For those on the fence or still confused as to what to really believe when it comes to the severity of the coronavirus outbreak, this coming week will most likely provide the answers you’re looking for.
For about month now most casual observers of the coronavirus have been unsure exactly what to believe. In the U.S. the CDC is saying that the outbreak has not reached pandemic status, despite it clearly fitting the definition at this point. China’s numbers regarding total cases and deaths have now been widely debunked, so most experts believe the real numbers are at least 5X the official numbers.
But most importantly we have developments over the weekend that suggest this week will be the most telling as to bad the outbreak really is.
Over the weekend South Korea announced a surge in the new cases. A total of 602 with 6 deaths, and most of those were new cases coming over the weekend. (Update – 740 cases)
Next we have Italy, which also reported a surge in cases just over the Weekend. More than 150 as of Saturday and mostly around the populated city of Milan. Officials have quarantined 10 cities with photos of armed checkpoints circulating around the internet showing the severity of the situation.
Then early Monday, the Wuhan Municipal Government announced looser travel restrictions but then abruptly retracted the notice within hours, telling residents that full restrictions throughout the city were still in place.
Finally we have the financial futures markets, which at the time of this writing, are showing the DOW futures down 800 points, with other major markets in similar percentage losses ahead of the opening. This suggests that the markets are finally becoming aware that the coronavirus is poised to drag down the global economy.
Combining all these factors it looks like this week will be when the truth comes out. There has been a worldwide effort to try to downplay the effects, especially within China. But videos of small numbers of patients being quarantined are obviously too little too late. The virus is in Europe, the Middle East, and America. Quarantining a few people here and there is probably doing nothing to stop the transmission.
Is this a doomsday scenario? I find that unlikely. But it does look to be at the very least a significant global economic event, and one that could be devastating for China in the long term and the U.S. in the short term. Virtually all of America’s supply chains are somehow connected to China. Most of those supply chains are known as ‘just in time’ style supply chains, which means exactly what it sounds like. Most inventories and supplies are set to arrive just-in-time before running out. This cuts cost, but it also makes for a very fragile system where something like the coronavirus can leave companies with no inventory or raw materials.
So for those still wondering about what’s going on with the coronavirus, this will most likely be the week where we find out.