Hacker News Reader

Comment by huherto | Hacker News Reader

I am surprised the stock market is holding up while the virus can have a big impact in world trade. Any guesses ?

The trump trade policies (specifically, the China tariffs) have reduced the exposure of many US firms to Chinese goods. A lot of factories shifted to Vietnam and other SE Asian countries. Europe is already showing early red flags in their stock indexes, due to their closer ties to China.

If COVID-19 spreads further throughout SE Asia unchecked, expect the SP500 to catch up with reality in a hurry.

Would it be better or worse for China if the disease spread to countries that compete with it economically? If it helps China at all, would China be able to resist the temptation to allow infected individuals to travel to those countries?

Well, I suppose in terms of comparative advantage, misery loves company, so better. In terms of absolute number of people with rice in their bowl on any given day, I suspect worse.

Vietnam is becoming more and more locked up from the virus every day. For example, all of the schools are closed until further notice and the borders have also been restricted as well.

The stock market is very divorced from the economy and global events at present. The money faucets have been pumping non stop to stopgap all liquidity shortages within financial trading. As long as you grease the wheels, the market won't collapse.

That said, the coronavirus has also been ignored as a whole until now. AAPL's downward guidance is a big, big fucking deal and is almost certain to cause a short term impact on prices. However, it'll also be transitory much as the rest of the shit is.

Only a few companies reported any material impact because of coronavirus. I recall SBUX, NKE, UA reporting decreased sales in the 1st quarter of 2020 during their Q4 2019 earnings calls.

AAPL is the first “big” company to report an impact. Check out /NQ and /ES in 16 minutes if you want to find out, I’d wager NQ will gap down .5% and ES will gap down .25% in the ETH session tonight. As to where they go from there, I’m betting on 3400 (with actual money)

You think they're going to spring back up? Why's that? The same reasons it's been flying up for the last few years, or something in particular?

The Fed is injecting liquidity into the market via repo operations. Remove the added liquidity, and watch the asset prices fall.

Another rate cut or two is likely this year as well, that will juice things even more.

Well. The market is closed today. Since this is the first official guidance revision related to the virus (at least from a major corporation) you can expect to see some red tomorrow.

My guess would be people don’t see the virus as something threatening to the businesses long term, but rather as a temporary inconvenience.

I’d guess the real impact isn’t that big, and/or the stock market considers the impact extremely temporary and not worth selling over.

I'm guessing that AAPL March call option I bought is going to take a beating tomorrow morning. AAPL saying, "we ain't gonna make our numbers" might be enough to start to drag on NASDAQ a bit. Worse, perhaps it will start some closer examinations of other supply chains.

Reply on news.ycombinator.com