As Franklin Roosevelt said, “All we have to fear is fear itself.” The stock market hangs in such peril that it is the fear of fear that is now driving its surges. The market is afraid that Ebola fear will cause a panicked change in people’s economic activities. The market fears the fear.
When the stock market tops out, it rarely hovers long at the top. Thus, when it is poised to fall toward a correction or a crash, it becomes overreactive as investors worry what thing will trigger panic. Small events can trigger large movements when the market is ready to slide. So, what you see is a market that lurches as if trying to top or match its last high point and then stumbling on some small bit of bad news and then trying again but stumbling over the next bit of news. You see a market that cannot rise past any bad news because it has no more momentum. Typically in other crashes, after several days of that, the bottom gives way.
This is what we’re now seeing.
The fear of Ebola fear is scaring the stock market
“This feels like a top to me,” said Nicolas Colas as he prepared to host his television show on September 19th. The S&P 500 was stuck in a rut that was 5% below it’s peak. It had tried to push out several times but remained below that invisible ceiling. The amount of hype needed to assure that Alibaba’s IPO was a success seemed like an extraordinary push to him. And a single individual arriving in the U.S. with a disease that has been in and out of the public consciousness since the nineties had the foreboding feel of calamity.
Uncertainty has always been an enemy of a rising stock market. And the uncertain outcome of the Ebola pandemic seems to be exacting a toll on Wall Street in recent weeks.
Slowing global growth, geopolitical turmoil in the Ukraine and Middle East and the end of Federal Reserve stimulus are the most commonly cited catalysts for the market’s pullback. But these are the same catalysts that investors have been worried about for months….
The wild card in the weekslong selloff: Ebola.
“This is, by definition, a situation with an unquantifiable outcome and that it would create market uncertainty should hardly be surprising,” said Dan Greenhaus, chief strategist at New York brokerage firm BTIG. “Rational markets, these are not.” (The Wall Street Journal)
When the market is ready to fall, it doesn’t like things it can’t quantify. The forces mentioned in the WSJ article above are the same ones I said last spring would be a serious headwind for the economy, and Ebola is the kind of unexpected event that I said could trigger a collapse of the stock markets at such a time of onerous forces coming together.
One analogy I used along the way was that of standing on an empty pop can … where the forces pushing down on the can are to such an extreme that a mere touch on its sides triggers collapse. That is how the stock market appears to be reacting now to Ebola. With one known case in the U.S., the finger was pointed to the can, and the market watched breathlessly to see where the news would go.
The feeling one gets is that, if it becomes clear that Ebola is spreading in the U.S., the U.S. stock market will collapse. Ebola with its images of people bleeding through their eyes is the kind of thing that can spark that panic when the market is poised to give way. Normally, the market would not be so intensely focused on one or two individuals who contract a terrible disease, but this time Ebola looks worse than at any other time and the stock market looks worse than it has in a long time. I think people know deep inside, though many are not admitting it, that the market feels like it is poised to give way. They fear it and are trying to talk it up, but the pep talks of the bulls seems like small amo against Ebola.
The same WSJ article continues,
If consumers and businesses retrench by reducing flights on airplanes, changing vacation plans, or altering business connections in a globally interdependent world, GDP growth rates will fall farther. We do not know how much, at what speed, or for how long….
CNBC’s Jim Cramer said Ebola is the biggest worry in the markets right now and that there is “an overall feeling that something lurks out there we don’t know about.”
That list of concerns exactly matches those that I said a few days before could easily be the result of an Ebola scare, even if the disease does not go any further out of control. Normally, the markets would not be too concerned that a scare over a disease could bring down the econony by its impact on GDP, but everyone knows GDP, itself, is sliding all over the world. The economies of Europe and the even the U.S. can’t absorb much impact right now.
Ebola fear factor rises daily
First, the fear was that it might spread beyond Africa. Then Ebola did spread to the U.S. and to Spain by people entering the country who got the disease in West Africa. Next the worry focused on whether or not the disease could be contained if it got outside of Africa or would it be caught by others within those countries for the first time? Then it was caught by nurses in Spain and Texas who were treating the ill. And these were people wearing hazmat protective gear and following special protocols. Still, they caught it; but, still, they were the ones in daily contact with bodily fluids. So, the next step in public concern is whether the disease will spread to other people who were not handling sick and bleeding bodies, who were around the person before symptoms grew bad.
As the world waits to see if the disease will leap the next barrier and infect someone who was near the patient but not treating him, the epidemic has also upped its risk. The death toll from Ebola has been raised by the CDC to 70% of the illness’s victims.
The Ebola virus is killing 70% of the people who contract the disease, the World Health Organization said on Tuesday, and as many as 10,000 new cases a week could be reported by early December….
Dr. Aylward said the number of reported cases has been running at 1,000 a week over the past three to four weeks, with the total number of reported cases expected to top 9,000 this week.(WSJ)
The biggest Ebola fear
I think the biggest fear for many people is that the government cannot be trusted in the assurances it gives, nor can the professionals working with the epidemic be trusted when they assure us their procedures are failsafe. We have all seen that, when experts in an industry talk as if things are failsafe, they are anything but failsafe. Their certainty is the very hubris that causes them to overlook the weak points in their plans.
When hearing CDC assurances about Ebola, I think back to when experts of the nuclear industry assured us Fukushima’s reactors were failsafe. It turned out that, even as they were talking, the reactors had already melted down and the experts didn’t know it.
The CDC, for example, has tried to assure the world that Ebola is not airborne — that it must spread by physical contact. And, yet, the World Health Organization has said that the disease can spread via any bodily fluid and from contaminated surfaces that those fluids have touched.
Theoretically, wet and bigger droplets from a heavily infected individual, who has respiratory symptoms caused by other conditions or who vomits violently, could transmit the virus – over a short distance – to another nearby person.
This could happen when virus-laden heavy droplets are directly propelled, by coughing or sneezing (which does not mean airborne transmission) onto the mucus membranes or skin with cuts or abrasions of another person.(WHO)
That seems like splitting hairs to me. If someone coughs in a plane, and their mist drifts over me, I can get the illness, though I’ve had no physical contact with the person. We see teams in hazmat suits fumigating apartments where diseased people have been in case any surface is contaminated because the virus can live for some time in an invisible film of bodily fluid left on any surface. How much logic does it take to figure out that, if you can get the disease from the sweat or droplets of a sneeze left on the surface of a microwave oven hours after the patient has left the building, then you can get it from the droplets of sneeze near your face that are still airborne?
These kinds of assurances don’t ring very true to people because they see not only the great care being taken to avoid the slightest contact with bodily fluid (hazmat suits and fumigation), but they also see that people using all of that care have contracted the disease.
In the very first incident of Ebola spreading within the U.S., we have already seen how easily the system fails when the head of the CDC sited a protocol breach as being the reason Ebola spread from patient to nurse:
Top US health authorities said Sunday a breach of protocol was to blame for the Ebola infection of a Texas health care worker who was said to have worn full protective gear.
Worn full protective gear?
The same article goes on to say…
The Dallas hospital where the woman worked said she had worn a mask, shield and gloves during her encounters with Thomas Eric Duncan
Does protocol not include a hazmat suit??? No wonder this kind and beautiful nurse contracted Ebola. The protocol given to her includes only the standard mask over the mouth, face shield and gloves. So, bodily fluids could easily have entered some minor scratch on her skin. Do hospitals and the CDC really not think of these things? Since the CDC says she used “full protective gear,” it’s pretty clear to me that the protocol, itself, is insufficient — that or the CDC is asleep in saying that she used full protective gear. Did no one notice the hazmat suit was missing?
Perhaps her uncovered forearm got some vomit on it and then she wiped the sweat from her eyes with her forearm. Clearly, if you’re not completely contained in a hazmat suit, the possibilities for contagion to spread by physical contact are innumerable. And, yet, no one thought she needed to be in a hazmat suit when the goal is to absolutely quarantine the disease with no possible chance of contagion.
You have to wonder if officials are thinking at all if, in fact, she was not expected to have a hazmat suit on. If it is required, you have to wonder why no one noticed the suit was missing from the list of protective gear she was known to have worn. This isn’t missing the minutia. This is missing the biggest of the big stuff.
These are the kinds of things errors that make people think — regardless of all assurances — that the disease could easily spread out of control in the U.S. If something so obvious is overlooked, how many minute mistakes could go uncaught? While every disease has its particulars, 99% of what needs to happen to prevent contagion is the same for all diseases, and it appears that the breach of protocol clearly happened in that 99%. A hazmat suit might have been a good first line of defense when working in a quarantine situation. Ya think?
A Liberian Ebola patient was left in an open area of a Dallas emergency room for hours, and the nurses treating him worked for days without proper protective gear and faced constantly changing protocols, according to a statement released late Tuesday by the largest U.S. nurses’ union. (Yahoo!)
The problem here happened in the most basic aspects of containing any contagion that all of us know about. How could a necessary protection that is so obvious to so many have been missed by an entire hospital full of experts and by the CDC?
Nurses were forced to use medical tape to secure openings in their flimsy garments, worried that their necks and heads were exposed as they cared for a patient with explosive diarrhea and projectile vomiting, said Deborah Burger of National Nurses United
And the CDC is still trying to figure out where the breach in protocol was? How about the lack of hazmat suits followed by the the availability of hazmat suits full of holes! And people are suppose to rest assured that the government and medical professionals have this under control? Maybe CDC stands for “Circus of Disease Control.” The blatant errors made here by an ill-prepared hospital even after they knew what they were dealing with make it a little concerning that the CDC is scratching its head to figure out what went wrong!
Clue: I’d start with those hazmat suits. Every hospital in the U.S. should have suits that fit without gaps. That’s kind of the ABC of disease control. Did they notice that “disease control” is two-thirds of their name? Why do I feel like we’re being protected by the Marx brothers? Are hospitals too cheap to keep an adequate supply of something that works universally to help stop the contagion of incurable diseases?
Hospitals create Ebola fear
Some healthcare experts are bristling at the assertion by a top U.S. health official that a “protocol breach” caused a Dallas nurse to be infected with Ebola while caring for a dying patient, saying the case instead shows how far the nation’s hospitals are from adequately training staff to deal with the deadly virus. (Yahoo!)
Ever since Dustin Hoffman treated Ebola victims in the movie Outbreak in the nineties, the world has known what a dangerous disease this is. We’ve also known that many governments have weaponized plagues like this. The world is filled with many other flues and illnesses that can become plagues. All of those can be stopped from spreading with the same kind or rigorous quarantine protocol.
Yet, decades after Outbreak, nurses are now telling us that hospitals don’t train nurses in how to prevent contagion when dealing with an epidemic disease? And Ebola, we are told, is not even that contagious! Nevertheless, hospitals now need to learn on the fly obvious things like having hazmat suits at the ready and requiring they be worn? There are many things about particular diseases that may require unique treatment; but there is also a level of quarantine and protective gear that should be sufficient to stop the contagion of any kind of disease. There is nothing unique about Ebola in terms of what it takes to stop the transfer of germs.
Yet, nurses are saying they have not been trained adequately in how to prevent contagion. That’s one of the scariest things I’ve heard during this whole outbreak. If hospitals haven’t learned yet how to stop germs from moving from one body to another or one place to another, then contagion is certain. Whether it is Ebola, bird flue, dengue fever, small pox, or any other plague-like illness, preventing the transport of germs remains the same procedure. Some germs spread more easily than other or resist different disinfectants, but things like wearing hazmat suits and how you remove your gloves, and keeping an area sealed off, all remain the same. All hospitals should have been trained long ago in top-level containment.
In recent months, the CDC has published detailed guidelines on how to handle various aspects of Ebola, from lab specimens and infectious waste to the proper use of protective equipment. (Yahoo!)
The world has known about the high risk of Ebola since the nineties, yet the CDC is just now giving hospitals guidelines on how to handle it? This does not give me reassurance that our experts have done their job. The medical community is apparently flying by the seat of its pants while it waits for the instruction manuals to arrive.
On Wednesday, Texas health officials announced that a preliminary test indicated a second, unidentified health care worker at the hospital had been infected with the disease. (Yahoo!)
Is it any surprise, given the holy hazmat suits at Presbyterian Hospital?
The nurses also alleged that hazardous waste was allowed to pile up to the ceiling.
Does it ever end?
Said the hospital in reply,
We have numerous measures in place to provide a safe working environment, including mandatory annual training and a 24/7 hotline and other mechanisms that allow for anonymous reporting.
Maybe one of those mechanisms should be hazmat suits without the gaps and enough of them for everyone, followed by properly incinerating the garbage.
Here are just a few other shortcomings in protection that the nurses pointed out:
- Patients who may have been exposed to Duncan were kept in isolation only for a day before being moved to areas where there were other patients;
- Nurses treating Duncan were also caring for other patients in the hospital;
- Preparation for Ebola at the hospital amounted to little more than an optional seminar for staff;
- In the face of constantly shifting guidelines, nurses were allowed to follow whichever ones they chose.
- When Ebola was suspected but unconfirmed, a doctor wrote “using the disposable shoe covers should also be considered.”
Hmm, I wonder how anything could have gone wrong.
Doesn’t sound like the CDC’s problem is figuring out what went wrong, but, rather, trying to count how many things went wrong. And ALL of it basic stuff — the 99% of precautions that are the same for containment of any infectious disease.
Now multiply the multitude of problems at Texas Health Presbyterian Hospital by numerous hospitals that may be just as sloppy. The only thing I’m still trying to figure out (being many steps ahead of the CDC apparently) is whether their plan is a comedy of errors or a horror story.
Hospital managers have assured nurses that proper equipment has been ordered but it has not arrived yet,
O.K., I’m going with horror story. After all of the bad press, the hospital still couldn’t think of paying for overnight shipping of the essential hazmat equipment?
Nurses claimed they had been warned by the hospital not to speak to the media or they would be fired…. The AP has attempted since last week to contact dozens of individuals involved in Duncan’s care. Those who responded to reporters’ inquiries have so far been unwilling to speak.
Ahh, well, at least the hospital has that contained! We don’t have to worry about those pesky leaks of information. That much has been hermetically sealed.
(Note: A later alternate and contrasting account to the report by the nurse’s union appears on CBS, and one has to bear in mind that the union may have its own agenda.)
So, rest assured by the words of your government and medical professionals, you have nothing to fear!
If all of this does not ease your fears, you’ll be glad to know that your government is just now figuring out that hazmat suits are uncomfortable and awkward and, therefore, fatiguing and, so, need to be improved. Apparently, no government employees working in hot climates made the government aware of how sweaty the suits get during the past twenty years in which they have been widely used. Let’s hope they get that one worked out in the next few years as doctors and nurses are bound to do better when they can see through their face shields. Improvement is finally … on the way.
Fear of ebola fear itself grows in the stock market
We see the same kinds of empty assurances that are intended to calm any public panic about Ebola being laid on the public by stock market analysts, too. Said Gina Martin Adams at Wells Fargo & Co.:
We continue to view this turbulence as transitory, but likely to continue…. We do not currently see a reason to doubt the long-term upward trajectory of earnings, and ultimately stock prices. Nonetheless, we continue to expect further shake-ups for the equity markets in the short run, as investors adjust to the new policy environment. (The Washington Post)
What is “transitory but likely to continue?” If things are transitory doesn’t that mean that they will fade away? She sounds a little like those doctors at Presbyterian Hospital who say not to worry because protective equipment is on the way.
The World Health Organization called the Ebola outbreak “the most severe, acute health emergency seen in modern times” on Monday but also said that economic disruptions can be curbed if people are adequately informed to prevent irrational moves to dodge infection. (AP)
You mean the market can be spared this fear if we all avoid irrational moves like going to hospitals that are still learning what a hazmat suit is and how to wear it?
Staffers of the global health organization “are very well aware that fear of infection has spread around the world much faster than the virus,”
Not to worry, Presbyterian Hospital will soon have that imbalance rectified.
“We are seeing, right now, how this virus can disrupt economies and societies around the world,” she said, but added that adequately educating the public was a “good defense strategy” and would allow governments to prevent economic disruptions.
Consider the above article part of that education.
Article by David of the Great Recession Blog