E Market Briefing For Thursday, February 27

Double-edges swords - tend to describe bounces from S&P (SPX) supports. I anticipated an early Wednesday rebound, but not any sustainable rally. It rallied early, but that's not the point. Sobriety returns when one dismisses the 'structured' morale-building optimism (such as the White House surely attempted), versus the candid perspectives 'history' of pandemics brings. 

In the midst of all this, we come-off a 'priced-for-perfection' S&P, thus a 'mispricing of risk' clearly preceded the WuFlu Pandemic. That requires a wallop of decline to bring equities into more realistic valuation levels. Of course it's too early (especially in the US) to have a perspective on how it will unfold, and how severe the physical and economic impact will be. At least one hint of how markets view 'risk' after the preceding sharp decline look to see how Microsoft behaves. After the Close they are the latest to warn about missing earnings guidance due to the WuFlu epidemic. Now, that shouldn't be surprising, but if MSFT breaks say 165, that's a hint that previous shakeouts don't fully-discount the essential 'stock re-rating'.   

Sure, I for one believed the status is 'blended', and the President wasn't entirely wrong, with regard to the 'relative containment' in the USA. But at the same time the continued 'openness' of our airspace (and unsure they are willing to truly address this without reflecting on the 1918 pandemic), to a degree, forewarns (as does the CDC, HHS and so on) this is brewing on a broader basis. Even just talking about it causes consumers to think a bit about their travels, and maybe even contract local outings, when for the most part (note, the most part) American cities are safe for interaction (and yes I realize there are variations in this across the Country).  

It's all a tragic situation that omits noting the high 'recovery percentage' I mentioned last night, and others should focus on. However that's not the all-clear kind of reassurance people need, and what they want really isn't available yet, no matter what anyone says. Even the White House tends to soft-pedal the 'containment claim' and realizes more money eventually will have to be allocated to fight it, which admits we're unprepared to the extent 'real' knowledgeable people would like to see.

So, trying not to be too somber, after sharing Dean Koontz, excerpts last night.... and by the way thanks to a couple members who offered thought provoking views on that... one of which caught my attention. That was the idea that the 1980's book was 'less some sort of predictive vision' (Wuhan was a small city back then, not the 11 million metropolis it became..while certainly not that anymore), and maybe instead reflected some diabolical individual (or a group?) reading the book, and trying to emulate it.  

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Alpha Stockman 1 month ago Member's comment

To reduce panic, I believe all governments are playing down the threat of COVID-19. We should be listening instead to the medical experts who are saying we are the verge of an epidemic.

Leslie Miriam 1 month ago Member's comment

I read that if the virus doesn't die out once the warm weather starts, like SARS and MERS did, we'll be stuck with the coronavirus forever. Just like we are stuck with the regular flu as a seasonal ailment.