact on consumption numbers in the future, my beef is not with your article, but with the constant media hype (fear sells advertising!) and their need to instantly put a market sentiment to the daily ups and downs of global stock markets
peace.




On Apr 27 12:36 PM Daniel Harrison wrote:

> I agree with those who think that the health/human aspect, though
> obviously tragic re: individual cases, is not nearly as serious as
> the media hypes it up to be. But that doesn't mean it can't seriously
> damage an ailing economy, or that there isn't money to be made by
> being aware of where capital is harnessed if that is the case. <br/>
>
> The question is how far the virus spreads, and more to the point,
> how long it goes on for. A week will be pretty insignificant; after
> about a month you'll see impact on consumption numbers.
>

Apr 27 02:11 PM

[doubleguns:]

I believe that the reason that mexico is having such a bad problem is the polution and health issues in mexico. The people of mexico city inhale more crap than 25 LA county americans. Air polution is horrible there. Thier lungs are already working overtime just breathing that stuff. Health is not as good in many other parts of the county because of bad water, poor food nutrition, etc... That is why they are dieing and we are just sick.

Apr 27 03:12 PM

[mac123449:]

I see alot of people trying to down play the seriousness of the situation the only reason we don't have any deaths here in the states is it hasn't had time to incubate it takes about 7 days to die from it once you get it. this is a totally new form of flu that has DNA from pigs,birds,and humans are bodies have no way to fight it and can't recognize it it takes over flooding the lungs till suffocation.

For those that don't know, a small company up in Washington state called Veratect was one of the first to identify that something was going on in Mexico. Anyhow, their blog and twitter account is a good source of quick updates.

However, the post below - posted about a half hour ago - caught my eye because of the words "involuntarily isolate" Anyone get an image reading that of government men in white suits knocking at your door and telling you that you are about to be placed in a top secret lab for further study? Just struck me as an odd phrasing.

twitter.com/Veratect

North Carolina: Health officials involuntarily isolate an unspecified number of suspected cases and test for swine influenza.

Apr 27 11:49 PM

[Moon Kil Woong:]

Unfortunately, we still don't know the scope or initial incidence about this flu. because of it we don't know the incubation period. Fortunately, it seems treatable with existing flu vaccines.

It's not good for the market but hopefully it won't lead to severe loss of life in the US where there is plenty of flu vaccine and treatment can be quick. It's not the end of the world.

Apr 28 03:23 AM

[prairiedog555:]

The flu spreads faster in Mexico because it is warmer there, helps incubation, and they do not have very good hygiene, and lax food handling practices.
Just a fact.

Apr 28 08:04 AM

[Justin_Forest:]

I think the fears of the influenza is just overrated. With the market oversold to these levels, even bad news like the SARS didnt drag the markets down much. As i blogged, the SARS even was the ideal time to Long the market back in 2003.

seekingalpha.com/insta...

May 01 12:21 PM

[Doc 224899:]

The swine flu over-reaction is ridiculously costly, but the Obama administration doesn't care about that cost. They're happy because we, America's citizens, are paying for a public relations campaign that Obamanistas have engineered to scare the public into approving of their bureaucracy-heavy lawyer’s-fee-generating "healthcare reform" legislative package.

That expensive healthcare reform plan entirely ignores a long-overdue legislative approach that would cut healthcare costs by about 70%: tort reform. The Obama plan is little more than re-packaged Clinton-style healthcare reform, which also protected the huge vig raked in by thieving lawyers. No surprise in any of this, except it is all so entirely true to form, and exactly the sort of government rule by manipulating public fear that was exposed by Michael Creighton in "State of Fear".

Even the new acting director of CDC (notice the term "acting director") has been careful to avoid statements that compare this batch of H1N1 virus from Mexico to normal human flu, and to the 1918 flu, but then we should understand that he's on a tight leash and wants to get a letter in the mail telling him he's the new full-time director of CDC, and if he told the public the truth he wouldn't have a chance to get that letter. He couldn’t even say, “You don’t get swine flu from eating dead pig meat because viruses die when the host organism’s cells die,” which is basic high school cell biology that everybody needs to be reminded of so they don’t eschew pork products

You'll also notice that in spite of the fact that isolation and quarantine have been the default strategies in infectious disease epidemic control for over a hundred years, the acting director of CDC couldn’t come out and call for sealing the border with Mexico, where the allegedly dangerous infection comes from, and where all the people carrying it into the US are coming from. Why is that? Could it be that doing so would finally establish one legitimate reason for correcting the porosity of the US-Mexican border, and Democrats don’t want to risk alienating Hispanics, even if it means increasing the risk of killing hundreds of thousands of Americans? (That’s the sort of risk that a real flu pandemic would entail, killing hundreds of thousands of Americans. The fact that the border isn’t being sealed may actually prove that it isn’t a legitimate pandemic flu risk.)

So let's look at this H1N1 and the alleged lethality risk it carries.

In Mexico there have been maybe a 100 to 1000 deaths (by the time you read this), reported to American newsies by Mexican officials who are bought and paid for by the American government and who would be utterly defenseless against drug gangsters if it weren't for US support and protection, and who will say whatever they're told to say. Right now they're busy hyping the flu scare and maintaining the silly fiction that drug gangsters in Mexico get their guns from Bob's Bait and Tackle in Waco.

Why are Mexicans dying of this flu? Well, maybe it's because the infection has greater lethality when it makes its initial jump from Mexican swine to humans, and less lethality in its first human-to-human jump, and not much after that. It's a common pattern. The other reason would be that Mexico sells antibiotics over-the-counter without prescription, so people in Mexico commonly self-medicate in a way that either under-treats bacterial infections or otherwise encourages antibiotic-resistant bacterial strains to flourish in Mexico, and Mexicans with H1N1 flu are dying from secondary bacterial respiratory infections that are either under-treated or that involve antibiotic-resistant bacteria. The third reason would be that healthcare in Mexico is even worse than healthcare in Canada or England, so people in Mexico generally just stay home and die or get Mexican healthcare and die when they get sick.

Biologically, this H1N1 viral strain in today's news clearly lacks the lethality factors that have been present in the serious pandemics in the past. In other words, it's wimpy flu, not big strong scary flu.

Thirdly, this H1N1 strain of flu has been infecting humans in Mexico for at least 4 months (just do a little googling for yourself if you don't believe me), and nobody had any reason to make a big deal about it until the Obamanistas needed an infectious disease scare to bully the masses with.

Oh, you ask, didn’t public health officials say there was a warning? Yes, they did. If you were a public health official, and you were in today’s political environment where every boss in the country has been shown over and over that survival today requires a keep-your-head-down-an... mode of professional conduct, you’d put out the warnings you were instructed to put out.

Oh, you ask, didn’t the WHO issue warnings? Yup, and who do you think funds most of what the WHO does every year, without bothering to go to congress for consideration of whether that funding is justified?

Give me a call when 36,000 people in America have died from this strain of H1N1 flu in a year, which is the average rate at which American’s die from normal flu in a normal year. Until then, I’m betting that I’ll be more likely die from being hit by a solid iridium meteorite than from infection with H1N1 flu.

May 03 01:55 PM

[Daniel Harr...:]

Unfortunately, you're right on the money.


On May 03 01:55 PM Doc 224899 wrote:

> The swine flu over-reaction is ridiculously costly, but the Obama
> administration doesn't care about that cost. They're happy because
> we, America's citizens, are paying for a public relations campaign
> that Obamanistas have engineered to scare the public into approving
> of their bureaucracy-heavy lawyer’s-fee-generating "healthcare reform"
> legislative package.
>
> That expensive healthcare reform plan entirely ignores a long-overdue
> legislative approach that would cut healthcare costs by about 70%:
> tort reform. The Obama plan is little more than re-packaged Clinton-style
> healthcare reform, which also protected the huge vig raked in by
> thieving lawyers. No surprise in any of this, except it is all so
> entirely true to form, and exactly the sort of government rule by
> manipulating public fear that was exposed by Michael Creighton in
> "State of Fear".
>
> Even the new acting director of CDC (notice the term "acting director")
> has been careful to avoid statements that compare this batch of H1N1
> virus from Mexico to normal human flu, and to the 1918 flu, but then
> we should understand that he's on a tight leash and wants to get
> a letter in the mail telling him he's the new full-time director
> of CDC, and if he told the public the truth he wouldn't have a chance
> to get that letter. He couldn’t even say, “You don’t get swine flu
> from eating dead pig meat because viruses die when the host organism’s
> cells die,” which is basic high school cell biology that everybody
> needs to be reminded of so they don’t eschew pork products
>
> You'll also notice that in spite of the fact that isolation and quarantine
> have been the default strategies in infectious disease epidemic control
> for over a hundred years, the acting director of CDC couldn’t come
> out and call for sealing the border with Mexico, where the allegedly
> dangerous infection comes from, and where all the people carrying
> it into the US are coming from. Why is that? Could it be that doing
> so would finally establish one legitimate reason for correcting the
> porosity of the US-Mexican border, and Democrats don’t want to risk
> alienating Hispanics, even if it means increasing the risk of killing
> hundreds of thousands of Americans? (That’s the sort of risk that
> a real flu pandemic would entail, killing hundreds of thousands of
> Americans. The fact that the border isn’t being sealed may actually
> prove that it isn’t a legitimate pandemic flu risk.)
>
> So let's look at this H1N1 and the alleged lethality risk it carries.
>
>
> In Mexico there have been maybe a 100 to 1000 deaths (by the time
> you read this), reported to American newsies by Mexican officials
> who are bought and paid for by the American government and who would
> be utterly defenseless against drug gangsters if it weren't for US
> support and protection, and who will say whatever they're told to
> say. Right now they're busy hyping the flu scare and maintaining
> the silly fiction that drug gangsters in Mexico get their guns from
> Bob's Bait and Tackle in Waco.
>
> Why are Mexicans dying of this flu? Well, maybe it's because the
> infection has greater lethality when it makes its initial jump from
> Mexican swine to humans, and less lethality in its first human-to-human
> jump, and not much after that. It's a common pattern. The other reason
> would be that Mexico sells antibiotics over-the-counter without prescription,
> so people in Mexico commonly self-medicate in a way that either under-treats
> bacterial infections or otherwise encourages antibiotic-resistant
> bacterial strains to flourish in Mexico, and Mexicans with H1N1 flu
> are dying from secondary bacterial respiratory infections that are
> either under-treated or that involve antibiotic-resistant bacteria.
> The third reason would be that healthcare in Mexico is even worse
> than healthcare in Canada or England, so people in Mexico generally
> just stay home and die or get Mexican healthcare and die when they
> get sick.
>
> Biologically, this H1N1 viral strain in today's news clearly lacks
> the lethality factors that have been present in the serious pandemics
> in the past. In other words, it's wimpy flu, not big strong scary
> flu.
>
> Thirdly, this H1N1 strain of flu has been infecting humans in Mexico
> for at least 4 months (just do a little googling for yourself if
> you don't believe me), and nobody had any reason to make a big deal
> about it until the Obamanistas needed an infectious disease scare
> to bully the masses with.
>
> Oh, you ask, didn’t public health officials say there was a warning?
> Yes, they did. If you were a public health official, and you were
> in today’s political environment where every boss in the country
> has been shown over and over that survival today requires a keep-your-head-down-an...
> mode of professional conduct, you’d put out the warnings you were
> instructed to put out.
>
> Oh, you ask, didn’t the WHO issue warnings? Yup, and who do you think
> funds most of what the WHO does every year, without bothering to
> go to congress for consideration of whether that funding is justified?
>
>
> Give me a call when 36,000 people in America have died from this
> strain of H1N1 flu in a year, which is the average rate at which
> American’s die from normal flu in a normal year. Until then, I’m
> betting that I’ll be more likely die from being hit by a solid iridium
> meteorite than from infection with H1N1 flu.

May 03 09:51 PM