Why is the Wuhan Virus Such a Threat?


Posted by Ed 53 days ago
AsiaXPAT (Hong Kong) -  An article published on the Daily Telegraph provides rationalle for the extreme measures that governments are taking to address the coronavirus threat.
Leading financial journalist Ambrose Evans-Pritchard also analyses the dire global implications related to the spread of the corona virus in this article. 
Here are some excerpts:  
The Virus Threatens to Collapse the Global Supply Chain
The workshop of the world is closed. China is on a total-war footing. The Communist Party has evoked the ‘spirit of 1937’ and mobilized all the instruments of its totalitarian surveillance system to fight both the Coronavirus, and the truth. Make GDP forecasts if you dare.

As of this week two-thirds of the Chinese economy remains shut. Over 80pc of its manufacturing industry is closed, rising to 90pc for exporters.

The Chinese economy is 17pc of the world economy and deeply-integrated into international supply chains. It was just 4.5pc of world GDP during the SARS epidemic 2003, which some like to use as a reassuring template. You cannot shut down China for long these days without shutting down the world.

The scale of disruption in China is already staggering. Hyundai, Number Five in global car sales, has been forced to close all its factories at home in Korea for lack of key components.
Volkswagen, Toyota, General Motors, and Tesla have all downed tools at their Chinese plants, as has Apple’s iPhone supplier Foxconn.
Global Supply Chain Risks
In his seminal paper, Trade-Off, David Korowicz, explains the fragility of our Just-In-Time global supply chain and the contagion risks should factories stop production for even a few weeks. 
To summarize, companies keep limited stocks of parts and products so if the supply chain is interrupted (by war or pandemic) the shelves go empty and it would be very difficultnand probably impossible to restart the system.

If the Virus Spreads Outside of China It Overwhelms Medical Facilities, and Spreads Even Faster
“It’s very, very transmissible, and it almost certainly is going to be a pandemic,” said Anthony Fauci, head of the US National Institute of Allergy and Infectious Disease.

It is the same warning from an “increasingly alarmed” Peter Piot, head of the London School of Hygiene and Tropical Medicine.

The danger is that it will become endemic and circulate everywhere like flu, a manageable headwind for rich countries with good health care but a Sword of Damocles having over Africa or South Asia.
Medical experts quoted in this New York Times article indicate that the problem with the coronavirus is that it can spread before a person exhibits symptoms.  By the time they become sick, they may have already passed it on to multiple people.
Obviously we have a very dangerous situation on our hands. Measures to try to stop the spread of this virus risk toppling the global economy. But not introducing draconian measures likely means the virus spreads out of control and we get a similar outcome.
Also see the SCMP for ‘Striking’ coronavirus mutations found within one family cluster, Chinese scientists say 

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Ed 52 days ago
Bloomberg is reporting that 61 of the passengers out of 273 on a cruise ship have tested positive for the coronavirus.
It would appear that his virus is extremely virulent and spreads rapidly, and easily.
The danger is that it will become endemic and circulate everywhere like flu, a manageable headwind for rich countries with good health care but a Sword of Damocles having over Africa or South Asia. 

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Ed 49 days ago
UPDATE:   60 More Test Positive on Cruise Ship
Japanese press are reporting another 60 infections on one cruise ship bringing the total from that single ship to 130.   This would indicate that this coronavirus is highly contagious.
Meanwhile, in China, there are concerns about opening factories and putting thousands of workers into spaces similar to what's happened on the cruise ships.   If one person is asymptomatic and reports for work, the virus could spread and infect hundreds of workers in a factory.    
This puts the Chinese government in a very difficult position.   If they do not reopen the factories, then the supply chain will be starved of parts and products.  This would soon result in shelves going bare around the world.   If they reopen prematurely, and the virus infects significant numbers of workers, the factory will not be able to operate. 
Read more on this story on Bloomberg

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Ed 48 days ago
This from a friend commenting on this article  Plague Pushes China To Breaking Point

'A friend's family is in Wuhan, they are all at home 4/5 people in the family are sick, just the kid is not sick and they believe one family member is on a deathbed (45-year-old male) the rest just have bad flu symptoms. These people are definitely not in the official statistics and are undocumented cases so I imagine the numbers are much much higher.'


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Ed 48 days ago
This SCMP article confirms that there are likely many thousands of infected people in Wuhan and other cities in China who are unable to obtain medical treatment or testing for the coronavirus because the hospitals and clinics are jam-packed. 
The head of the CCP party in Wuhan Ma Guoqiang admitted nearly 1500 people exhibiting severe flu-like symptoms had to wait days to get admitted to a hospital.
A great many infected people exhibit only mild symptoms of the virus so might not bother to seek medical treatment or quarantine themselves, so they are likely to be passing on the virus to others. 

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Ed 47 days ago
UPDATE : Is the Worst of the Coronavirus Over?  SCMP
My Take:
1. The SARS virus did not run its course for 6 months and it was never a China-wide epidemic. 
2.  Real numbers are not being reported because a) it's China and b) more people are probably not going to the hospital than are, because the hospitals are full.
3.  The infections are cumulative and increase exponentially and one person generally infects multiple other people (see 130 infections on a cruise ship - see the entire family infected at the hot pot meal)   
China is reporting roughly 43,000 infections as of Tuesday and 4000 recovered. If the hospitals were already overwhelmed a few weeks ago, and only 4000 have recovered, then surely that means that ever more people are not being admitted or diagnosed. And those people will be spreading the virus.
4.  Wuhan built a new hospital in 10 days that can hold 'up to 1000 patients'  One might call that a drop in a bucket in terms of addressing the true scale of the problem (or a cynic might refer to it as a PR exercise).  Many thousands of infected people will continue to be turned away because there is no space in any of the hospitals. 
5.  Further compounding this problem is the fact that as of mid January, over 500 medical workers in Wuhan were infected by the coronavirus, leaving hospitals short-staffed. Authorities were told not to report this infection rate then, so one has to wonder how many more doctors and nurses are infected now and unable to report to work.  Fewer medical staff surely would result in fewer reported infections as even more sick people would need to be turned away.
Conclusion:  the hospitals are full so fewer people are being diagnosed, resulting in lower infection counts.   No, unfortunately the worst is unlikely to be over.
This is an interesting headline on the SCMP.  Shouldn't it be 'does' 
I suppose the algos that run the stock market are triggered by the past tense and the computer programs are triggered to buy on that signal. 
Vaccine for the Coronavirus Imminent?
On a related note, I have seen multiple headlines indicating that miraculously, various labs from Australia to Hong Kong to America have developed a vaccine for this virus in just the few weeks since it was discovered. 
Let's put that to rest by listening to Professor John Nicholls of HKU Faculty of Medicine
The NY Times also has a story on this indicating a vaccine is likely years away and that costs are so prohibitive that labs are reluctant to develop a vaccine for the coronavirus when they know the infection will have burned out by the time the vaccine is ready. 

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Ed 47 days ago
China's Fatal Dilemma 
This blog post by Charles Hugh Smith suggests that keeping the quarantine in place long enough to halt the spread of COVID 19 would collapse the Chinese economy, and that the authorities there have decided to falsely state that the virus has peaked and is receding, and that China is slowly re-opening for business. 

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Ed 47 days ago
The Wall St Journal is reporting on people being turned away from hospitals in Wuhan:

Coughing badly, Zhu Chunxia sat on a sidewalk in the rain on Monday, awaiting transport to a facility where her apartment complex’s residential committee said she could be treated for the new coronavirus sweeping through this central Chinese city.

The ride never came. Though her doctor was almost certain she was infected with the virus, a throat-swab test she had taken came back negative, which meant the facility wouldn’t take her.

"They said we didn’t qualify," said the 36-year-old mother of two girls. "They wanted positive results."

And meanwhile, scientists at Imperial College in London estimate that approximately 1 million people might be infected in Wuhan, a city of 11 million.

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Ed 47 days ago
Feedback from a friend who owns a trading company:
AX - what’s happening at the factories you deal with in China? Are they re-opened yet?

Trader - Not good up there.

My partner’s factory in Dongguan has 20% of its staff in so its slow going.

Many of the factory workers in the south and middle parts of China provinces come from the northern part of China. And because of the migration issue, many factories (for the time being) won’t be getting their workers back for weeks to come, if not months.
Otherwise, anyone wanting to migrate from one province to another will have to be quarantined. no one wants that...

So...challenging times indeed. Our deliveries are delayed…3-4 weeks. This is what happens when the global markets rely/depend on one country to produce its goods. I sincerely hope the world wakes up!!

Its brutal here…SARS 2.0. A lot of businesses will go belly-up…particularly those riding on thin profit/loss margins.


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Ed 45 days ago
JP Morgan is tracking coal consumption in China to try to determine if the country is 'getting back to business' and opening factories.

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Ed 44 days ago
Coal Consumption: 
Property Sales:

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Ed 43 days ago
DEVELOPING : Fiat Chrysler Assembly Plant Halts Production - Unable to Source Components from China
Bloomberg is reporting that  Fiat Chrysler is the first automaker in Europe to idle its assembly lines due to the impact of the coronavirus.  Their Serbian production line was suspended due to inability to source electronics parts including sound systems from its China suppliers.
Earlier the Bangkok Post reported that the biggest car factory in the world in Korea had also halted all production due to the inability to source a range of components from factories in China. 
It is not known when these components will be available to these automakers as much of China remains in lockdown due to the COVID 19 virus.

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Ed 42 days ago
UPDATE - SOHO Hong Kong is in its death throes due to the coronavirus with dozens of restaurants, bars and shops now boarded up.   
This is a recent video of Elgin Street:

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Ed 41 days ago
UPDATE:  China's Largest Property Developer Slashes Apartment Prices by 25%
Less than two months into the coronavirus crisis, and Chinese property developers are already facing a cash flow and debt crisis as property sales have collapsed.
Evergrande, with 811 projects under construction and for sale across China, is desperately trying to raise cash by cutting prices 25% this month and 22% in March.
Evergrande is carrying over 800 billion yuan in debt and is paying 12% on its bonds. 
Read more on this story on the SCMP 

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Ed 41 days ago
UPDATE - 78% of US Companies in China Say Not Sufficient Staff at their Factories
An Am Cham poll of US companies with operations in China revealed that over three quarters of them still do not have enough staff to resume full production. 
Nearly have of the respondents indicated that the plant shutdowns have already impacted their supply chains and that the effects will be realized in a month's time as warehoused stocks of components and consumer products run out.
Workers are finding it difficult to return to factories due to travel restrictions and quarantines in effect across China.
Read more on Reuters 
I wonder if something even more troublesome is occurring in China where there is clearly
widespread panic over this virus. 
After seeing (assuming they have access to this story given the mass censorship in China) that 350+ individuals on a single cruise ship were infected by the virus, perhaps they are afraid to return to the factories.   
Ad the end of the day, a factory, with thousands of workers in close contact with each other is similar to a cruise ship.  All it takes is one infected person (asymptomatic) to show up for work and hundreds of workers risk infection.    

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Ed 41 days ago
UPDATE - Apple Expects Huge Hit to its Profitability due to Coronavirus
Apple has trashed its previous revenue guidance citing 'iPhone supply shortages' and the closure of large numbers if Apple shops in China.  Those shops that remain open are on shortened hours and experiencing very minimal foot traffic as consumers avoid public places.
The Wolf Report has a comprehensive explanation of the bottlenecks that are forming across the supply chain in China here

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Ed 41 days ago
UPDATE - 99 MORE Infections Reported on the Diamond Princess Cruise Ship Yesterday
Japanese medical officials reported another 99 infections on the Diamond Princess yesterday bringing the total to a whopping 454.
Why is the coronavirus a threat?    Because it appears to be highly contagious, and if unchecked would result in millions of people falling ill.   As we are seeing in China, sick people do not report for work, and that threatens the global economy.
Read more on Arstechnica 

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Ed 41 days ago
UPDATE -  Thousands of Containers of Frozen Meat are Stalled at Chinese Ports 
There are not enough truck drivers and other workers available to transport thousands of containers of frozen chicken, beef and pork.
Ports are also reporting that they have run out of electricity power points to keep the meat products frozen due to the massive backlog.
Read more on this on Bloomberg 

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Ed 41 days ago
UPDATE - Researchers Confirm Coronavirus Far More Contagious Than SARS 
Researchers in Texas indicate that the coronavirus is up to 20 times more contagious than SARS.
This very obviously is not 'just another flu'
Read More on the SCMP 

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Ed 40 days ago
UPDATE :  Is China Getting Back to Business?

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Ed 40 days ago
UPDATE - Lenovo Reporting Serious Delays due to Coronavirus
Our systems management company is advising the following regarding CTO products: 
'From our Lenovo rep directly; Due to Covid-19 and CPU shortage impact, all CTO and back to back order require up to 8 to 12 weeks ordering lead time'
This is 2.5 x longer than usual and this assumes that the factories will be able to source the components to clear the backlog of orders that are building up. 
CTO's refer to custom builds so there will still be off the shelf desktops and laptops in the shops. 
But once their inventory gets sold, we may be facing a similar situation with long waits for computers. 

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Ed 39 days ago

UPDATE: 79 More People Test Positive for COVID 19 on Diamond Princess Cruise Ship

Channel News Asia is reporting 79 more infections bringing the total to 621 on the Diamond Princess cruise ship.

Two Thirds of Migrant Workers Have Not Returned to Work

Meanwhile, the SCMP reports that over 200 million migrant workers are unable to return to work

The government 'expects' 120 million workers to be back on the job by the end of February and that the remainder will return 'in March' when the virus 'is brought under control'

I'd like to thank the SCMP and Channel News Asia for their excellent press releases. 


Now let's try to understand what these 200 million migrant workers might be thinking.
Keep in mind that this 200 million figure comes from the 'Ministry of Truth' which is notoriously loose with the truth. As the JP Morgan graph above indicates, coal consumption has barely increased since the extended holiday ended. China burns coal to produce electricity and factories use electricity. If 100 million workers are back on the job, where is the spike in electricity consumption?
1. 621 people on the Diamond Cruise ship have now tested positive for COVID. This is obviously a highly contagious disease.

2. Entire cities in China are in total lockdown with almost nobody on the streets. Videos are circulating showing authorities with weapons enforcing the quarantine.

3. There is panic buying in the shops in China (and to some extent Hong Kong).

4. Official numbers indicate 75,000 infections with 14,000 recovered. The hospitals obviously still have no space.

5. The actual number of infections is surely many times higher than the official count. Scientists at the World Health Organization have suggested we are seeing 'only the tip of the iceberg'

6. SARS did not abate for over 6 months and it was never out of control in China.

It's easy to say (as the Chinese government is) that the workers will report to the factories soon. The virus will magically go away. And of course, these workers need money so they are going to return and start making widgets.

But hold on a second. Bloomberg reported yesterday that thousands of expats are either fleeing Hong Kong or have shipped the kids out of the city. Hong Kong doesn't even have 100 infections. And Hong Kong is not in complete lockdown with armed guards controlling our movements.

Yet panic and fear are in the air....

Put yourselves in the shoes of a migrant factory employee in China. Let's say you work in the auto industry in Wuhan ('the Detroit of China') at a semi-skilled job making components for Land Rover. You left for your village to spend Chinese New Year with your family and friends.

Then you read about this terrible virus that is devastating Wuhan. How would you feel? What would you do?

Struggling with that? Just imagine that you returned to your 'village' for Chinese New Year.

You flew to London, or New York, or Toronto, to spend a week or two with your family and friends. Now substitute Hong Kong with Wuhan. You work in Wuhan.

How would you feel? What would you do?

If the Chinese government assured you that it was safe to return to your office even though there are hundreds of other workers there and one might show up asymptomatic and infect you (would you not be thinking 'Diamond Princess... 621 infections’).

Would you be willing to return to a city that is in complete lockdown? Where you can go to and from the factory and the grocery store, but otherwise are confined to your apartment?

Yes, you need that salary (and that bonus), but is it worth risking your life for?

Now we are in the shoes of a migrant worker in China.

Clearly hundreds of millions of them are doing exactly what you or I would do. They are frightened of this virus and they are unwilling to return to their places of work.

They know that if they return to their factories, and contract the virus, that the hospitals are full. They are unlikely to receive medical care.

They have no interest in putting their lives at risk to produce widgets for the world.

Land Rover's CEO in the UK says his assembly plants will stop production in two weeks’ time due to a shortage of components. If it gets to this Land Rover will lose many millions every single day. Think about all the other industries that will be in the same boat.

We read about this and sanguinely conclude, nothing to worry about, this is too important. The workers will ride to the rescue and the supply chain will flow again.

Stepping back into that Wuhan workers shoes.

Do you think he gives a rat's ass about Land Rover?

If you worked as an executive for Land Rover in Wuhan, would you be thinking 'yep gotta rush back to that hell hole where I might get infected and die, because Land Rover needs those bloody door handles or the assembly lines in the UK stop'

Or might you decide to hold tight, wait for this virus to abate, and then return to the Land Rover office.

This appears to be what the Wuhan and 200 million other factory workers are doing. They are remaining in their villages with their families and waiting.

And meanwhile, the Land Rover CEO is watching the inventory numbers on his computer screen each day as they head towards zero.

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Ed 39 days ago
UPDATE:  China is in a Life and Death Battle to Restart Factories - and Failing
Factories across China remain closed or producing at feeble levels as owners are facing critical staff staff shortages and are finding it difficult to source raw materials.   The transportation and logistics network is sclerotic due to a lack of drivers and other workers. 
Hetin Shah, the president of supply chain management company MES Inc warned, “Our key suppliers are terrified. Even workers within the province aren’t willing to go out and go to work, people are really scared of getting infected. People are still choosing to stay at home.” 
Read More on the SCMP

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Ed 37 days ago
UPDATE: Multiple Cases of Coronavirus Reported in Italy
The small town of Cologno in northern Italy had 6 people test positive for COVID 19 with more suspected infections amongst its 15,000 residents.
Unconfirmed reports indicate that 14 more people have tested positive in Lombardy, and 2 in the Veneto region.
Read More on The Local

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Ed 37 days ago
UPDATE - Fear as Coronavirus Clusters Emerge at Beijing Hospitals 
There has been a sudden rise in coronavirus infections in Beijing as dozens of new cases have been confirmed at two downtown hospitals.  Hundreds of more people are being monitored for symptoms.
Read More on this on the Nikkei Asian Review 

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Ed 37 days ago
UPDATE - Global Shipping Dominoes are Starting to Fall 
Nearly half of all container shipping sailings out of China have been cancelled in the past 4 weeks reducing outbound container volumes by 300,000 per week.
Lars Jensen from SeaIntelligence in Copenhagen said this will cause logistical nightmares in Europe as early as March, even if the virus is miraculously brought under control and China comes out of lockdown in the coming days.
The US Agriculture Transportation Commission issued similar warnings for the United States stating that the Pacific supply chain has been badly “compromised” 
Mr Jensen said “The first to be hit is the auto-industry because it has a very tight supply-chain. Companies are having to airlift in supplies from Asia, which is extraordinarily expensive.” 
Read More on the Daily Telegraph 

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Ed 36 days ago
UPDATE - Coronavirus Cases More than Double in Day with 229 New Infections
Nearly every patient in a psychiatric hospital tested positive for the coronavirus contributing to a huge spike in infections in a single day.
Read More on Bloomberg 
Virus Spreads in Italy 
Italy has locked down 10 towns as the virus has now spread to the country's financial centre, Milan.   Two people have now died from the virus and 60 are confirmed infected.
Read More on JPost 
6th Death in Iran
28 cases of coronavirus have been confirmed in multiple cities in Iran with 6 deaths so far. 
Read More on ABC News 
Meanwhile, Ethiopian Airlines continues to resist pressure to halt flights from China.   Ethiopia is a major hub for Chinese nationals who work in Africa.   Africa is ill-prepared should the coronavirus pandemic spread throughout the continent.

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Ed 36 days ago
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Ed 35 days ago
UPDATE:  New Coronavirus Surge in South Korea
Coronavirus infections are exploding in South Korea with 161 new cases reported yesterday, and a 20 fold increase earlier.   
The remaining days of the Venice Carnival have been cancelled as 150 more coronavirus cases have erupted in the northern part of the country.
Cathay Pacific has announced it is suspending additional flight routes.  As more countries report significant outbreaks of coronavirus infections, already weak air travel and tourism numbers are bound to take additional blows as people cancel bookings.
Hospitals in China are struggling to provide critical care services as some patients infected with the coronavirus requiring a month or longer on mechanical ventilators. 
Read More on Bloomberg  

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Ed 35 days ago
UPDATE - Middle Oil Shipments to China Plunge 88 Per Cent
Oil shipments from the Middle East to China are at only 12% compared to a year ago. 
The SCMP is reporting that crude tankers have virtually stopped sailing for China since the beginning of February. 
This is a further indication of just how feeble economic activity is in China due to the coronavirus. 

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Ed 35 days ago
UPDATE - The CCP is Pushing Factories to Open and Risking Everything
The CCP has loosened restrictions on factories allowing them to open as China tries to re-start crucial production and prevent the global supply chain from collapsing.
This is a classic Catch 22 situation whereby if they keep the factories closed to prevent the spread of the coronavirus, shelves will start to go empty around the world.    But, by opening the factories while the virus is still raging, China risks a huge spike in infections which would leave factories drastically short of workers. 
Factories that have reopened are reporting that they are operating at very low production levels due to a shortage of workers. 
Workers in heavily infected centres are prevented from returning to work in the large industrial cities.   Factories are still waiting for their suppliers to start shipping and for transport companies to commence distribution. 
There are huge stakes involved and one wonders how far the CCP might be willing to go to force frightened workers to return to their jobs.  
Read More on Bloomberg

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Ed 35 days ago
UPDATE -  HK Bankruptcies Worse than during the Global Financial Crisis
The Hong Kong Institute of Certified Public Accountants said that they expect to see the biggest increase in bankruptcy declarations in over a decade as firms are overwhelmed by the US trade war, protests and now the coronavirus.
Read More on the SCMP 

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Ed 35 days ago
UPDATE -  Flip Flopping and Confusion in Wuhan
The CCP has now revoked an earlier announcement that they would loosen the quarantine that is strangling Wuhan and let healthy people who are from other parts of the country leave.   
Read more on Reuters. 

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Ed 35 days ago
UPDATE - Panic Buying in Milan - Shelves Emptied 
Watch Video 1 
Watch Video 2 

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Ed 34 days ago
UPDATE - Two Thirds of Coronavirus Cases are Undetected - Imperial College London 
Consistent with similar analyses [3], we estimated that about two thirds of COVID-19 cases exported from mainland China have remained undetected worldwide, potentially leaving sources of human-tohuman transmission unchecked (63% and 73% undetected based on comparisons with Singapore only and with Singapore, Finland, Nepal, Belgium, Sweden, India, Sri Lanka, and Canada, respectively).
Undoubtedly, the exported cases vary in the severity of their clinical symptoms, making some cases more difficult to detect than others. However, some countries have detected significantly fewer than would have been expected based on the volume of flight passengers arriving from Wuhan City, China.  
The hospitals are full in China, making it likely that most making people who contract the virus won't seek medical care or go into quarantine, particularly if they are not experiencing severe symptoms.  
What are the real number of infections in China? 

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Ed 34 days ago
UPDATE - The HK Construction Industry has Ground to a Halt
50,000 construction workers in Hong Kong have lost their jobs and another 80,000 are reduced to working one or two days a week due to construction material shortages.
Factories are 'open' in China however workers are not returning either because they are caught up in lock downs in other cities, or (more likely), they are afraid to return to their places of work.
Read More on the SCMP 
These workers are aware that if they do return to the factory floor with thousands of others, they risk infection.  And they know that the hospitals are full and that they will likely be left to fend for themselves should they catch the coronavirus.
Remain in your hometown and sip tea with the family for a month or two longer, waiting for the contagion to abate, or rush back to the factory?   

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Ed 34 days ago
UPDATE - Foxconn Reportedly Offering New Workers USD1000 Bonus to Return
If this is true, then it paints a rather grim picture of what's happening at factories across China.  The doors are opening, but it is likely huge numbers of workers are not returning.
USD1000, or 3 months salary, to risk your life.    
If you worked in China, would you be willing head back to work now,  if you were paid a 3 month bonus?
See more on the SCMP 

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Ed 34 days ago
UPDATE -  China Trader Confirms Factories are still Operating at Minimal Capacity
This is an email from a mate who has been trading in China for 2+ decades (an update on an earlier post involving the same person):
I can only tell you what I know from the factories I am dealing with. Our plastics factory in Dongguan is at 25%…and may start to ramp up mid March. Even so, we won’t be at full capacity for some time…I mean to levels high enough to stand behind customer delivery commitments. This is our plastics injection factory and sell our houseware products in North America.

On the silicone factory, the situation is much more dire. I just placed an order for 50K pcs and they will not be delivering until early April. Under normal operations, lead times would be 3 weeks. Yet, we’re still in Feb for crying out loud and the lead time is 6+ weeks at best. They really have labour issues.

Up north in Putian near Fuzhou (footwear manufacturer), they started operations yesterday but they, like other factories across China, are not at full capacity and won’t be for some time. The only labour pool they can draw from is from the province itself. All those from the northern provinces are still not in the migration mode as you’ve eluded to below.

So I don’t see them shipping product till end of March. And they themselves don’t have a really good idea when they will return to normal operators (full capacity) until the CCP overcomes the Covid issues for good! This could be 2-3 months from now as temps will rise and should help subdue the spread of the virus.

There is a whole lot of guesswork in play here as to how the virus can be contained. And the sentiments in the business community is still on the cautionary side of things.

And when you add the issues South Korea, Japan, Italy and Iran are having…my goodness, this enigma is far from over. Pandemic? Not yet but it can happen in the coming month or two…

But my concern which many are not talking about is the supply chain issues and logistic challenges when product starts to head to ports, will the capacity be there for worldwide deliveries?

Who knows?

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Ed 34 days ago
UPDATE - HK Closes Schools Will Remain Closed Until at least after Easter
The Hong Kong education department has announced another extension of the school closure and will not consider reopening them until at least mid April.
Read More on the SCMP
Hong Kong has less than 100 coronavirus cases yet schools will remain closed for another 7 weeks, and most office workers are still working from home.
Meanwhile, China, with nearly 80,000 infections ('tip of the iceberg') has thrown open the doors to many of its nearly 3 million factories, and is urging workers to return asap.
Setting a tremendous example, the leaders of the CCP have cancelled the National People's Congress because of fears of the coronavirus.

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Ed 34 days ago
UPDATE - Steve Bannon - Coronavirus Is Out of Control In China
This makes for disturbing viewing:

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Ed 33 days ago
UPDATE - The Virus Spreads - This Will Bring Global Travel to a Standstill
The first cases of coronavirus have now been reported in:
- Austria
- Spain 
- Switzerland
- Croatia 
- Algeria
- Brazil
More on this on the SCMP 
The CDC (Centre for Disease Control) is warning Americans 'it's not a question of if coronavirus will spread, but when'   See CNN 
It doesn't take much to convince most people to shelve travel plans.   A hint of unrest in a country will get them unpacking their bags and demanding hotel and air ticket refunds.   A few cases of coronavirus will lead to a similar result.   
Nobody wants to risk contracting this virus nor do they want to end up in a 14 day quarantine when they return home.
And trying to lure them with cheap air fares and hotel rates is about as effective as trying to catch a fish with your bare hands.
Every day more countries are identified as having 'the plague' which is narrowing down the options for would-be travellers, and making them reticent to go anywhere. 
I thought that New Zealand, where I spend half the year, might benefit from this as it has no cases of the virus and leverages it's clean, outdoors, no crowds brand. 
But nope, I got my hair cut the other day and got the inside scoop on what's happening in the tourism capital of NZ, Queenstown (hedge funds really should get barbers - and cab drivers - on the payroll since they will give you boots on the ground insights).
The bungy jump which is just up the road from us in Gibbston, normally sells 300+ opportunities to plunge to your death before being rescued by a rubber band.  At the moment there are only 100 jumps per day.
The luxury Rees hotel is apparently operating at half occupancy - and this is the ultra high season. 
No corner of the earth is immune from the economic impact of this virus as it is creating fear and panic and stopping large numbers of people from traveling. 
The only place I can imagine that is not being hit is my home town of Sudbury.  It's a mining town with winter temperatures that regularly drop to - 30.  You could cut off flights and nobody would notice because they get about 50 tourists per year.   The highlight of a visit to Sudbury is a tour of the Big Nickel!   
Now I am looking at that CDC warning (or is it a threat?) and thinking the US has around 50 cases of the virus which is definitely a concern.
But what is the point in the CDC stating that a pandemic is inevitable? 
Should we change the axiom to 'only death, taxes and pandemics are certain'
All this is going to do is create panic.   People will  head to the shops and clear the shelves.  Many will use this as an excuse to bulk buy more guns and ammo. 
But what they will not buy is a new fridge, or a new car, or much of anything else that they don't need now because 'the end of the world is imminent'
And that is not good for an economy where the consumer is 70% of GDP.
Why would the CDC set out to deliberately create anxiety in America?
The issue with workers refusing to return to the factories in China remains a massive concern.  But the multiple threats to the global economy and financial system are building by the day.   If they push use over the cliff, will there be a rubber band to haul us back up? 

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Ed 32 days ago
UPDATE - Xi Pressured to Lift Virus Restrictions
The Wall St Journal is reporting that Chinese President Xi is under intense pressure to lift quarantines and restrictions so that companies can resume business across the country.
The restrictions are strangling the Chinese economy and business owners are urging Xi to take action.
Removing the restrictions could lead to a huge increase in infections as workers might pack into close quarters in the 2.8 million factories across China.
It remains to be seen if workers will be willing to risk their lives even if more factories in the 'hot zones' that are in complete lockdown are re-opened.
Based on coal consumption across China, industrial activity remains weak:

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Ed 32 days ago
UPDATE -  Coronavirus Threatens Global Economy with a Sudden Stop
This is another excellent article from Ambrose Evans Pritchard of the Telegraph.  It's behind a paywall so I will summarize:
- the spread of the coronavirus is beyond the point of meaningful containment
-  many prominent virologists have lost patience with the WHO and the organization is perceived as kowtowing to pressure from China.   Contagion experts Peter Sandman, Ian Mackay, and Jody Lanard state:
“We are near-certain that the desperate-sounding, last-ditch containment messaging of recent days is contributing to a massive global misperception about the near-term future.
One horrible effect of this continued 'stop the pandemic' daydream masquerading as a policy goal: it is driving counter-productive and outrage-inducing measures by many countries against travellers from other countries, even their own citizens back from other countries.
“But possibly more horrible: the messaging is driving resources toward 'stopping' and away from the main potential benefit of containment – slowing the spread of the pandemic and thereby buying a little more time to prepare for what’s coming.”
- the mortality rate of the coronavirus is in the same region as the Spanish Flu (2.8pc in Hubei) 
-  the Central Banks will be powerless to mitigate the impact of the virus because large segments of the economy will be effectively shut down (stimulus cannot force workers to return to work and produce the products that make the world go round)
-  Large numbers of workers are not returning to factories.
China’s Baidu migration index shows that 72pc of travellers and migrant workers have not returned to the 15 largest cities since the Chinese New Year. Nomura says journeys on the Guangzhou metro remain down 85pc. Coal use at six key power plants – a proxy for industry – is down 47pc. 
It is not believable that people are going back to work and at the same time that the spread of the virus is being contained dramatically outside Hubei.

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Ed 32 days ago
UPDATE - New Infections:  Korea 334 - China 433
Korean authorities took immediate action locking down hot spots and quarantining suspected cases.
China, on the other hand, covered up the situation and persecuted doctors who issued warnings which resulted in the coronavirus spreading throughout China.
The numbers out of Korea are believable.  But I am more than a little sceptical on those China figures. 
That said, if the CCP published accurate figures, would even fewer workers return to the factories?   

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Ed 32 days ago
UPDATE - Shanghai, a city of 24 million people, is a ghost town.  Video 

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Ed 32 days ago
The factories are open, but there workers or few. And there are no raw materials.   
'We'll get back to production by the end of March' is the common refrain.  But that is predicated on the virus abating.   
Will the CCP continue to massage the daily infection numbers downwards so that they can claim it has disappeared in a week or two?   There are the daily numbers and there is the reality - entire cities remain in total lockdown and despite censorship, people will know if the virus is still making its rounds.   
The Chinese MSM can attempt to fabricate a revised reality and control perceptions, but the masses fear of suffering and possible death, will ensure they fail. 

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Ed 31 days ago
Update - Video of Boarded Up Restaurants and Shops on Wellington St in Soho

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Ed 31 days ago
UPDATE - Vietnam is Not the Answer
Shifting production from China to Vietnam is not an option because most factories in Vietnam source raw materials and components from - you guessed it - China.
“The deeper you go in the supply chain, the greater the impact,” said Julien Brun, managing director at CEL Consulting, a supply chain advisory firm. “Small companies may have important expertise for the rest of the supply chain, but because of the shortage of goods from China, they will be the first to go.” 
“If companies like Flextronics and Apple cannot produce products, then they do not need packaging,” Donegan said. “February numbers at my company will be a disaster. We want to get back on track for May or June, but it is uncertain at the moment. We do not have to make lay-offs for a while, we will see where we are at the end of March, but it is all depending on factories reopening in China.” 
Read More on the SCMP 

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Ed 30 days ago
UPDATE - Leaked Documents - 'China's Main Priority is Controlling Public Opinion'
The Epoch Times has obtained leaked internal government documents indicating that authorities prioritized how to “control the society” and “manipulate public opinion” to view China’s efforts to contain the virus positively.
The obvious question that arises is would the CCP go so far as to falsely reduce the daily infection numbers to create the perception that the crisis is abating? 

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Ed 30 days ago
UPDATE - China Amassing Mountains of Commodities
As global demand for finished products collapses due to the coronavirus, China continues to produce steel, copper, gasoline and diesel and is stockpiling these products.
“Producers won’t involuntarily stock forever if they are not selling their products as this would be a cash flow negative exercise,” Max Layton, managing director for commodities research at Citigroup Inc.
Read More on Bloomberg  

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Ed 30 days ago
UPDATE -  Major Plumbing Retailer is Running Out of Products 
This morning, I purchased a valve for a water filter from Reece Plumbing, which is one of the largest retailers of plumbing products in Australia and New Zealand. 
I asked the sales person if they were experiencing problems with obtaining plumbing parts.
His response was, "yes, we have received notices from some suppliers that some items are already out of stock due to supply chain issues related to the coronavirus." 

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Ed 30 days ago
UPDATE - The FDA Reports First Drug-Related Shortage due Coronavirus
The FDA are refusing to name the specific drug but indicate that it is no longer being supplied due to coronavirus disruptions of the supply chain in China.  
At this time, alternative drugs are being prescribed.
India is a major drug manufacturer, however most of the raw ingredients for most drugs originate in China.
Read More on CNBC 

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Ed 30 days ago

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Ed 29 days ago
UPDATE - Why No Health Care System Can Cope with a Coronavirus Epidemic
A doctor in the UK explains that even a modest uptick in hospital admissions 'overwhelms the system'
- the coronavirus is worse that SARS or MERS in that it is undetectable for long periods when patients show no symptoms yet are infectious
- the virus can remain infectious on surfaces for up to 9 days 
- the mortality rate is 2-3%, many times higher than 'the flu'  and roughly 5% of all cases require intensive care
- England has 4000 ICU beds in total.  Many of those beds are taken up by people with other critical illnesses
- estimates indicate that if unchecked, the coronavirus could infect 60% of the population 

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Ed 28 days ago
UPDATE - NASA Satellite Imagery Shows Huge Drop in Air Pollution across China

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Ed 26 days ago
UPDATE :  Dozens of Bodies Piling Up in Iranian Hospital - Watch Video 
23 members of Iran's parliament have been stricken with the coronavirus.
Read More on Stuff 

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Ed 26 days ago
UPDATE - Why Does Indonesia Not Have Many Infections?
A mate of mine who lives in Bali spoke to a doctor yesterday who told him that the cost to test someone for the coronavirus is USD100.   
As he pointed out, there are people who get bitten by snakes who do not see a doctor because they cannot afford the fees.  So if you develop flu like symptoms, and they are not severe, then it is highly unlikely that you would bother with a hospital visit.
No doubt this would apply to all countries with large numbers of people living in poverty. 

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Ed 26 days ago
UPDATE:   Death Rate for Coronavirus is a whopping 3.4%
- Spanish Flu in 1918 killed 1.7% of the world's population with a death rate of 2-3%
- Japan indicates the Olympic Games might be delayed
- JPMorgan orders US employees to work from home
- Ford Motors US halts all business travel
- Amazon employee in Seattle infected
- The Fed drops rate 0.5% after emergency meeting
- Multiple major conferences cancelled in the US
- FDA warns of imminent drug shortages 
Read More on Bloomberg 

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Ed 26 days ago
UPDATE -  Is China Faking Factory Production Statistics and Electricity Consumption?
Financial analysts have been referencing air pollution indices and coal consumption to try to determine the real levels of factory production in China over the past few weeks. 
And the conclusion they have reached is that the situation is grim - the factory doors may be open but nobody is home.  Workers are refusing to return. 
There are reports that Chinese factory owners are being told to use more electricity even if they have too few workers for meaningful production, apparently in order to flatter the “Li Keqiang” tracking index watched by markets and create an illusion of recovery. Telegraph
"At least three cities there have given local factories targets to hit for power consumption because they’re using the data to show a resurgence in production. That’s prompted some businesses to run machinery even as their plants remain empty.
On Saturday, the Taizhou Daily published a front-page commentary criticizing local officials for focusing on power usage, arguing that hitting the targets won’t ensure economic growth. By Sunday, a link to the article on the paper’s website was no longer working.
Last week, the Xinhua News Agency published a story about production resuming in Guangdong using power consumption as the main evidence to show how quickly production is returning to normal levels.
Some smaller businesses are unable to restart work because workers haven’t returned and have resorted to turning on all their electric equipment, including air conditioners, to meet the quotas, according to two factory bosses. Bloomberg
If these assertions are correct, China is operating the mother of all Potemkin Villages
Burning coal does not in itself produce the stuff we need to operate the global economy, and if they think that this is going to fool fearful workers into believing things are back to normal and convince them to return to work,  the CCP is badly mistaken.   
What is likely to happen is that the workers will hear about what is transpiring at their places of work and become even more fearful as they are made aware of these desperate, bordering on comical, government dictates.
Can We Trust the Daily Virus Infection and Death Statistics? 
If the CCP is demanding that companies ramp up their electricity usage (OR ELSE!), then might they also be demanding that government officials and medical staff report a reduction in coronavirus infections and deaths (OR ELSE!).

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