Daily Investment Interpretations

April 28, 2009

2009-4-28:   The indices dropped a trifle more today. The NASDAQ Composite fell 5.60 points (-0.33%), to end the day at 1,674. The Dow subtracted 8.05 points (-0.1%) to close at 8,017, and the S&P 500 dropped 2.35 points (-0.27%)  to 858. Oil fell slightly to $49.25, while gold gave up $14.60 to finish at $893.60. The VIX slipped 0.37 to 37.95.
    It's too early to know whether this epidemic of swine flu that appears poised to become the first pandemic of the new century will be a kitten or a tiger. In the meantime, suspected cases are being wisely reported. At least six (
1:00 a. m. Update: at least seven) U. S. patients have now been hospitalized. Mexico's death toll has risen to 159, although only 7 of these have been laboratory-confirmed per the World Health Organization. (1:00 A. m. update: The Mexican death toll appears to be stabilizing.) One or two deaths in California are suspected to be a consequence of swine flu. (1:00 a. m. update: One death is now suspected to be attributable to swine flu; the other has been ruled out.) Of course, ordinary flu kills around 36,000 patients in the U. S. alone each year. But the death rate in Mexico is running around 10% of those hospitalized, and many of these deaths are arising from the patients' own immune responses (as was the case with  the 1918-1919 Spanish influenza): This flu's danger is in its potential

4-28 (Afternoon):   The newsworthiness of the swine flu epidemic appears to have declined, but the number of swine flu cases in the U. S. has jumped now to 68, including "a number of hospitalizations": U. S. swine flu cases climb to 68. (The number hasn't been given.) These hospitalizations probably involve pneumonia, and sound similar to the Mexican cases. It also appears that U. S. patients are infecting others around them. The World Health Organization is awaiting confirmation of this person-to-person transmission. If confirmed within the United States or Canada, the alert state would probably escalate to phase 5, virtually insuring an imminent declaration of a global pandemic (phase 6).
    One other point about this flu outbreak: it's occurring after the usual flu season.
    Roche pharmaceuticals, the manufacturer of Tamiflu (Oseltamivir phosphate), has stated that it can produce up to 400 million doses a year, and is prepared to license other drug manufacturers to also produce Tamiflu if that should ever prove necessary.
    The World Health Organization said today that this flu outbreak could be mild, but also cautions that the 1918 flu pandemic also started out mild. An official of the World Health Organization says a pandemic is not inevitable, and is likely to be mild if it does occur:
100-plus swine flu cases confirmed outside Mexico.
'What we have seen clearly as a result of these epidemiological investigations is there have been probably three smaller waves of human-to-human transmission and now there is an amplification among suspected cases,' he said of Mexico."

    In order to effect a pullback in the stock market, it seems to me that the professional money managers who have bought stocks during March and April in anticipation of an economic recovery would have to confront economic news dire enough to change some of their minds, and inspire them to part with some of the stocks they just bought. 

4-28 (Noon):   Sigh of relief! I know it's too early to declare victory over a deadly swine flu pandemic, but at least so far, the cases of swine flu that are cropping up around the globe outside of Mexico are mostly mild. (Of course, it would probably take a few days for a flu-induced pneumonia to kill its victims so we may not be out of the woods yet, but as of Sunday night, only one U.S. patient had been hospitalized: Newsweek: Should We Panic?.) More than 150 deaths in Mexico have been attributed to this new influenza virus, and more than 50 U. S. patients are suspected to have the disease. It now appears likely that there will be a global swine flu epidemic. What remains to be seen is how lethal it will be, but the situation looks a lot less worrisome than it did this weekend when the death toll in . Mexico rose from 68 on Saturday morning to 149 by Sunday night. Now, a day-and-a-half later, the death toll has only risen by 3 to 152. 
    From MSNBC:
Amid the alarm, there was a spot of good news. The number of new cases reported by Mexico's largest government hospitals has been declining the past three days... from 141 on Saturday to 119 on Sunday and 110 on Monday." the number of cases.
    Turning back to investing, U. S. consumer confidence soared in April, and Pace of decline in home prices slows, Case-Shiller data show. A technical  advisory service to which I subscribe is recommending a holding strategy until the markets break out of their trading range. The markets are ripe for a correction, but with everyone eagerly anticipating a correction so they can "buy on the dip", the expected correction is proving to be elusive. In the meantime, the NASDAQ Composite (below) is approaching its 200-day moving average. The Dow and the S&P 500 have plateaued, and have settled into trading ranges.