by Charles Hugh Smith
Of Two Minds
The potential for a consequential disruption in China’s supply chains appears to be vastly under-appreciated.
Despite the current drop in stocks (less than 1.5% as this is written), there’s a tremendous reservoir of complacency about the economic and financial impact of the coronavirus epidemic. The zeitgeist reflects an implicit confidence that the coronavirus will blow over like the SARS scare a few years ago and the impact on the global economy will be essentially zero.
Have all the risks already been fully discounted? Here are some of the reasons why the assumption that this will have little effect on the U.S. economy and stock market may be misguided:
1. Patient One (the first reported case of 2019-ncov) on 31 December was unlikely to be the person in which the mutation enabling person-to-person contagion occurred. The latest genetic analysis suggests the virus first mutated into its present form sometime between late October and late November.