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March 4, 2020- by Steven E. Greer, MD
I was pondering the impact from the COVID-19 pandemic. I think that it will have a huge detrimental impact to the GDP as numerous sectors get clobbered.
Mind you, I am one who is actually not afraid of this coronavirus, yet even I am erring on the side of caution in my own behavior. The Mets have spring training by me. I will avoid that setting. I am trying to avoid a trip to New York next week, and so on.
Now, who in their right mind would take an elective cruise ship vacation? How many people might avoid a restaurant or movie theater? Who would go to large music concerts or sporting events?
I think the following industry sectors will be devastated:
- Airlines
- Cruise ships
- Hotels
- Large-venue entertainment
- Any company dependent on overseas travel
- Oil companies as demand for jet fuel drops
I think these sectors will be affected too:
- Restaurants
- Hollywood studios and the theater companies
- Any city around the world that benefits from tourists (e.g. New York, any Italian city, etc.)
- Hospitals rely on lucrative elective surgery, etc. Those will slow down.
Certain individual stocks might do well:
- There are numerous biotech and medical device ideas that one can find.
I think that US companies relying on China for their supply will be hit hard. Apple, for example, is in denial. Their earnings are going to be very bad. As another example, I made a rare impulse purchase of sneakers I saw advertised on Instagram. It was an unknown small company I assumed was a U.S. startup. The delivery is very late. It turns out that it was a shady China company. If I ever see these shoes, they will be delayed. The big loser in all of this, in the long-term, will be China. This is a wake up call to industry.
The way that my dire predictions could change for the better is if we start to get an accurate picture of the virulence of COVID-19. We have no idea what the real death rate is. We know that high-end estimates are about 3%. If real death rates are under 1%, and the people dying are all elderly, then I think the panic might subside.
We need more color on each of these deaths and recoveries. The HHS and states need to release details on a centralized website.
In conclusion, I predict that earnings season for Q2 2020, which will begin in July, will be very bad. Q1 earnings should start soon and they will reflect all of this too. I still do not believe that the actual death rates will be catastrophic, but it does not matter.
Update March 6, 2020- South Korea is the biggest country to have large-scale coronavirus testing capabilities and it is reporting death rates of only 0.6%. Told you so.
This is very good news that the propaganda press is covering up because they want to create a recession and hurt Trump. If the U.S. can duplicate these testing results and mortality rates, and get that information disseminated, then the damage will be a single-quarter issue.