Jim Bianco shared some of his coronavirus research with me yesterday. I asked if he would make the article public.
Thanks to Bianco please consider Coronavirus Growth Rates and Market Reactions.
This is a guest post courtesy of Bianco Research
Summary
The growth in coronavirus infections has continued along a geometric progression for the last 12 days. Should it continue along this path, infection cases could approach 100,000 in a week.
Comments
The following charts were constructed from the daily update from the National Health Commission of the People’s Republic of China.
The blue line in the chart below shows the actual number of reported coronavirus cases stands at 4,515 as of January 27.
The orange line is a simple progression that assumes a 53% increase in the cases every day. Or, one person infects 2 to 2.5 people. So it is a simple multiplier, nothing more. This is known as R0 (R-Naught), or the infection rate. Note the chart is a log scale.
The reported number of infections perfectly track this simple multiplier. This is how viral inflections growth, along a geometric path.
If this track is not altered, the number of reported cases will top 16,000 by Friday.
Not trying to be an alarmist, but the number of confirmed coronavirus cases has jumped by more 50% to nearly 4,500 in less than 24 hours. It’s possible today’s stock market dip-buyers were a bit premature. https://t.co/OJ9fBMfwhX
— fred hickey (@htsfhickey) January 28, 2020
To many, such a geometric progression is alarming (see the tweet immediately above).
As the orange line shows, this type of growth rate would suggest 80,000+ infections next Monday and 138 million by February 20.
Is this growth rate possible? Over the near-term yes.
The National Health Commission of the People’s Republic of China offers another statistic, the number of people in quarantine suspected of having the coronavirus. As of January 27, over 44,000 are quarantined. Many of these people will unfortunately be reported as infected.
To be absolutely clear, this is NOT a prediction that 100 million people will be infected by Feb 20. Rather, this has been its growth rate for the last 12 days. A vaccine, mutation or successful quarantine/isolation could help reduce this growth rate.
Market Implications
Mongolia and North Korea have already closed their border with China. Hong Kong is restricting its border. As cases continue to emerge in Japan and outside of Asia, calls will grow for the Chinese to engage in drastic action to stop its spread.
This potentially means Chinese businesses will halt, flights will stop (see the plunge in crude oil on oversupply worries) and the global supply chain will grind to a halt. This could have enormous economic consequences for global growth.
While not overlooking the human tragedy, the markets have the difficult task of pricing an event that has a small chance of being devastating to global growth, but a more likely outcome of being contained. Yesterday’s selloff in stocks was likely a response to the fact that this virus has continued to grow at a geometric pace thus far. In trying to quantify the market impact, perhaps these charts offer one way to gauge the severity of this virus in the days ahead.
End Guest Post
Here is another link echoing Bianco’s market concerns.
Coronavirus fallout could shock the global economy into recession, Stephen Roach warns https://t.co/w0X80ceuK0
— Jeff Lee 2020 (@JeffLee2020) January 29, 2020
Thanks to Jim Bianco for these charts. He has a couple more including one on death rates that I did not copy.
Click on this link for a Free Trial to Bianco Research.
Mike “Mish” Shedlock
Reports of rioting in china now. People don’t riot because of the normal flu. China is under reporting the number of deaths and cases, either on purpose or because they can’t keep up. Both cases and number of deaths are much higher than being reported. That said, deaths and infected continue to grow. China has a major problem. I still seeing people comparing the x number of deaths from the corona virus to the number of deaths from the yearly flu. They are missing the point. Mongolia closed border with china. Flights are being cancelled. This doesn’t happen because of the flu. Watch what is being done, not the number of deaths or cases being reported. 59 million people are being Quarantined. This is for something that is not even close to as deadly as the flu? Think people.
I doubt the accuracy and openness of infection reporting to believe that that blue line reflects reality.
nCoV may be reason to cut rates closer to zero again in the coming month depending on what happens. Yesterday on Marketplace, it was shown that the Boeing 737 Max issue already will cut 0.4% from first quarter GDP.
The thing I despise most is that this epidemic will warrant a 500 point cut in the central banking rates, to flush out the most stubborn cash hoarders. To the ordinary folks this economic mayhem will be blamed on corona virus.
It is deeply unjust to the virus.
Parabolic virus charts. Not good. What’s this minimum talk? They closed the iphone maker down! LOL. Not to mention almost everything else we get from them. Walmart could look like an empty warehouse if this crap keeps up. Not that it matters, but i’m getting too old for this crap and really not in the mood for it.
Exponential, not parabolic. Exponential is much worse.
If you charted it, it would still go staight up. Sucks either way. And I want to know exactly how bad is it when you get it cause i’ve seen some pretty shocking stuff that appears much worse than the average bug.
What, only 4000+ on 1/27? Wasnt there a previous post that says there were like over 100000 patients just one or two days ago？ whatever happened to that number, fake news peddling?
Latest is that there are 60k suspect cases.
6000+ confirmed early 1/28 with 132 confirmed fatalities.
Seems to be on track with the figures as quoted above
Those early numbers were merely a suggested possibility that the numbers might have been under-reported. There may or may not be under-reporting. These new numbers are projections based solely on the reported numbers, which are bad enough. If the numbers are under-reported, we will get to 1m cases earlier than 2/9/20.
On the other hand, unless the virus starts spreading freely outside of China, the growth rate will surely slow within weeks, so all this is just a mathematical abstraction of something that “could happen” but won’t because, to keep growing at this rate, each person needs to be able to infect 2-2.5 people who have not yet been infected or exposed to the virus. If everyone they meet has already been either infected or exposed, the new infection rate will drop
Not so much that, because even a hundred million infected in China is just around 10% of the population of China, so plenty of room to continue infecting. Spanish flu was around 30% of global population, as an example.
What we hope for is:
Mortality rate is/becomes lower than so far understood.
RO becomes lower (preferably less than 1) when control measures (from hygiene to restrictions) are implemented.
There is also the possibility that the reverse of those occurs, with this wave of infection or in future waves.
I developed a similar simplistic model the other day. Merely, solving for q presuming a geometric sequence. Geometric-average q is ~1.45. This imply doubling number of infected every two days.
So far china and rest-of-the-world exhibit exponential growth of doubling every two days or so on average. Albeit, “rest-of-the-world” having smaller numbers is less stable model and could surprise to the better.
Great, isnt the big market crash what Mish and readers have been waiting like, forever..
And the same pundits have been saying that it will be a Black Sean event that will mark the beginning of a crash.
Is this virus the potential Black Swan? Too early to tell yet but give it a week or two.
I’d wager a “Black Sean” event is 100x rarer than a “Black Swan” event.
The latest:
This is the real reason to fear the coronavirus. It may be a weapon designed to kill millions.
People should ping Peng.
It wouldn’t be a very good weapon If they have no control over it & it kills their own people.
True. Biological warfare is stupid except to a small number of ‘elites’ who want to survive it, even at cost to the rest of US.
Umbrella Corporation says that the Coronavirus is entirely safe, and should not result in any walking zombies. At least, not very many.
Several virologists say that the genome appears perfectly natural, not the result of human manipulation, and that the virus’s infection characteristics would be a poor choice for a bio-weapon.
And that is disregarding the universal truism that if communists, or any other progressives, had a hand in designing it, it simply wouldn’t work. Which this thing seems to sorta-kinda do.
Or, on second thought, judging by where infections seem to be mostly concentrated……….
“a poor choice for a bio-weapon”
If there is such a thing as a ‘good’ bioweapon, it would be for which there is an antidote available only to the side that used the bio-weapon. I don’t know whether or not that is the case here.
A bioweapon that primarily targets the aged and infirm, but kills few of the young and healthy would not be very useful. Remember, though, this article comes from ZeroHedge, so take it for what it’s worth.
I take it from that you don’t think much of Zero Hedge, do they have a bad reputation?
Some people love ZeroHedge. I don’t happen to be one of them. Each person needs to decide which news sources they trust, and which they are skeptical of.
Ah ok, thanks for the reply, I just wondered as I haven’t been aware of it that long. It’s given me some links to some sites I’d never have seen so I quite like some of it. Such as realinvestmentadvice.com
“Remember, though, this article comes from ZeroHedge, so take it for what it’s worth.”
Zero Hedge is the best news source. Mish is published there.
This particular article doesn’t make it sound like it was a bioweapon. Peng got interested in cornoaviruses in the first place when he contracted SARS as a junior. His research into why bats were able to carry around SARS, MERS, and other deadly viruses without getting sick led him to start researching bats and he eventually got into genetically engineering bats as part of his research. In the process of genetically engineering bats, some coronavirus “superbug” strains evolved and apparently escaped into the wild. So possibly the strain causing all the problems in China at the moment is one of these superbugs which escaped into the wild among the bat population, then into one of the local food markets where it was consumed by a human, then began to be passed around among the human population.
I think it’s far more likely a Wuhan lab worker caught the virus and passed it on when they were off duty.
Certainly that’s more likely than anything sinister. The article makes no accusations; it just points out what the lab and Zhou were experimenting with.
I posted in the article on doubling every 6 days that it seemed to be growing 57% a day, but i only went back 4 days. 53% or 57%, it will double much faster than every 6 days, which would only be 12% a day.
If I were a Coronavirus field marshal, I’d attack by attempting to jump the animal/human genome barrier in a wild meat market in the most populous region during their annual period of maximum travel.
I’m sure we’re the thinking life form, and our AIDS, SARS, Coronavirus defeats are just bad luck…
“We” are dumb enough to fall for the twin idiocies of activity taxes and central banks. Plus all the rest of the pathologies adding up to totalitarian progressivism.
“The Viruses” seemingly are not. That should relieve you on any delusion wrt who is thinking, and who is merely thoughtlessly regurgitating abject nonsense.
Sarcasm detected. The corona virus is not the problem; the problem is the human population that spreads like virus.
“Yesterday’s selloff in stocks was likely a response to the fact that this virus has continued to grow at a geometric pace thus far.”
Or not. Today the markets gained most of that loss back as if none of this will be a problem economically. I have a difficult time understanding how quarantining 50 million people in China for several weeks will not have a significant adverse economic impact, but it would be easy to get the impression from today’s market that none of this is significant.
I’m replying to you because I don’t have an independent reply field to the article… but this is to the article.
is an interesting read, it tends positive and sort of overlooks that R0 can go the other way, same as Jim Bianco looking to better figures maybe, but then I haven’t seen a more pessimistic, if maybe realistic, chart than the above. Jim talks of it being contained, I don’t see that happening, no matter the R0 this virus is too fast and widespread. Just possibly it will slow, until it establishes in another country with easy transmission. The only thing that is positive is that fatality ratio is not incredibly high, just very high. Changes in the virus can make it more dangerous as easily maybe as making it weaker.
The impact on the economy depends greatly on whether it spreads fast in the US. If not, the impact will be minimal.
What is your rationale for that statement? Not arguing, just questioning.
If the virus stays confined to China, and the cases in the US end up limited, how will the US economy be affected? Will there be more exports to China, or less? Will US consumers change their spending? Will government spending increase as a result of extra monitoring precautions on people coming into the country? I think that, the overall effect will be minimal in the US if the virus doesn’t spread in the US. If it takes off here, too, and millions get infected, the economy will take a massive hit, obviously.
The stock market, by bouncing back, is saying that it currently expects the virus to be contained at the border. Can it be contained? We shall see. The US cases stayed at 5 overnight, with all of them being people who had been to China, and that is giving comfort to the market. On the other hand, non-China cases jumped from 64 yesterday to 87. A 36% jump doesn’t match the 53% in China, but within 2 weeks non-China cases would get to where China is today, and in 40 days at that rate would reach 19 million.
I guess I’d argue that since China is the world’s second largest economy and since the country has pretty much ground to a stop, that the world economy will take a hit, and by extension so will the US.
My Chinese friends who live there tell me they are all holed up with no one going out (even in cities very far away from Hubei province). Boredom is turning into a big problem.
Suddenly you have about 25% of the world’s population not buying anything. I can’t see how this will not affect the US.
It is also true that Chinese factories will be affected. Obviously there will be impacts, but what? Will they import less? Perhaps, but if most of the US exports to China are Ag products, will China continue to eat? Will their domestic food production fall, and then will they need to import even more? If their factory production falls, will Americans be forced to buy goods from other countries? If so, how will that affect the US economy?
I think that the impacts will be complex, but small, if the virus is confined mostly to China. The more countries it spreads to, the more effect it will have, and if it spreads to the US, it will crush the US economy.
On a brighter note, all that boredom will surely produce a baby boom.
The impact is already NOT minimal in China.
The question is whether or not it spreads.
Yes, what I meant to say was that the impact on the US economy will be minimal if the virus stays largely confined in China. Clearly the Chinese economy is seeing very significant impacts from it already, and any country where it spreads will take significant hits to their economy.
” Today the markets gained most of that loss back as if none of this will be a problem”
Today is Turnaround Tuesday and the Dow recovered less than half of Monday’s loss. Did you buy the dip, Observer?
Futures also up so far. No, I did not buy the dip.
As long as the virus’ impact is not gigantic enough to decimate the influence of central banks and governments, stock prices will continue to be set largely by them. To serve a redistributionary function.
With “news” serving merely as foils to obfuscate this fact. And hence keep hapless dupes, placed in front of CNBC or some “trading” app, still properly in thrall, hence subservient, to the well connected mediocrities the redistribution is done in favor of.