Still not anywhere near the numbers we see in the common flu year after year. The numbers are minuscule. Pandemic means "occurring over a wide geographic area
AND affecting an exceptionally high proportion of the population"
https://www.merriam-webster.com/dictionary/pandemic
Once again, one time issue or permanent? The markets are going to exaggerate it no differently than the nightly news headlines and the fear being driven online. Is it the end of the cruising and travel industries? Extremely unlikely. Might we see a further dip in share prices over the next 3 to 6 months? Possibly. However, the scope continues to be primarily limited to the region. Even the locals see that. Travel agents indicate inquiries and bookings for the cruise lines continue for dates a year out. The cruise lines are also indicating they are seeing little change regarding bookings outside of the Asia region.
This stuff is loose and spreading in Asia, Italy, Malaysia, possibly Africa, probably Hawaii, and I would guess in the lower 48. Sounds like a pandemic to me. The media and gubmint have done their best to keep the party going as long as possible ("just the flu, bro"), but I think the herd is starting to get the vague idea that all is not right. Pretty soon I think they are going to start to panic at real or imagined packs of wolves closing in. When that happens, the very overvalued market is going to have its reckoning.
As far as real world outcomes, there is a lot we really do not know. However, just with what we can see now, this new plague spreads very easily, consumes huge amounts of healthcare resources, and in the event that it becomes widely spread the death rate will rise a good bit because the healthcare system will quickly be overwhelmed. With that very definitely in the range of possible outcomes, how do we value equities? If quarantines and the cancellations of anything involving large groups of people become widespread, what will that mean for the economy? Exercises for the reader. I would suggest that merely including these possibilities in the range of outcomes should result in a materially lower price for risk assets.
I don't care to speculate on the truly awful outcomes (this mutates into something a lot worse). Just based on what we can see now, the valuation of the equity market mystifies me. I think cruise lines, hotels, airlines, movie theaters, restaurants, etc. and all at a huge risk if there are either enforced restrictions on gatherings of people or the populace (like me and many board members) simply starts avoiding these sorts of situations. If you don't see the world that way, I would welcome hearing your arguments why the sun will continue shining regardless of this new plague.
