As the zombies gather for the Covid-19 apocalypse, China already is returning to normal economic activity, and the extensive quarantines implemented in other countries may be about to slow the world-wide panic, said vaunted futures analyst and forecasting firm The Hightower Report.
“Certainly the economic carnage is severe and is likely to expand, and that could create a knock-on failure across the global economy,” the Hightower report said. “However, we think everyone should take a step back and consider China’s situation as a guide for events over the coming two months.”
CHINA RESPONSE POSSIBLY DELAYED
There are reports that Chinese authorities may have known about the outbreak as early as November, Hightower said. But for whatever reason, they did not implement a widespread quarantine until the last two weeks of January.
They were dealing with very large infections early on and did not have the advance warning the rest of the world had.
Other market analysts have said that once Chinese authorities realized their plight and got going with building hospitals and their massive quarantines, they stepped up and “did the right thing” by alerting the rest of the world to the Covid-19 coronavirus.
Hightower went on to say that Chinese authorities eventually slowed the pace of new infections to a crawl and were able to resume their economic activity.
WEST’S EARLY RESPONSE TEPID
“Unfortunately, Europe and the US did not take China’s experiences seriously enough and are paying the consequences,” Hightower said. “We are reminded of something that has been attributed to Winston Churchill, ‘Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.’”
However, the US has begun to “do the right thing,” and the widespread isolation may hinder the spread of the virus, Hightower said. Economic and psychological carnage likely will continue to expand, but the report warned against the potential for an inflection point.
THERE IS HOPE
While challenges about developing and testing a vaccine, getting it approved and producing mass quantities take time, the markets look to the future, and an effective vaccine would give some definition to the crisis, the report said.
Market volatility is likely to remain historic, and any involvement in the markets should be restricted to risk-defined strategies using long option premium, the report said.
Hightower suggested strategies that attempted to benefit from a potential relief bounce once the market sees some benefit from the successful implementation of the mass isolations currently taking place.
Even the European and US markets could mimic the Chinese pattern and bounce back once the infection rate declined, the report said.
CATTLE FUTURES SHOW MILD SUPPORT
After dropping sharply for the last 2 ½ weeks, live cattle futures this week are showing some signs of support from firmer beef and cash cattle markets, a market analyst said. Cash cattle this week traded up from $105 per cwt to $113 with strong beef markets leading the way.
Probably just a blip, an analyst said.
CATTLE, BEEF RECAP
Cash cattle traded in the Plains this week at $105 to $113 per cwt on a live basis, down $3 to up $3 from last week. Dressed-basis trade has been at $170 to $175, steady to down $5.
The USDA choice cutout Wednesday was up $7.31 per cwt at $247.24, while select was up $9.18 at $238.50. The choice/select spread narrowed to $8.74 from $19.61 with 187 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Tuesday was $123.36 per cwt, down $0.64 from the previous day. This compares with Wednesday’s Mar contract settlement of $112.57, down $0.97.