First Global Economy Shutdown!!!
On October 1, 2015, the SS El Faro, a massive American cargo ship, disappeared in Hurricane Joaquin, a Category 4 storm. The ship, its hundreds of shipping containers, and its entire crew collapsed on the ocean floor, three miles deep. It was the most massive maritime disaster in the United States of modern times. The massive ship had an experienced crew, state-of-the-art navigation equipment, and a warning of the storm. It seemed incomprehensible that such a ship could sink so suddenly. How could this have happened?
The truth is that it happened, and you can continue the story by reading the excellent book by G. Michelsen Foy (you will have a lot of time at home …)
Obviously we are going to refer to the gigantic and never before observed storm caused by the coronavirus. The COVID-19 (SARS-CoV-2) outbreak is one of the most unusual episodes in economic history. In fact, it is a unique episode, since no human being has ever seen what could be the first “technical shutdown” of the colossal machinery that is the world economy. No previous pandemic, no war (global or nuclear threat) has paralyzed the economy like COVID-19 is.
The engine that is the economy is expected to idle.
Governments around the world were quick to deal with the spread of the coronavirus, which has sickened at least 176,500 people worldwide and contributed to more than 7,350 deaths. Canada closed its borders to anyone who is not a citizen or permanent resident, while the European Union ordered to stop all non-essential travel. Italy began the confinement of its population. Spain followed suit. In France, President Emmanuel Macron banned all social and family gatherings, placing the country in an unprecedented blockade. And the following will undoubtedly be the United Kingdom and the USA.
Even before the White House guidelines were released on Monday afternoon, school districts, towns, cities, cities and states were pressing ahead with a chaotic mix of mandatory restrictions and suggestions on how to prevent the virus from spreading.
The Triumph of Science
The last hope we have that all this is relatively brief is that scientific discoveries can save us in some way. It is what we could call the “Triumph of Science”.
This last could be achieved through the appearance, but very quickly, of an effective treatment against COVID-19, such as, but not limited to, the following:
- A vaccine
- A drug
But the truth is that to be effective these treatments must emerge very quickly, now that the coast is still visible and we can return to do cabotage navigation.
If science does not arrive in time, then we will have to weigh the deaths caused by COVID-19 or those caused by the economic cataclysm. Dear politicians, the time has come to earn your salary. It is time to make good decisions. So FUND strongly the SCIENCE.
What to do trading whit this bad weather?
In this scenario, just stop.
Science cannot help in this scenario since the premises are so unusual that there is no previous experience and therefore no trading systems can be created that can reliably predict. Of course, banks, hedge funds and trading professionals will tackle each of their trades as best they can, but individual traders should remain out of business until the horizon clears.
The situation is so serious that cases such as the following could occur:
- Closing of the main world financial markets.
- The price of a barrel of oil could be ZERO or even negative (given the high storage costs)
- And so …
You see, this is an unpredictable situation.
Good Luck friends, and STAY AT HOME!!!
I will continue writing about this unusual phenomenon.