This will become an often-played tune over the next few months, delineating how dependent Corporate America has become on China.
By Wolf Richter for WOLF STREET.
China’s official reaction to the coronavirus – locking down mega-cities, shutting down part of the transportation system, closing factories and retail stores for weeks, etc. – largely shut down production and crushed retail sales. And this predictably would do two things to Corporate America:
- Throw its complex and huge supply chains that crisscross China into disarray,
- And cause sales in China of US brands – mostly made in China – to collapse.
There have already been some US companies that grappled publicly with warnings about revenues, earnings, and supply chain woes. But here is the big one.
Apple announced this afternoon – a holiday for US markets and the last day of a long weekend, when no one is paying attention – that it threw its revenue guidance of January 28 out the window. Clearly, January 28 was not the time to sow doubt; the stock had to be driven higher.
At the time, the coronavirus and China’s way of dealing with it were already in full swing, and the supply chain woes and retail sales collapse were already obvious. In my podcast of February 2 – THE WOLF STREET REPORT: What Will the Coronavirus Do to the US & Chinese Economy? – I pointed at these issues; and surely, Apple had been aware of them too for days, as part of its supply chain and retail stores in China had already been shut down.
Apple disclosed today that, as work is starting to resume at factories in China, “we are experiencing a slower return to normal conditions than we had anticipated. As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.”
Those two factors are of course the supply chain woes and collapsed retail sales in China.
The supply chain woes will cause “iPhone supply shortages” and eat into revenues.
The first is that worldwide iPhone supply will be temporarily constrained. While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated. The health and well-being of every person who helps make these products possible is our paramount priority, and we are working in close consultation with our suppliers and public health experts as this ramp continues. These iPhone supply shortages will temporarily affect revenues worldwide.
Apple’s China sales collapsed as many stores were shuttered and as traffic plunged at stores that were open.
The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed. Additionally, stores that are open have been operating at reduced hours and with very low customer traffic. We are gradually reopening our retail stores and will continue to do so as steadily and safely as we can. Our corporate offices and contact centers in China are open, and our online stores have remained open throughout.
“The situation is evolving,” Apple added to make clear that this was just the first belated announcement, and that the second belated announcement would come during the earnings call in April, when it will sort out in greater detail its supply chain woes and sales collapse in China. And it added the soothing words that “this disruption to our business is only temporary.”
We’ve been sitting on the edge of our collective chair for weeks, waiting for this type of announcement from Apple. Other giants among Corporate America will soon come out with their own version of throwing their revenue guidance out the window, warning of supply-chain woes and shortages of components and products, and predicting more uncertainty as the “situation is evolving.”
The situation will be evolving for months. This issue in China isn’t going to be resolved by the end of the first quarter. As Apple and others – including automakers – have now pointed out: Just because the factory is open, doesn’t mean it has the people and the components and supplies in place to start producing at a normal rate.
All supply chains going through China, or relying on China for some of their components, have been thrown into disarray. Not much is moving through. If just one part of the final product can’t make it to the factory, the final product can’t be shipped.
Supply chains are complex and finely tuned. For some easy-to-make products, such as shoes, there are alternatives around the globe. But for precision-machined components and high-tech components, as in the automotive and consumer electronics sectors, it takes time to develop supply-chain alternatives outside China or to sort through the supply-chain woes in China.
Over the next few weeks, this will become an oft-played tune that will delineate just how dependent Corporate America has become on China, both, in terms of revenues, and in terms of production.
It’s not only Chinese tourists, business travelers, and property buyers who’re not showing up, but also travelers from all over the world who’ve gotten second thoughts about sitting on a plane…. THE WOLF STREET REPORT: Coronavirus Slams Airbnb, Airlines, Hotels, Casinos, San Francisco, Other Hot Spots
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:
Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.
Wonder how much of basic necessities in Walmart come from China? The toilet paper shortages may even hit USA.
This type of stuff can be sourced anywhere in the world, even in the US :-]
Hang in there with your short wolf. Negative divergences are popping up
And the spx monthly 15 ma, A nice drop ,is aching for a kiss
Mr Engle may agree?
sector positioning is never more important….
down moves are going to be muted…3-5% correction is to be expected….sideways is more likely
Your shorting the market now seems clarivoyant. I wonder how many such Chinese factories will truly, ultimately be able to resume work for good, without more infection incidents.
Is the government here also trying to avoid panics? I predict this is the Black swan.
Yes, Wolf but not tomorrow.
Even in China, you can go to remote city’s like Kunming, and find box Walmart stores exactly as in USA, same layout.
Place’s like Harbor-Frieght, Walmart, and Costco got going by offering cheap ‘made in china’ stuff 30+ years ago.
Now virtually all comes from China, sure it can be sourced, what about assembly? Finally assembly for most Chinese junk is one time, they do a run of John Deere tractors, and they make 10k, and then never do it again; That’s why if you buy Chinese stuff you will never get parts’ down the road.
It took 30+ years to build the Walmart inventory and stuff we get coming in from China, sure it could stop tomorrow, but seriously replaced by who and what?
In China, its not uncommon for people to make PH meters for a $1USD that are clones of USA $200 USD devices, who on earth would bother with such a high-volume low profit venture? Who Wolf please tell us?
The way I site is that 1.4B people in China, and if you ain’t rich you can’t find a wife, because of the 40 year one-child policy. So guy’s spend 20 years of their lives ‘getting rich’ so they can have a wife by 40, that’s how Ma of aliBaba did it, he worked 24/7 and deferred his life to post 40. This is the secret of entrepreneurialism in China, now tell us where else on earth can this be duplicated?
This does NOT need to be duplicated. Just raise price until people can make a profit working 40 hour a week and be able to get laid and married.
To choose between 1$ PH meter without getting laid and 20$ PH meter but getting laid, I choose 20$ PH meter every single time.
@JZ:
problem is you will find a lot less people willing to buy a $20 PH meter; I’m sure some entrepreneurs in China have already considered this “easy” option and failed because there were insufficient buyers to keep the factory humming. In fact, when buyers know about the $1 meters they may never again be willing to pay $20, unless you come up with something extraordinary improvement like an i-pH meter with some fruit logo on it, costing $ 2000.
Kimberly-Clark has several domestic factories. I don’t think we’re going to have any problem ramping up toilet paper production stateside.
China sneezes, and the world catches a cold. It could be worse, at least no one has to have iPhones. At least it isn’t semiconductors yet.
For the want of a shoe the horse was lost,
For the want of a horse the rider was lost,
For the want of a rider the battle was lost,
For the want of a battle the kingdom was lost,
And all for the want of a horseshoe-nail.
….I just pray that our globalized, financialized, overcomplicated society is not as fragile as it seems.
Magic; pure magic!
But it is exactly as fragile as it seems. And to make it worse, think about our utter dependence on electronics for everything. Very convenient–and very, very frail. It wouldn’t take much for the whole house of cards to come down.
Do I enjoy my electronics? Yes. Do I trust them in any way? No.
Old ones are the best, and generally the truest: a rhyme once known to every school child…..
Interconnected dependency is a bitch.
“Paging the ghost of St. Leibowitz to the Courtesy Whitehorse Express Message rider ..”
Pray harder. And while you’re at it, consider putting together a ‘joint-venture’ to franchise a few post-apocalyptic neo-dominican abbeys, or better yet .. monasteries .. with deadicated monks chosen amongst the surviving plebs, to supervise the collection and archival of pre-deluge industrial processes .. eventually to be worked by all those previously sucksessful financial elites (the formerly faithful of the Church of Mammon) whose hands need a rigorous cleansing and callousing up.
Yup, the weakness of the “Just-in-time” manufacturing model now used world wide will show its downside very quicky.
No those are generally assembled in Singapore or Taiwan.
Isn’t Singapore the Wuhan of the Rest of theWorld?
Hey Char
As a part-time resident of Singapore, I’d say the manufacturing base has diminished significantly. There are still factories devoted to pharmaceuticals, odd tax-related electronics assembly etc. Semiconductor stuff still gets done here, Malaysia, Taiwan. But not quite the Wuhan of the rest of the world, not since the late 1990s. That label did bring a smile to my face though :)
Yes, Singapore is only 5 square-miles, the entire country. The Green-Zones (embassys of USA) in Afghan & Iraq, are bigger than Singapore.
It’s super expensive, like HK;
Nobody makes stuff in Singapore, its banking, and its business ( think offices ), its also where lots of rich people hang-out cuz of good weather, good climate, excellent beaches nearby.
Singapore is super-clean
China where they make stuff is super dirty and polluted, just like Flint, MI, or Gary, IN; Wuhan is the Chicago of China, but think smoke-stack, back in the day like Detroit, back in the day. Except now Wuhan is Detroit&Chicago all in one, and its always running at full steam.
Poor village people came to Wuhan made the city in 20+ years, just farmers became assemblers, not unlike Detroit where farmers became auto-assemblers.
Hong-Kong too is like Singapore, just a tiny place with millions of people. Singapore is way cleaner than HK. Both places nobody makes stuff, think of it this way, a hotel room is $2,000 USD a night, a dirty low quality room. Who their right mind, could ‘make stuff’ in such a place where land sells for millions of dollars a square-meter?
I meant as the place with most corvid-19 cases outside China.
Actually Singapore is probably the country with the smallest number of coronavirus cases. They have medical and contact tracing systems second to none. Thus they are able to detect the cases early. Other countries have no clue what they have until it is going to explode and it will be too late. You are reading the case numbers wrong. The countries that report too few cases are the ones with the real problem.
Umm…. America sneezed and the world caught cold in 2007-2008. The continuing massive disruptions (NIRP etc) caused by the CDO greed are on America! My savings are still getting almost no interest because of America. There is an “everything bubble” because of America, so any investments are hugely/irrationally inflated. So before anyone starts shaking the finger at China (or others), one should look to recent history for examples of much bigger fook-ups.
yes, but for all the financial engineering, when you don’t make stuff, at the end, you aren’t doing as much. And for all the talk of services, and that is important, that stuff is additive. China is more than capable of doing services, and China can probably still accelerate faster.
Seriously, just look at grad school, take most STEM oriented groups, a majority of the students are not Americans. It’s just easier to become a liberal arts major and be a lawyer. That’s going to eventually catch up with the US.
Especially if eventually the software majors in China are going to dominate the world. After all, for BAT, they have a safe domicile, and the government is in lock step with these companies. In the US, it’s all about why Facebook and Google are bad. Privacy is important… etc, etc, etc.
Consider all the pain associated with facial recognition. Everyone in the west is against it, that means there is always a natural headwind for Western companies vs Chinese ones, eventually the Amazons are going to get pushed out because they just can’t compete on that level against the Chinese companies.
everyone in the west against facial recognition? Come on, most people are only against it when China uses it to “oppress” their own citizens, not for “providing security against terrorists and criminals” and other noble purposes like the governments in the West do. And for software/web, I don’t think Chinese policy is any worse for privacy than the whole US FANG etc. mob; China is just a bit less effective in convincing their citizens and the rest of the world of the advantages.
As was explained to me by an engineer cum lawyer:
“America is run by lawyers, China is run by engineers.”
Use your imagination to see where this will end. (My guess is probably not well.)
My friends in Europe observe millions of Europeans no longer use anything related to Apple. After all, why should they? Huawaii have far cheaper costs.
Only the wealthy EU folks are still buying Apple items.
Moreover, a French tech person is making millions after he created a very low cost to service cellular phones. More power to him.
Huawei apparently doesn’t have a problem with privacy issues like Facebook and Google, at least not in Europe. My supposition is that the Europeans expect that whatever privacy they have is violated anyway, but at least it’s a government doing it, and not a private business, and hence the preference to go for the cheaper items.
Heh heh, it seems that Apple’s privacy message isn’t resonating well in Europe.
Yeah, what is the difference between the Americans taking your data or the Chinese doing the same thing ? In both cases your data is taken by someone.
The main difference is that the Chinese Government cares only about China, they won’t put me on a no-fly-list or nick my SWIFT transfers over some shit they somehow think I posted on Twitter!
Since most Europeans are not Chinese, it is USA’s surveillance and its belligerent ‘World Policing’ & ‘World Improvement’ that represents the greater personal risk to people here.
—
Both the USA and China will steal business data and give it to their favoured national competitors; that simply makes them equal in being ‘our Special friends’.
Huawei phones still have Android/google play store, so Google still gets its data…
Apple is simply expensive. You have to be able to afford privacy.
Agree with fajensen. Will be interesting to see how Huawei continues operating in Europe now that the US is tightening the screws even more, while even some of their “best friends” no longer believe the Huawei spying stories (while all of them know how pervasive US spying is).
Huawei make excellent hardware, hopefully they are working hard on their own software to replace the now forbidden stuff from some evil US companies ;)
A smartphone is a necessity. Not a natural like food, but a cultural one like clothes in Miami.
maybe we need a real nasty virus to make people reconsider that necessity ;)
If the emerging narrative is correct, that mostly old, male smokers are severely effected and the fatality rate is low, then the panic should soon pass and China will be back at work supplying the American consumer with the goods he craves in exchange for dollars created by the Fed and the banking system.
Unfortunately for me, I know nothing about the ability of Chinese industry to start up after a prolonged shut-down but I do see a firehose of liquidity from central banks coming on line so from where I stand… BTFD – if I’m lucky enough to get a dip.
China will not be back at work for american companies for sure. What we see is a new normal which clearly serves the idea (rapid destruction of the dollar by any means) promoted by Trump. The insanity with completely indebted US economy had to stop long time ago (it is way better to stop it sooner than later) but FED’s endless printing of fiat money does not allow this to happen, so the other way around (in addition to sanctions that serve the same purpose of destructing the US dollar) is to cut off the supply chain and production for american companies.
Errant comment that new regulations allow US Fed to directly monetize Chinese banks? Have long said that you cannot look at GDP in either China or the US without considering both. If China is the 51st state, raises the question, are they blue or red?
An expression by our old friend Mike Tyson comes to mind Van Went something like this “ It’s all fun and games until you get punched in the mouth”
Not even close in spirit to his quote, which was:
“Everyone has a plan until they get punched in the mouth.”
I was a member of a Vietnamese parish for a while…very devout… but the men run out the door to smoke all the time!!
We aren’t used to that in the US anymore. But in the far East…whew!!
Corporations in the US and worldwide will try to excuse all kinds of unrelated bad news and bad performance and bubble-2.0-related shenanigans with Corona-virus explanations.
This may be the excuse everyone needs to explain away the failure of all the corporate debt and all the bubble-blowing around the world. Once the excuses take hold, everyone will join in and asset repricing will be inevitable.
NAR:. Yes, it is “kitchen sink” time!
NAR,
Agreed, there is a distinct strain of “big bathism” (lumping all bad news in one quarter or year, to clear out all the financial baloney invoked over yrs) in corporate governance/accounting stds – if some external party or event can be blamed…all the better.
After the decks are cleared, new financial baloney can be used…
Oh yes, absolutely. They have been doing this since 2016 or so.
Apple revenue growth has been slowing down for a bit now and in US dollar terms grew by just 2% in FY2019. In inflation adjusted terms it means Apple has gone absolutely nowhere.
This outbreak in one of their top markets is just the excuse they need to cover for it.
As an aside the “iPhone shortage” sounds a whole lot like a pathetic attempt to get people to line up in front of the Apple Store like they did when the 4S came out. Apple has warehouses full of brand new iPhone’s they struggle to sell all over the world: by the time this thing will lose steam they’ll still have plenty left.
my cynical self thought that right away. “Buy one now at full list or …..”
yes, I already mentioned it yesterday. The biggest Dutch pension fund warned for corona pension trouble due to lower performing investments, while the Dutch stock market (and most EU markets I guess) is still within 1% of its highest value in 19 years. How hypocritical …
The next earnings call on YUMC (Yum Brands China) is going to be interesting.
WE now know what it will take slow this thing down
Every one needs to stay home freaked out that they
will die if they leave the house
It’s a fact that all indoor air is 5 times more polluted than any outdoor air. Even with the crud in our air , it’s safer to be outdoors.
The “central” Ac and heat have more germs, mold, and filth than is possible to ever clean out.
I live in the pollen/mold capital of the States (Savannah) and you can take it to the bank! With interest!
NOT always SO in FL: with the high MERV filter replaced monthy, I can tell the difference as soon as i walk in my house. Nose stops running and eyes stop burning in seconds…
Of course, I am surrounded by highly allergenic ”punk trees” and have a major interstate to the west as well as sometimes very busy city streets nearby.
Depends on the totality of the environment, type of air filter and if air system is new or old, with old duct work full of mold, etc…
think maybe you are generalizing on the basis of insufficient data?
Who really cares. They were given a big tax break to bring back manufacturing to the US.
Instead they spent it on dividends and sharebuy backs.
Here is the deal. If the virus goes pandemic, the Dow will go to 6000.
I think we see a little dip. The Central Bank and Government unleashes tons of liquidity. When the virus peters out, all that liquidity has to find a place to go and we have a big stock market run as well as other assets. Just a guess.
Central Bank will goose the markets helping the 1% while Joe Lunch Bucket is laid off due to supply chain. He then defaults on auto loan, credit cards, etc and other consumer debt wrecking the remains of the underling economy like 2008. Will Americans sit back while the banks and wealthy are bailed out again?
“If the virus goes pandemic, the Dow will go to 6000.”
The current theory in the market seems to be this: “If the virus goes pandemic, the Dow will go to 60,000.” Hahahaha
The virus was over 3 days ago, I suspect that the 15 coming into USA will release the virus there, and then China can exploit their agony for months with a vast army of trolls ‘working at home’ in Wuhan.
The stock market clearly don’t care, and I’m talking the ASIAN market, I would not be in anything in the USA right now except blue-chip diamonds.
In China there are so many good companys that nobody needs to buy unicorns, in the USA there are so many unicorns that nobody can find a good company.
How long will the Plunge-Protection-Team keep buying? Probably forever, or until uncle-scam takes a real hard black-swan blow
Not only that…actual products are no longer necessary…we live in a unicorn fantasy economy!! Like Mickey Mouse in “The Sorcerer’s Apprentice” where his broom keeps multiplying into millions!
Best analogy in the comments Deanna
Listening to KROQ this morning on my coffee run, they listed off the movie totals for the weekend & mentioned several movies have cancelled China Premiers which is resulting in losses of hundreds of millions of dollars.
Then it will collapse in a spasmotic fit of coughing, just before pitching over stone-dead in a soaking wet .. market !
There were no conditions attached to the tax break. The Republicans chose not to make changes to the tax code which would discouraged offshoring (don’t have a link to this, but I remember reading an analysis on that topic back when the Republicans were in tax cutting frenzy).
There were no changes made to encourage companies bring business activity back to the US, only the repatriation of profits.
It was truly a disgrace – and such a missed opportunity too.
“Democrats #1 priority is corporate tax cuts on offshore profit…” (Parhrased). And they don’t understand why they lost.
And that will be how the Dow/ Gold ratio gets back to 1
Sounds like perfect news to spark a stock market rally to yet another all time high.
And Bloomberg said a couple of days ago the worst is behind us. Things are sweet.
Something tells me your comment won’t start a backlash tidal wave…you made it at 2:14 and here it is 7 am.
Anybody? Anybody?
Wolf isn’t up and at work yet,,LOL
On the other hand, I really appreciate him doing as much work as he does to keep the focus of comments at least somewhat on subject.
Had never seen ZH until i saw it mentioned here,,, What a waste of time and energy trying to figure out anything there versus learning a lot almost every article here…
A later knock on affect from the coronavirus may occur in pharmacare medications where governments may tell companies if you want to sell your products locally you have to make certain types of medications locally or you won’t be selling any products at all!
This kind of restrictive liecencing/clubbing is already in force in India. Global Multinational Pharma major’s if they want marketing liecence for their latest (with out price control ) wonder drug, they have to sell their older drugs under price control to help the poorer section of the population.Old formulations in anti diabetic/ anti hyper tension/ dysentry/ vitamins & many more are in price control costs 1/10th price in India compared to USA.
I would seriously say 1/100th
I can pay a $1USD and get a bag of pills when sick.
Same deal in USA would be $300 for doc visit, to get prescription, then $500 for pharmacy, then probably go back to doctor for follow up
In Asia go to the pharmacy, tell/show problem get bag of pills for the $1, walk out done, … that’s 800/1 cost differential IMHO
Most of the drugs made in India, chemicals sourced from China. Cost penny’s to make, sold for 100’s of USD in USA. Suckers. In ASIA ( africa/india/asia) they don’t mark it up, its still penny’s.
Same drugs. Viagra is a perfect example, what’s it $20 a pill or more? Yet, in ASIA you can get a box for $1. Same exact stuff
Like the analogy. However, I prefer the old fashion way of medical cost containment.
If Get sick, then
If fever, stay home
else go to work
GOTO: GetWell
GetWell:
Loop while Sick Days<6
Drink lots of herbal teas, organic chicken broth and soup
Optionally, sit in Sauna to sweat out bad mojo.
Not Optional: Tell medical industrial system to f off.
Sick Days +=
Return: Fully recovered
Total all-In costs: $4-5 and maybe a couple of PTO days. And no side effects from taking unnecessary antibiotics.
Frankly, that would be really, really good news. Perhaps we will learn something from this experience, after all.
more likely Big Pharma will use it as an excuse to hike prices in the developed world even more
The old stock shorter, sleeps in his car.
Pinned to the roof is a frayed chart of TSLA.
He now knows it is easier for a camel to pass through the eye of a needle, than a rich man to enter the kingdom of heaven.
Brilliant!
Sometime around 2003 I was working for a company here in Silicon Valley that was starting to move all the production of their main products to China. I happened to run into a Senior VP about this time and I asked him, “What are your contingency plans for dealing with potential political risk in China.”
He looked at me like I was speaking some unintelligible foreign language.
It only took you 17 years to possibly be right!
Wayfair had a layoff this past week, over 500 people were let go. Many tech positions included.
https://www.mercurynews.com/2020/02/14/tech-job-cuts-totaling-1100-jolt-silicon-valley-east-bay/
Pier One just filed for bankruptcy as well. Another one bites the dust.
And Wayfair is an online retailer.
You can get your :daily Boom & Doom dose of
“Layoffs /bankruptcy/closures” news in
www dot dailyjobcuts dot com (direct link may send my comment to moderation)
Layoffs virus vaccine sample dose :
Feb 17:
Express Parcel service -108
Ralicrew Express -600
Feb16:
VMWare-PaloAlto -211
Feb15: IDEXX-51
Feb14:
XPO Logistics Fortworth -300
Canopy Growth(weed?) – some lay offs!
DHL Detriot-Up to 144 !
Tulsa Public school-174 !
Alliance Bernstein-98+
Intel HQ Santa Clara -128
Feb13:
Wayfair 550
Kohl’s -250 in Corporeate HQ
Cisco- Lay offs coming
US Steel- additional lay offs
BearDown Logistics Ohio-105 etc etc ….
HSBC to cut 35,000
AAPL can take its GAAP “cash and cash equivalents (that +$100B corp bond pos)” and start making iMasks! Might have to do a couple of $wap transactions with junk rated sovereigns (hello Brazil!) to turn that into cash though.
Nothing to see here!
As markets start pricing in the new liquidity injections by central banks I expect the Dow to now hit 30k before the summer instead of November elections.
Yup and Gold to 2000 in the same period I suspect
Depends on IF DJT made peace ( aka bent over ) with the FED, in which case the financial and general economies continue to go up and then crash after the election; on the other hand, if the owners/oligarchs of USA have decided to get rid of DJT, then the economies will crash Before the election, etc.
Just my opinion after looking at the booms and busts since the one in 1956.
Coronavirus outbreak on Diamond Princess hits 454; 14 infected Americans return
The new cases in America bring total from 15 to 29.
WOW. This confirms what governments fear. That is a crazy rate of contagion.
I just read on Facebook that you can catch the virus just by looking at an infected person! Hang on, I don’t use Facebook. I must have made that up.
Just waiting now for the first reports of factory workers being infected and the whole lot shipped off to quarantine.
Imagine say Foxconn were involved.
Somehow I am thinking that if that happened, we would not be informed because the current level of panic would turn into hysterics.
Contrary to Medical lore, if you eat an APL ..you just might get sick and wither !
Those giant cruise ships are nothing but mega Petri dishes.
My guess is the market will continue to shrug off fundamentals. Apple used to trade at 10x earnings.
So, this is a supply disruption problem. Didn’t tarriffs cause supply disruption problems? Which the Fed said justified it’s not U-Turn, U-Turn, it’s not QE, QE, and it’s “insurance” not rate cuts, rate cuts? One can only imagine the magnitude of the required response by Fed in terms of a great big aggressive package of QE and rates cuts to at least zero.
I think the Fed is about to steer portside into an approaching rogue wave. Time to launch all Life’s boats.
Country and western tune: The China Factory Blues
‘The factory doors are open, but nobody’s home… theyre stuck in quarantine, or six feet under…’
the “situation is evolving.” = lie
the “situation is deteriorating” = truth
Hence I will never be hired by a PR firm.
It feels a bit like the dreaded final countdown.
Hubei is a large supplier of precursor chemicals to pharmaceutical biz. India a big customer and big generic supplier to US is mulling over ban on pharmaceutical exports. The effects are only beginning to be felt.
Yep.
https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/panel-mulls-drug-export-curbs-to-avoid-shortage/articleshow/74053935.cms
Oh…and let’s not forget the Fed is already on an aggressive QE expansion autopilot of $60/month which is about a 15% annual rate of increase in QE. But it’s another not QE, QE because it’s “organic”. I’m getting so confused remembering all the terms getting to be so many.
FedEx is next.
Well I would say its over, here in Asia.
I’m now seeing the long-haul trucks return to normal in the past two days.
For the past month they had dropped to zilch, but now flying by every few minutes like normal.
On border with China.
…
Makes sense that Apple is freaking out, hey its there “Just in Time Coming Home to Roost” right?
Supply chains have been disrupted now for two months, so stuff will start trickling down. I saw stuff go to zip 6 weeks ago, and I still can’t get stuff from China, most resellers here in Asia still have stock, and we’ll be the first to restock, I’m going to assume that the US inventory’s will collapse in March, and it will be summer before there is a restock in inventory.
Long ago Job’s told Obama that “Apple can never return to USA”, maybe that’s not true anymore, on the other hand there ain’t no FOXCONN in USA, and never will be as it would be politically impossible to duplicate such a work environment.
USA will blame their coming woes on the “Virus”, but we all knew that 2020 was going to be a bad year for USA,
China Boy,
“on the other hand there ain’t no FOXCONN in USA, and never will be as it would be politically impossible to duplicate such a work environment.”
Nope. It’s in Wisconsin, after getting huge taxpayer incentives to open up a plant there, and then falling back on its promises. But it’s there.
But seriously, when will they start producing anything? Last I heard, they haven’t even finished standing up the factory yet.
And how much of a difference is one factory going to give to the critical mass in China. The truth is, the entire supply chain is in China/Asia. (they are essentially the same thing at this point) The supply chain in the US is non-existent. Although this country is resource rich, most of it is not extracted here, most of the additive manufacturing isn’t done in the US. If anyone tried to make an iPhone from scratch in the US, they will find that most of the stuff will have to come from China anyway.
Automation isn’t relevant in this case, you can completely automate that Foxconn Wisconsin factory, and it would be just a shell because there is no supply chain to really support it. The entire consumer electronics supply chain has long ago vanished east.
Gotta love those ‘Right to Work’ states.
I know corporations do.
Thanks for the thoughtful observations from the ground.
Here on my turf, a large container port on the Atlantic…the big guys keep going up and down the river all day.
I figured the coronavirus would be a problem for major corporations like Apple, Walmart, Amazon, and others who outsourced their manufacturing to China, but for a lot of small businesses, particularly those on Shopify or doing Amazon FBA,this could be devastating, if not the actual death blow to their business. A lot of people have set up small online businesses sourcing goods from China thru Alibaba and AliExpress, and any extended supply chain disruption could make it difficult for these businesses to survive. This would be particularly hard for those who set up such businesses as a major side hustle or couldn’t find a decent paying job in their line of work.
But, but, but but but but!:
China close to declaring “coronavirus victory”
https://www.macrobusiness.com.au/2020/02/china-close-to-declaring-coronavirus-victory/
By David Llewellyn-Smith in China Economy at 9:20 am on February 18, 2020 | 20 comments
The CCP may be close to declaring “victory” over the virus everywhere but in Hubei. The official number of new cases outside of Hubei Province has declined for 13 consecutive days and Premier Li Keqiang sounded almost upbeat in today’s meeting of the leading group on the prevention and control of the novel coronavirus outbreak (Xinhua Chinese, English):
避免了可能出现的更大范围暴发流行，全国疫情形势出现积极向好趋势 ….
===
When you have a lot of COVID-19 cases, is it because you have a poor hospital system? Or is it because you have a really good one. Cases: Versus hospital efficiency: Source: World Health Organisation For reference, Australia rates 32, US 44, China 144. ibid
===
It all comes down to how you want to look at it. If you go with the Chinese data, then there is a miraculous straight-line recovery, new cases are falling every day outside of Hubei (helped by a definition change on 7 Feb): If you look at the rest of the world data, then …
ibid
===
It’s pretty clear now what the CCP plan is. Allow the COVID-19 pre-programmed robot to run the fake numbers to zero then demand the world open up. If the world catches it, that’s all to the good. …
ibid
Yet the stock market, which is supposed to predict future value, doesn’t see any of it. So much for “market wisdom”.
That idea has been out the window for quite some time anyway…
The stock market in general usually get’s it.
They are a bellwether, anybody that’s actually on the ground in ASIA knows full well that this was always a nothing-burger.
aliBABA is now back to its all time high since IPO in Nov (HK), it dropped to a low a few weeks ago, I should have bought more, but thought the news cycle might get worse.
If people actually bothered to read the news coming out of China, they would see a different ‘reality’.
The sky is falling crowd is really running the USA.
I think the stock-market got this thing just fine, and besides as Wolf has said, they’re DUMPING more FIAT everywhere right now, both in ASIA, and in USA, so that helps the market.
But there is nothing intrinsically wrong with the ASIAN stock market, they have rich customers, they have cash savings.
On the other hand the US stock market is terminally ill, with a population in debt, with no savings, and the majority wanting to live on the streets in their own feces.
Shutting down China is a nothing burger?
Wow.
Most Chinese people have gotten rich by
“selling” their property to developers.
Across the world, tax laws favoring those
who leverage their real estate debt
and pass it on to their kids, tax-free,
have made a bunch of spoiled brats rich.
In Seattle, San Francisco and Los Angeles,
young, healthy kids prefer sex, drugs and
rock ‘n’ roll — even if it means stealing
from “the evil rich”, day after day.
If you imagine that “family values”
are important, then you should expect China
and America to fall soon, as Japan did,
decades ago.
The richer and more educated a woman is,
the less you can trust her with “your” kids;
you’re better off investing in something else.
This is perhaps the most disgusting thread of comments I have seen on wolfstreet, starting with Asia Investors’ xenophobia and ending with your mysogeny.
The proactive Fed will start signaling that next proactive FFR cut soon. The curve is already sagging and inverting.
‘Los Alamos Experts Warn Covid-19 “Almost Certainly Cannot Be Contained”, Project Up To 4.4 Million Dead’
Via ZH
PS: I agree a lot of nonsense is on ZH. But so is good stuff like WS from time to time. Here is a way to skim: avoid stuff by the ZH gang and look for stuff from others like WR. The item report above is from Sharon Begly with Statnews.
I also skip anything on ZH to do with US politics and only once briefly looked at the comments.
The virus projection is by the National Lab at Los Alamos
ZH is the only mainstream blog where true freedom of speech exists in the comments section. Absolutely uncensored content.
I read very few of the articles on ZH and almost never do I read the comments section because they are filled with racism, hate and utter stupidity and ignorance.
You’d have to dig deep into that fetid sewage pit to find anything of value.
Having rules – is generally a good thing.
That may be true but you can also find some truth in that comment section that you will never find on mainstream news Pick out the gems and discard the rubbish That’s called free speech I believe
So who makes the rules? Who en-forces the rules?
It is very censored. People get kicked off for criticizing ZH. I am one of many.
ZH comments are worth reading as a window into all those people you were told to never be friends with. They exist, and will likely vote this year with strange conspiracies flitting through their heads.
There are people like this. They exist in a large percentage. Don’t get out of your car……..
There is a comment from this very type of person upthread…I wouldn’t shake hands with him with a 10ft pole.
~signed, not-to-be-trusted educated woman
Hence why there is no intelligent debate on zh at all. It wasn’t actually that bad before 2016 but the trash from Drudge came over, the content quality declined, and the comments section turned into a bunch of racist filth cussing out everyone over how much they hate just about everything including each other. You’re either lazy or a conquerer stomping your boot on someone, but as long as I’m not the one getting stomped who cares. That’s why you can hate the government and bankers, but also poor people and anyone in a tough situation. It was always sad and funny to see them eviscerate someone who thought they were a member of the same ideology only to find out there is no pity whatsoever. One hell of a tribe to depend on.
I find it rather amusing that no matter the blog site, it’s adherents ALWAYS think the blog they hang with the best, where, often, other sites are to be derided as X, the inferior …
Pick .. your Pique ! ‘;]
just an observation.
Insightful – Nanotechnology (Willingly chipped – that didnt go so well – or viral chipped – lets see if it works) in viral form with an HIV marker for a timed 5G attack later. These creations carry potential for new global economic models based on population contraction. And if this doesn’t work, more ideas in the pipeline. Civilisation is ended. The programme now is shrinkage. OR. Imagine a world with a stable healthy population stewarding planetary diversity and natural resources to support all life respectfully with a blockchain barter system per country not per person. Transport – energy supply – medicine all using vibrational wave technology for peace and harmony. Your choice. Which do you choose?
‘This is typically of all posts on ZH, that they get their feed from Twitter.’
Are you trashing the site you are on, and by extension your comment? Items from WolfStreet appear all the time on ZH.
The lab at Los Alamos does not need to be a medical lab to do computer modelling, which is essential for nuclear fission research.
Next time, address the allegation and tell us why you disagree, instead of an ad hominem attack on staff at Los Alamos. The topic is the projection not who owns ZH.
I looked up the lab btw ( try it) It is widely credited with ‘nailing’ the SARS projection, and is very active in peer reviewed studies.
But now comes the stopper: ‘I lived there a long time ago…’
Wow!!
Are you serious?
Since it is a city I guess people other than scientists live there. But not all qualified by virtue of residence.
Yes, that ZH post above contained an epic amount of plain wrong or distorted facts … ZH website is moving in the wrong direction (like all that China bashing lately …) but there is lots of useful info to be found there, if you use some common sense and ignore the comments.
The Los Alamos National Laboratory is definitely one of the credible research labs worldwide for certain high tech research topics, including this kind of modeling. But they have to work with imperfect CoV data like anyone else, and due to their Deep State links you sometimes have to wonder why they are publishing certain information.
the economy has been in recession since late-2019, evidenced by the fact the retail sales were zero in real terms last quarter. the Covid 19 virus will be the event that pops the internet bubble 2.0
The retail world’s bad news bears may have some competition from the real estate world. Evergrande, which according to China’s media is the world’s most valuable RE company and China’s second-largest property developer, has just announced it is slashing prices by 25% for a while.
The SCMP states, “The move is seen as an attempt to raise cash and ease the finance crunch faced by Evergrande and its peers as home sales plunge amid the novel coronavirus…they have no choice when they cannot sell their flats.”
It is for tourist much harder to buy from the web than from B&M retail. Fewer tourist, less B&M retail
I se where the # of cases in USA just jumped from. 15 to 29 in one day . I Just arrived at Travis Airforce Base last night @ 1:30am an 11 hr. Flight & confined In a bus for 6 hrs on the way from the Diamond Princess to Haneda airport.
Here are some REAL facts about the situation. Dates & CONFIRMED infection rates from the ship.
Note: Confirmed corona virus cases means they were transported to a “clinic or hospital” in an ambulance by drivers infull hazmat suits head to toe!
Feb 4 16
Feb 5 20
Feb 6. 22
Feb 7 3
Feb 8. 16 tested 273
Feb 9 65
Feb 10 39
Feb 11 0
Feb 12. 39
Feb 13. 44
Feb 14 2 total infected 218, total tested 713
Feb 15 67
Feb 16 70 total infected 366
Feb 17 90
all dates are from Japan so in USA Dd 1 day except Feb 17 which is USA date.
I can confirm that one Japanese lady was sent to a hospital & that her husband who remained on the ship, that she has “a hole in her lung” due to excessive coughing!
I was evacuated 3 days before the North Vietnamese waltzed into Saigon in April 75 & the flight on Kallita charted jet of approx 200 PC passengers was worse! Temperature checks (though the ear canal were not carried out until 2/3 of the way through an 11 hr flight. It was only then that the 14 new cases in the US were “isolated” from everyone else. I also met “evacuees” who were on the plane but not from the Diamond Princess! One I spoke with was “going to school 65 miles SE of Bejing.” There were more people on the plane speaking Chinese than English! Very disconcerting. HOW many were from China or HK or Taiwan, I don’t know. ALL evacuees had of course the legal right to enter the US. Final temperature checks were required just before embarkation front helping at Travis AirForce base in CA.
James:. Thanks for you comment!
That there were screw ups mixing people on the plane … well it was government organized and run!
Hope you escape catching the virus!
Almost seems that China wants out of Apple, and the virus gave them an excuse. China also knows bad news will roil US markets, (and consumer sentiment) while China will roll with the punches. Chinese president wants to hold China together, American president wants to tear his country apart. The narrative is coming together.
There is also a lack of “income”. What i understood from watching a few Chines movies is that it i custom to give red envelops filled with money with Chinese new year. My guess is that the youth uses this money to buy iPhones,
iPhones are not cool with young people here in China now. Since the “trade war” started, most have switched to Huawei or XiaoMi.
You reap what you sow. It is world wide, now. Apple earnings is the tiniest concern as this unfolds. Remember, the NSC listened in on Merkle’s private phone calls.
The Oscar winner ( South Korea) may have been a slap on the cultural dead zone in China. The Iphone is just hardware, the social media platform makes everyone’s life a living movie. (See Fahrenheit 451). The Chinese have no movie industry to replace. Besides that the phones are unaffordable (like American housing). China either needs to go back and make films, or open up the internet, something not likely with a regime undisposed toward public criticism. The leadership needs to promote a social media system based on propaganda and pay people to share their success stories, just as the US president pays people he buses to his rally in NH on the night of the primary. All wars are culture wars.
China just needs to clinch a deal with Twitter, FB and Google and use their advanced censoring technology to promote exactly the right culture. I’m sure they can invent a Chinese version of woke to get the job done while most of the public is cheering. They already have an example in how the EC is reshaping European culture with the help of these same web warriors. 1984 (China) is outdated, Brave New World (US/EU) is the plan that works ;(
The coronaviris will certainly impact many companies including Apple.
But Apple is a distant third in global mobile market share, behind Samsung and Huawei.
We in US /Europe notice Apple more because it is big in the West, but it is meh in the East.
https://www.idc.com/promo/smartphone-market-share/vendor
This sort of thing should hardly come as a surprise to anyone.
Pandemic always shows up in lists of existential threats to human civilisation, along with asteroid impact, nuclear holocaust, the AI singularity, and climate change. Existential threats are largely the concern of us Risk Management types, and not the general population, and not politicians. People take a great deal for granted.
It’s not as if you didn’t know about them, but what do you actually do about them? Next to nothing. Some of them you really can’t do much about, like a supervolcano disaster, and major meteor strikes are exceedingly rare. But several existential threats are actively pursued, like global warming, and a major human-caused Extinction Event is already underway, and that doesn’t get much attention. Hardly anybody worries about Toxoplasmosa gondii variants, and you can pretty much say goodbye to the bees. Mostly the News and Entertainment media has been concerned about the Zombie Apocalypse, even though zombies don’t really exist, probably as a distraction from real problems of imminent economic and political totalitarianism.
The coronavirus epidemic isn’t at all likely to evolve into an Existential Threat, but you never know. It’s pretty sure to cause a major recession in China, if it hasn’t already, and maybe even in the US, but it will probably cause only a few thousand deaths before it gets under control, mostly people you don’t know and could care less about anyway. Mostly it’s treated seriously because it threatens the increase in the wealth of the tycoon class that already has too much money. That’s the important thing. Everybody else is disposable. It won’t be a problem for your overlords (and overladies) unless it affects the FIC, and that, as we have seen, is pretty well insulated from problems affecting the real economy, so far.
Catastrophic climate change, OTOH, is virtually certain to wipe out most if not all humans. I always figured it would be the nukes, but there’s still plenty of opportunity there. It’s bound to be something, because the people who could do something about it have other priorities, like next quarter’s profit projections.
Don’t worry about me. I’ll be just fine. And if I’m not, look at the bright side: you’ll be able to gloat about how I was wrong. Maybe.
I do not have a smart phone and have no intention of ever getting one.
I held out on getting a smart phone until 2013, and I thought *I* waited a long time. I was often the butt of jokes among my friends because of the lack of a smart phone.
I was concerned that it would change the way I interacted socially, or somehow take over my daily routine, given how often I had observed other people ignoring those around them to look at their smart phones. Especially troubling to me was how often I was at an event with my kids where most other parents were only looking at their phones.
I am happy to report that it is not a given that owning a smart phone turns you into a smart phone zombie. I carry it around because it is useful should I need to get immediate messages about important stuff, but even that happens only occasionally – a couple of times per month. It’s been very useful as a map device, and a handy camera at times. I can search the web and look up restaurants and reviews of places, and can price check when I need to.
But I have never installed a game or social app on the thing so it continues to serve my needs instead of me serving its needs.
Very often it will run out of battery and I will not realize for an entire day so … I’m certainly not addicted. But it is quite useful.
I have a smartphone since 2016 and use it as a dumbphone 99% of the time; just talk and SMS plus some Wifi data for emergencies. Not a fan of “personal trackers” so I don’t use any of the social media stuff, Apps needing GPS etc. Sometimes it’s tough when people desperately want to send you something on FB or Whatsapp and don’t understand there are still people who use web or email from their computer ;(
And yes, my phone also frequently vanishes for a few days due to low battery etc. :)
I have had the same Nokia smartphone since 2009. Fortunately no one writes “apps” for it any longer and it doesn’t have GPS, so no eavesdropping. Still works fine, use it everyday. Removable battery with desktop charger for 2nd battery.
Lisa : I still have my old Nokia E5. Would probably still be using it but it won’t work properly on my current carrier ( nor my Note 4).
FWIW: Unless you pull the battery on your phone it still pings cell towers in your vicinity. Even turning it off doesn’t save you from being located via good old triangulation. Ask me how I know ??
Cheers
Unamused – in your short list of “existential threats to human civilization” you didn’t’ mention ZIRP/NIRP which just may do a reasonable job of destroying civilization. Also, if you believe that zombies don’t exist I suggest you take a hard look at the bottom 20-30% of the US congress.
Yeah, rippin the plebs guts out ! .. one ‘plunge protected’ at a time.
The opposite of progress is congress. I get your point.
NIRP/ZIRP could seriously damage the global economy and human civilisation but not destroy them. Survivors could subsist by reverting to hunter-gatherer and foraging techniques. I don’t think they’re sufficiently apocalyptic, not like a gamma ray burst or a solar flare would be.
The path of COVID 19 will probably be characterized by the quote,
“Nothing goes to heck in a straight line.”
to unamused: Yes, practically nobody notices that there are huge die-offs in bees and other insects, birds, and no doubt many other little fellas we don’t think much of – frogs, lizards, etc. Huge areas of the oceans are dead zones. Deforestation continues every where…nobody thinks : hey dude, don’t trees make oxygen? Aren’t
trees our ONLY source of oxygen? We need that to breathe right?
I don’t think it’s reversible. The moron quotient seems to increase at the same pace as the rape and pillage sector. Puzzle me this: Did Warren the Buff ever pick up a single one of the plastic coke bottles which made him rich?
No I am not merely sitting on my ass with a beverage. I’m planting trees and composting. Spending time w/ friends. Hoping for the best – but not expecting much. So, anyway – cheers.
I don’t think it’s reversible.
I don’t think it’s reversible either. I don’t think it’s even possible to reduce the rate at which it’s accelerating. Nothing has worked so far. It just gets worse faster, and most people have been suckered into it, one way or another.
I expect the Chamber of Commerce to blame refugees and teachers unions when the worst happens.
it’s not reversible but the natural world will survive if we don’t do anything really stupid before we finally kill ourselves off. But it’s really sad how the world around us is dying and countless species are vanishing forever because our species (on average) has totally wrong priorities.
I think many people notice (or maybe I’m talking to the ones who are not representative?) but prefer not to think about it too much. There is very little you can do about it even if you do something good on a local scale.
The greatest environmental damage being done here is by an infrastructure project of national importance with impeccable Clean Green (TM) credentials.
Just another way of pouring yet more concrete, but with a easy conscience.
The whole concept of ecological sensitivity has been totally undermined and corporatised.
‘Look not at what they say, but only at what they do.’…..
I’m trying to leave my own little patch of earth in a better richer state than I found it, but it is hopeless, really.
Unamused,
I really enjoy your comments and look for them.
As to Norma’s point, we also plant trees. I planted thousands on our property over the last 15 years and left the variable areas all jumbled up and full of brambles and mixed woods. Every morning I take my dog for a walk and have to dodge elk. Our eyes are out for the waking grizzlies which have spread out from their normal range and now reside here. Everything possible from home is composted and goes into our gardens. But…I also drive a truck for hauling lumber, and like everyone else, everything consumed/purchased is either constructed or transported using FF. We are all part of the problem.
In case RD is reading today, on Friday we are doing a town run to load up on dried lentils etc for soups, + flour, and rice. If town travel becomes unhealthy in a month or two then we’ll have stores in place and will just remain home. Readers might scoff at this, but soup supplies are about the cheapest food out there, stays viable for years, and is just about free it is so cheap. It takes up no room to store. I just baked bread this morning before work and for north americans rice is beyond cheap. The peace of mind of being somewhat self-reliant for several months or longer is about $200. Home made soup is wonderful, and just about every left over in the ‘fridge can go into it. :-)
Whether this unfolds badly, or not, (and I am no Mormon)…they have the right idea about families being prepared and somewhat self reliant for times of trouble, imho.
regards
Thanks, Paulo. That’s a comfort.
Paulo
Iam a vegeterian since birth(not even egg) . Lentils are the only source of proteins in my diet. Any given time I have 7-8 varietys of dry legume/lentils in dry pantry & cook them in so many ways with a daily tasty lentil dish apart from 2 veggies. (I dont buy pre cooked in cans). I cook from scratch daily 2 meals a day. (pressure cooker is a must to cook lentils fast)
Not too sure about Mormons, but think their focus is on storage, which, as you mention, can only be short term, as in months or at best a year or two in spite of what some selling ”prepper” products claim. Driving through Utah, etc., last few years, all I saw were huge FF tractors, that have been ”value engineered” to require repair only by highly trained mechanics, so vastly different than the simple tractors up to about 30 years ago.
Amish, on the other hand, are mostly prepared to keep the cycle of food growing going indefinitely, without use of FF at all if they can’t get it.
One Miller I knew had an older molding mill and planer connected to a 25 HP gas motor, but was set up to put the horse back on it if need be, as his ancestors had done for generations.
But they also have some rather questionable social habits, mostly new fangled ideas from what I could get them to tell me, that may not bode well for them in the next couple of centuries.
If I were not taking care of really old family and close enough to expiring myself, and wanted to live longer, I would get buggy ride or closer near to the largest Amish community I could find.
And BTW, most of the old folks (of all ethnic groups ) I knew growing up in SW FL in the forties were equally prepared to live without FF, many having done so their entire lives up to that point.
Norma Lacy,
Global warming is real but:
1. Phytoplankton in the oceans produce about 50% of the oxygen (from CO2) on Earth
2. If you compost you are actually RELEASING CO2 AND METHANE, both greenhouse gases, by breaking down all that carbon locked up in that cellulose and other dead plant matter.
3. If you want to do your tiny little bit of slowing, not advancing global warming, the way to deal with dead plant matter is to BURY that stuff as deep as you can, to sequester that carbon and make sure it doesn’t get released as CO2 or methane.
That is indeed how Mother Earth did it starting 2.4 billion years ago when cyanobacteria in the oceans converted the high CO2 concentration in the atmosphere to O2. This initially oxidized all the dissolved iron into rust, which settled into the sediment and became locked up almost forever.
Later, when trees and other cellulosic plant life developed, they sequestered carbon for millions of years before bacteria evolved that could break down cellulose. This massive quantity of dead undecayed cellulose got buried, and converted by high pressure into huge deposits of coal, oil, tar, and shale deposits. O2 concentrations in the atmosphere went up as high as 30% as a result.
A massive quantity of those coal deposits in Siberia are thought to have ignited and burned as a result of millions of years of volcanic activity in the same area when the Siberian Traps cracked open. The combination is thought to have created the conditions for the Permian Extinction 252 million years ago which wiped out 96% of marine life and 70% of terrestrial life.
Horrible, certainly, but the Earth recovered, and dinosaurs evolved out of that stew, followed very shortly after by mammals.
Us, in other words
Trees are not our only source of oxygen. An important source, sure, but not our only one. I am pretty sure algae make alot of oxygen too, for example.
Yes, algae and related ocean organisms are the main source, they produce about 3/4 of total oxygen on earth. This provides a glimmer of hope because ocean life can grow quickly in the right conditions, produce O2 and sequester C(O2). Trees are very important for the terrestrial ecosystem though and if you remove enough of them even the algae can no longer save the day.
1) Ford was doomed in 2008/09 because the supply chain
died.
2) SPX co feasting on buyback and high debt will blame China for
their demise.
3) Bloomberg media will any filter good news,
Bad news input feed an amplifier and circulate in a positive feedback loop.
4) Boing lost will MAX. Demand for long range flight to Asia & Europe
will be down. Orders for the 787 & 777 will be delayed or cancelled. Short
range flight will flourish, but Micron Bombardier lost the C-Serries 300 to
to France Macron who dominate his brain.
5) Face masks replaced Lancome/ Sephora by LVMH.
Beer instead of Hennessy cognac and Moet champagne.
Demand for food, not Tiffany diamonds or Tag Heuer men watches, for
high fliers.
Effendi is not Fendi.
If I was in China in one of the big cities in lockdown I would be worried about getting food a lot more than getting to work or going on vacation.
One of the few ‘stories’ getting past censors in China ( ok its Twitter but what else is there no western media is on the ground reporting) is the wastage of food. See #Harry Chen PhD, truck loads of food are being thrown on the pavement as local officials enforce whatever local edicts are promulgated. The distribution of food from farm to urban grocery store seems to broken. People, infected or not, gotta eat and this matters a lot more than going to work.
Quick…get into the Apple Store, buy phone for $1000 this week sell for $2000 next week lol……
1) After x3 bloody assaults, the colonial forces ran out of gunpowder
and Bunker Hill was lost.
2) Contraband gunpowder from Zeeland & Zaandam and 0.69 guns from
Liege (now Belgium) were intercepted by the British navy.
3) The x13 colonies ran out of dollars (peso de ocho) and the 2 millions
Americans will be stay the subject of King George III for the next 250Y.
4) Comte Vergenne , Baron von Steuben, Comte Rochambeay
and Comte de Grass filled the gunpowder gap and delivered the British surrender sword to GW, but lost their heads in the guillotine.
Just the beginning. Just-in-time inventory, single sourcing suppliers (using cheapest available supplier), and guess what, its not just Apple with problems. As for Apple in China, anyone think all these people not working, not earning a living, at home, spending on food, rent, mortgage are going to run out and buy Apple or anything else, once this Virus is over. The longer this goes on, the greater the long term damage to the economy.
… and the greater the flood of central bank money to prop up the markets and keep up the Goldilocks illusion (and destroy the real economy, but who cares – certainly no banker or politician). Bullish :(
A new meme for the MBAs: “Not in time non-delivery.”
\\\
Dear Wolfstreet readers, please if anyone of you is eligable to nominate Wolfstreet for the Nobel prize in economics…Do it! The unravelling has started and everything, and I mean everything, Wolf has diligently written about will start unfolding.
\\\
I am not cheering for a crisis. I am not delighted with the thought of a great economic recession, as everyone I know will be affected. But it seems to be here.
\\\
The unraveling, you mean a 0.5% dip in the markets after a previous runup of over 400% ? They don’t ring a bell at the top, I’m not surprised if we are even higher within 1-2 weeks; everything is bullish until it isn’t, and market psychology still hasn’t changed.
Anyway, who knows … maybe we can have a 75% market decline without any effect on the real economy for the 99%, given that the opposite happened in the past ten years ;(
///
The market will stay stable. The economy will go into recession. They are not dependant on each other any more.
///
Land Rover – Jaguar:
“We are safe for this week and we are safe for next week and in the third week we have … parts missing,” Chief Executive Ralf Speth told reporters at the official opening of the National Automotive Innovation Center in Coventry, central England.
https://www.reuters.com/article/us-china-health-jaguarlandrover/jaguar-land-rover-to-run-out-of-chinese-parts-for-uk-production-after-two-weeks-ceo-idUSKBN20C1WP
No big deal – right?
Well actually, if they are running out, every company will be running out very shortly.
You do understand what this means?
more FED and ECB money for sure, bullish :)
I’m calling it nPhone now.
If the China supply lines don’t come back quickly, I don’t see any result other than a massive stoppage and buggering up of the cheap durable goods supply train that has been driving the “low” inflation rate that has given the Fed and ECB and Japan license to print money out the wazoo for the last decade.
Again, the BLS will likely figure out a way to hedonics and substitute their way to a fake low low low CPI/CPE number AS USUAL, but consumers and the service economy will definitely feel this one no matter what the Official BLS Lies about inflation are.
Manufacturers will likely furlough or lay workers off if they can’t get parts. Service industries need these cheap parts also and will also lay off workers. Prices will rise, possibly skyrocket, as products become unavailable. All this will not appear in the official CPI/CPE numbers until the dam finally bursts.
Will the stock market stay or even rise higher than its current inflated levels? Will the coronavirus melt away harmlessly by summer as predicted by the Orange One? Or will new vectors of transmission from Cambodia/Southeast Asia, India, Africa, or Russia/Eastern Europe, or the Middle East appear, via Xi’s vaunted Belt and Road initiatives and the large numbers of overseas Chinese workers?
And what about rural China? Still about 20-30% of China’s population and the original homes to an even larger percentage of Chinese, millions of whom had gone back to their rural roots from their city factory jobs prior to the lockdown of China’s cities.
Not a peep so far.
We are headed for interesting times.
Our systems management company is advising the following regarding CTO computer products:
‘From our Lenovo rep directly; Due to Covid-19 and CPU shortage impact, all CTO and back to back order require up to 8 to 12 weeks ordering lead time’
These are custom builds so it does not mean the shelves are empty.
However when the current stocks run out, good luck with buying a computer.
Unless your machine is dead (or needs a part to get back in action), this is not a big deal. However if you are a computer shop and you have no computers to sell, you are done.
Replace ‘computer’ with pretty much every other product that comes out of the nearly 3 million factories in China.
Uh oh… yesterday it was thousands of containers frozen meat piling up because there are no drivers available to deliver and today it’s companies with no revenue either reducing pay or not paying staff at all.
This is compounded by the fact that without a doubt a large number of factory workers are unwilling to return to work and risk their lives to make stuff for the world.
Tick tock.
https://www.bloomberg.com/news/articles/2020-02-19/chinese-companies-say-they-can-t-afford-to-pay-workers-right-now?srnd=premium-asia