The coronavirus is spreading despite China’s substantial efforts to contain it. Spreading even faster: news stories about the new flu strain.
And the combination of the two is having a real impact on global markets.
The two forces are related, of course, but they are also separate. Let me dive in.
Coronavirus is a new strain of the flu that can progress enough to be deadly. That alone is not unique; the flu kills 300,000 to 640,000 people a year. There are four strains and dozens upon 2 dozens of subtypes. The vast majority we have seen before, which means two things: we have a vaccine already in hand and some parts of the population are already protected from a previous exposure.
The coronavirus that is in focus today is a new subtype of a category of virus that we have all had before: the flus that sit in your nose, sinuses, and upper throat. But while coronaviruses are usually tolerable, they certainly have the potential to become lethal. Both SARS and MERS were coronaviruses that became new human strains of the flu when they jumped from animals to humans, in 2002 and 2012.
This coronavirus, officially known as 2019-nCoV, seems to have taken the same path. Importantly it also developed the ability to transfer between humans, which is why there are patients ill with the virus who did not visit the meat market in Wuhan where the outbreak started.
I’m not an infectious disease doc or an epidemiologist, so I have no comments on how serious this is or will become.
I will say that we don’t yet know how deadly this virus is because we don’t have an accurate count of patients – we know how many have died but we don’t know how many caught the bug but did not get ill. Data is now filling in and it seems this strain has a fatality rate around 3%, which is much lower than SARS, but that will still change as more data is gathered.
I will also say that China is doing its utmost to contain the virus. There are some 50 million people on lockdown. Think about that for a moment! And with the World Health Organization labeling it a public health emergency, countries around the world are now working together to limit the spread. I think it’s likely containment will work. As such I am not at this point worried about an epidemic.
That doesn’t mean the markets are calm.
Well, the S&P 500 has lost 3% in the two weeks since the virus became a global news story. In the same timeframe gold has gained 2.2% to hit its highest price since 2013