We’ve been having some interesting conversations here in DC about Coronavirus. They remind me of 2009. Back then, I left Fannie Mae for 309 days to work at the DC Department of Health Emergency Preparedness and Response Administration, called HEPRA. I was there to help combat the H1N1 flu.
We ran vaccine clinics for the Administration. I stay in touch with them. We can apply the lessons learned then to the present day, though 2009 was certainly different––the world was in the midst of the 2008 recession. Presidential administrations have instituted some poor policies from 2007 to today, and the policies have impacted our ability to respond to global pandemics, therefore increasing negative market impact and impacts on daily life.
There are presently 100 people in the US with the virus––not a lot of people. The soundbites and stigma around the virus is what has led to the negative response.
In 2009, when the H1N1 came about, social media did not dominate, as it does today. Twitter was in its infancy, and all of these other social media platforms that connect people in the world, too. They either didn’t exist or were just in their infancy. WeChat didn’t exist in 2009.
People can receive information today live and firsthand from people on the street. When the Dow opened down 1000 points on Monday, it dropped another 900 on Tuesday, but, the President is saying, “Hey, things are great. We have this under control.”
It’s the difference between someone who is giving talking points versus what are the boots on the ground saying. Alex Azar, the Health and Human secretary, has different talking points about the readiness of the United States to respond to the threat of pandemic. On one hand, we have the private equity folks who are looking at the opportunities as the market drops. How low is it going to go?
I had a conversation this morning about telecommunications and web conferencing apps like WebEx and Zoom, which enable people to remotely communicate with each other. We talked about whether or not Netflix is going to go up even more based on China’s response. They will quarantine a small city of 10 million people. What are those people doing at home? They watch Netflix and order items via delivery services. Some traditional businesses will benefit from the coronavirus response.
What about here in the US? In 2008, the CDC got 80% of its budget cut to prevent global disease outbreaks. Initially the US had a presence in 49 countries. After the administration cut the budget, they’re down to 10.
The U.S. health infrastructure isn’t as prepared as it could be, you’re going to see the moment we have 100 cases, and people think they have coronavirus, but they only have the flu.
We saw the man who runs the Iranian health ministry on the news the other day. He was talking about the coronavirus while sweating profusely. Turns out he had the virus; in part because of what the U.S. has done in Iran to sanction them. You have a few million people who don’t have the Healthcare infrastructure to maintain themselves, but they have people leaving the area going elsewhere.
Iran is just one instance. It’s around the world. With Our America First policy we put ourselves in an odd position, because we cut our funding domestically for Health and Human Services for the CDC, as well as globally. And now we’re going to have to figure out how to combat this at our doorstep.
Our conversation came to a standstill of whether or not we should be worried about the zombie apocalypse, the corona apocalypse, in China. To their credit, the Chinese made the hard decision. They decided to quarantine entire cities. China has 1.2 billion people. Wuhan has approximately 12 million people in the city. Perhaps in China not so many people. But, that’s roughly New York, which has around 16 million people. Imagine if we decided to quarantine New York, Chicago, Los Angeles, Houston. Florida is home to 24 million people.
What would happen to commerce? When we look at the airports in Singapore and Hong Kong, huge international airports, but only a handful of people at the airports because they canceled all the flights. What is the impact of if we just canceled international flights to LAX or to LaGuardia or JFK?
We must determine how we’re going to respond and the US needs to determine how much money to devote. The NY Fed already announced $1.5 trillion in easing. The US needs to determine the funds are going to allocate for coronavirus response. Do we make the hard decision like China and just tell people we’re going to turn off the airports, no one can use a plane?
China made the hard decision by shutting down its airports. We in America might not have the political will to do that. If we don’t, we have the potential to have a true pandemic outbreak and, if we do, we’re going to have a huge economic ripple.
The ripple effect on the supply chain, on logistics, shipping, affecting Fang companies, like Facebook, Amazon, Google, is severe.
We have some political realities to face as the stock market turns red, as it hopefully doesn’t continues as it drops as it declines, because the global economy starts to slow the global logistics infrastructure starts to slow down, and when that happens to Bitcoin as a cryptocurrencies or any alternative investments as potential lifeboats for value?
There is a slight hope that with warmer weather here, this hemisphere would slow down the spread of the coronavirus. So, in the meantime, just continue to wash your hands and, you know, to the best of your ability use technology to implement some kind of social distancing from people in general.
But, what if things go awry?
From a retail perspective, a company like Philip Morris will do well. In a doomsday scenario, cigarettes are always in high demand. That means Philip Morris International. They own Massillon particulares, Argentina, HPT Hm, Sinfonia in Indonesia, and in the Philippines, it’s the Philip Morris fortune tobacco company or corporation, and in Vietnam, Philip Morris international has two state owned tobacco companies called the metaba. Philip Morris is always a strong candidate, because regular human beings, they’re going to love themselves some cigarettes.
In the U.S., limited brands, such as Victoria’s Secrets and Macy, are already contracting. If people no longer go to malls, such brands will be hurt. If people don’t congregate in large areas, the movie theaters, the malls, those big chain stores will suffer. Amazon benefits, as well as any of the technologies that enables delivery.
3M produces N95 respirators, which are the mask that many people wear. Instead of buying those masks, precluding at risk people from procuring them, why not buy 3M stock?
As well, nitrile and latex gloves could be good moves, because they are common things that will be on the uptick that everybody should want to buy––300 million Americans, and every last one of them will want to mask immediately. And they’ll want to use one or two masks per day. Imagine that spike in demand. Emerald Health Therapeutics is a big brand producing nitrile gloves, for instance.
There’s going to be a visceral reaction by humans about how these are the end times. People who experienced 2008, where they saw their portfolios drop basically overnight, they’re about to retire. They’re thinking they won’t recover from another loss like 2008. They’re going to be looking for alternatives.
They will be willing to look at Bitcoin and cryptocurrency for the first time with the fresh set of eyes, because emotionally and spiritually, they don’t want to see their portfolios shrink like they did in the recession of 2008.
When it comes to cryptocurrency, I’m doubling down on DOGE. It sounds silly and irreverent. Some people can’t afford Bitcoin. Then they’re going to hear about this DOGE thing, and that’s going to be that easy on ramp for them––their introduction into the cryptocurrency market.
My doomsday portfolio?
I tell people, “Bitcoin, DOGE, Cigarettes, and Bourbon: I accept them on equal terms.”
Pandemics don’t stop on Monday. The coronavirus isn’t going to just be gone March 8. We’ll ride Coronavirus from March, April and May, then we’re going to roll into hurricane season here and for the southeast United States, and then fire season in California. Those natural events will affect quarterly projections for the Fortune 50 companies for 2020 and beyond. We will have severe natural disasters. Those events can continue to impact the markets and people’s sentiments.
We’re not paying enough attention to how fear is the major market driver, and how social media connecting people amplifies the fear faster than any other point in human history. Social media represents the sentiment of humans. If people feel bad, they’re going to make financial decisions based upon that.
Those are some of the unknown unknowns. We’re going to be tackling them over the next week or so or actually over the next couple of months.
(And by the way, go and get your flu shot, because the flu kills like 8,000 people a year in the US. It doesn’t count as a pandemic, because we expect it.)
This text has been adapted from comments by Samson Williams on our weekly Genius Wednesdays. Be sure to join the CoinGenius Discord channel today for a constant stream of market analysis and economic insights.