Originally published in medium Feb 20, 2020 by the author
This article started after an interesting conversation at the Best Buy, where a blue shirt was talking about the impact on Best Buyâ€™s inventory due to â€˜Covid-19â€™ outbreak. A quick check on the apple website revealed that there is a delay in its supply chain for some products. Itâ€™s normal to see apple product being out of stock in September, but late February is a surprise. Apple, in its quarterly guidance, has highlighted that it is taking more time to return to the normal state of operations.
The ripple effect of this outbreak has already spread to countries neighbouring China. South Korea, Japan and Singapore have already taken steps to combat this threat. Together these countries represent a significant portion of good industrial production of the world. China is also a substantial contributor to the tourism market. An average of 3 million Chinese tourists visited the U.S. in the last couple of years. With the ban on Chinese travellers, this market is undoubtedly taking a hit. Brazil is a significant exporter of Agricultural and raw material goods to China. It is expected to take a hit with the Chinese quarantine.
Chinaâ€™s effort in fighting this epidemic has been phenomenal. From building infrastructure to shoring up support for the economy, China has taken aggressive measures, but we do not see the expected effect. The Peopleâ€™s Bank of China lowered its benchmark lending rates again yesterday, but the Asian market has not reacted.
Despite all this at the time of writing this article, the S&P 500 and Nasdaq have jumped to new heights. Is the market slow to react to this threat? It may be beneficial to heed Warren Buffetâ€™s warning as an investor,
It is wise to be â€œFearful when others are greedy and greedy when others are fearful.