Coronavirus Impact? Look To Second Order Reactions.

It's the governments and authorities which will control the full impact of the Coronavirus.

What's amazing about this current outbreak of the novel Coronavirus, is how quickly it has captured the attention of the entire world.

On December 31st of last year, the Chinese authorities notified the World Health Organization of a case of pneumonia, with, at that time, an unknown cause.

The case was located in Wuhan. A week later, the Chinese medical staff was able to identify the virus as the new Coronavirus 2019 n-CoV.

The World Health Organization then published an interim medical guidance report, alerting countries to this new virus.

That was just three weeks ago.

It took another week for the Coronavirus to begin to appear in the Western Press. And before we would become alert to its potential.

That's just two weeks ago.

Today, headlines around the world blare out the latest news on the virus, pirated video is posted of people quarantined in one of the Chinese cities affected, and a simple Google Search provides more then half a billion results for the term: Coronavirus.

While the Coronavirus is not yet a pandemic, in the sense of worldwide health disease.

It is certainly a pandemic in terms of the public's perception of the threat. And that perception grows daily.

For investors, or indeed anyone, trying to cut through the hype and really understand what's happening here, I have a suggestion: watch the governmental authorities.

I'm not saying this because I think they know more than the rest of us. Probably not.

I'm saying this because its the governments, and authorities around the world which will decide how we will react to this situation. And thus they create the environment we will all have to cope with.

Look at the Chinese government as a prime example. It was less than a decade ago that the Chinese Government had to deal with a very similar viral outbreak, the SARS Epidemic. Ironically SARS was also a Coronavirus.

In the case of SARS, the Chinese Authorities first tried to ignore the issue. Choosing to keep everything quiet, and I suppose hope it all went away.

When that didn't happen, and SARS grew worse and worse, ultimately infecting more than 8,000 and killing 774, the Chinese Government came under enormous criticism. For not acting sooner, and perhaps saving Chinese lives.

So this time the reaction was very different. Almost the polar opposite. Entire cities were quarantined, factories shut down and New Years Celebrations canceled.

But while the Chinese Authorities have perhaps over-reacted, the rest of the world has been quite blasé.

It's taken the World Health Organization over 2 weeks to recognize this disease as an international treat.

Other countries have been slow to restrict travel to and from China. And slow to institute screening procedures on China originated travel.

But it appears that all of that is about to change.

We're seeing the first signs of changes in Corporations doing business in China. American Corporations, in particular, are starting to take action to reduce any liability they may have in their Chinese operations.

Companies like fast-food providers Starbucks and KFC, have been closing down locations. High Tech operations Google, Facebook and even Goldman Sachs are closing offices.

But perhaps most impactful for those of us back in the US, a number of US-owned factories are shutting down.

The obvious example here is Apple Computer, with its associated producer Foxcomm, closing much of its production facilities. Can you say iPhone delivery issues ahead?.

And then there is big Pharma. Did you know that about 15% of the world's pharmaceuticals are produced in China? And while we do know that all the big names US Companies are involved in, exactly how much of their products are produced in China is considered proprietary. And thus not available for publication.

So we pray that this health epidemic does not become the world-wide pandemic that many fear.

But what is certain, is that it is the actions of the Governments and authorities around the world, that will create a new business climate.

A climate we'll all have to adapt to.

In short: it may be that the cure, becomes more challenging than the disease.

Tags:
Start listening to Bud Light In The Age Of Scientific Marketing
8:00
Start listening to Bud Light In The Age Of Scientific Marketing
8:00