SCENARIOS-Market fallout if swine flu outbreak worsens

SCENARIOS-Market fallout if swine flu outbreak worsens

www.reuters.com

LONDON, April 2* (Reuters) - The World Health Organization (WHO) has declared a "public health emergency of international concern" over an outbreak of swine flu in Mexico. [ID:nFLU]

International experts will convene on Monday at around 1400 GMT to advise the WHO on whether to raise the current pandemic alert level for swine flu from 3 in its six-step approach.

The following are the WHO definitions of the different levels of alert and possible consequences for financial markets at each level in the case of swine flu.

LEVEL 2 - animal influenza virus circulating among domesticated or wild animals is known to have caused infection in humans, and is considered a potential pandemic threat.

- Financial market impact confined to specific firms or sectors in countries directly affected by outbreak

LEVEL 3 - an animal or human-animal influenza reassortant virus has caused sporadic cases or small clusters of disease in people, but has not resulted in human-to-human transmission sufficient to sustain community-level outbreaks.

- Market impact limited to short-term swings lasting a few days though further jolts to financial asset prices could be seen if governments or major forecasters cut growth predictions.

- Global equity markets suffer moderate setback, with underperformance in particular sectors (transport, travel, leisure, and commodity shares) that are seen most vulnerable to further deterioration in trade flows, travel.

- Minor flows into the most liquid bond markets, causing moderate declines in yields in these markets.

- Dollar, yen benefit from investors' move into safe havens, with emerging market currencies and higher-yielding ones (such as the Australian and New Zealand dollars) losing ground as investors unwind carry trades put in place in recent weeks as stocks markets have rebounded.

- Gold gains

LEVEL 4 (current) - characterized by verified human-to-human transmission of an animal or human-animal influenza reassortant virus able to cause community-level outbreaks.

- Concern about the impact on global economic activity starts to weigh on the wider equity market. Mark Bon, fund manager at Canada Life in London, estimates an upgrade to level 4 would see stock markets suffer a sudden sharp drop of 7 percent. Relative performance of stock markets could be determined by their economies' exposure to infected countries and by their stock piles of relevant drugs and vaccines.

- Further flight to the most liquid bond markets, with curve steepening seen on the cards as investors are expected to favour the front end and cash-like short-term bills. David Keeble, head of fixed income research at Calyon in London, says any WHO upgrade of the alert level could see 10-year Bund and Treasury yields fall about 20-30 basis points within days of such move.

- Yen and dollar expected to continue to strengthen, particularly against higher-yielding currencies as above. Any concern about renewed stress in the financial sector will stoke speculation cash could be pulled back to the United States to bolster balance sheets in a rerun of what happened during the financial crisis.

LEVEL 5 - characterized by human-to-human spread of the virus into at least two countries in one WHO region. While most countries will not be affected at this stage, the declaration of Phase 5 is a strong signal that a pandemic is imminent.

(visit the link for the full news article)



[edit on 27-4-2009 by ashton]

What the heck?? This is all pre-planned

LONDON, April 2* (Reuters) - The World Health Organization (WHO) has declared a "public health emergency of international concern" over an outbreak of swine flu in Mexico. [ID:nFLU]

International experts will convene on Monday at around 1400 GMT to advise the WHO on whether to raise the current pandemic alert level for swine flu from 3 in its six-step approach.



www.reuters.com
(visit the link for the full news article)

It makes me want to tell everyone I know to pull everything out of the stock market, which is convienent since it will fall, but for a self ful filling prophecy perhaps. Kapow, Brain Spams to severe kind.

"Relative performance of stock markets could be determined by their economies' exposure to infected countries and by their stock piles of relevant drugs and vaccines."

Ooooohhhh....can you say someone is going to make a chit-pile of cash aka the folks manufacturing the "relevant drugs?"

This all is just so stinky...who would have thought a week ago that we'd even be considering this chit?

I do not know what to believe.

Well, the way I see it is... If I get sick, and die, then so be it. Then again, I have no family that are relying on me. I have family, of course. But, it's not as if they're relying on me to pay for their food and what-not.

I dunno. That's just my views on it, for me at least. I hope that those who have a family, that they stay safe and without this crappy illness.

It definetely seems a little "convenient" for this swine flu to appear. Especially since bird flu hasn't been doing what I guess they hoped it would.

Meh, I do dislike this conspiracy crap a lot.. and I hate questioning stuff which could easily be natural.. but, it's definetely better to be cautious, than not at all.