Swine Flu Pandemic Primer
As author of World Event Trading, I did an entire section on infectious diseases from the 1918 Spanish Flu to Bird Flu. The recent outbreak of Swine Flu is generating headlines and concerns globally. It has spread from Mexico to the US to New Zealand. Expect the World Health Organization (WHO) to take the lead on dealing with the disease.
Critical point: fear of the disease is the biggest driver of behavior and societal changes due to the outbreak.
Reuters: “The new flu strain, a mixture of various swine, bird and human viruses, poses the biggest risk of a large-scale pandemic since avian flu surfaced in 1997, killing several hundred people. A 1968 “Hong Kong” flu pandemic killed about 1 million people globally.”
Here are a few bullets on the topic:
The country of the origin of the disease will see it’s markets the most severly impacted from currencies to stocks. Bonds generally rally.
Major outbreaks and rapid spread of infectious diseases occur when the populations are under duress or at the weakest points. This would be an ideal time for a large outbreak as the global economy has dramatically weakened the finances of major countries to deal with the situation. The population may also be weakened by lack of funds to provide proper health care due to job losses.
Populations flee and spread the disease. This is already occurring as Mexico has had tourists leave and come to the United States spreading the disease. Russia and some US states are limiting travelers from Mexico and some imports already.
Travel, leisure, and retail will be hit. While I don’t think any attempt at quarantines, I do think travel to the originally infected areas will be severly curtailed. Mexico’s tourism will be severly negatively impacted with hotels hurt. Public places will be shunned and this will impact entertainment like concerts (already canceled in Mexico City), movies, theatres, stores, and restaurants. Schools will be closed and universities. Also, ridership on mass transit could decline significantly.
Pharma could see gains. Like bird flu, the big drugs are Relenza and Tamiflu with Glaxo and Roche. “Roche said Saturday it is in regular communication with the World Health Organization concerning a outbreak of swine flu in Mexico, and could deliver several million doses of its Tamiflu drug should the treatment prove effective. producing them. ”
The big winners could be health care and hospitals as they see a surge in patients. Also, telecommunications entities like cell phone companies could do well with increases in phones used from people staying home. Companies like Blockbuster and Netflix could see surges due to stay at home families….this is somewhat already occuring due to the recession/depression.
I hope this helps and I hope the Swine Flu doesn’t spread like the 1918 Spanish Flu which killed about 7% of the US population at the time.
July 14th, 2009 at 10:40 pm
I sure hope another Pandemic does not hit our world again. I can’t bear to see that many people die!! Hopefully it will stay out of the US again.