Messari Daily Newsletter: What Now?

What’s actually going on with Wuhan coronavirus?

As I wrote yesterday, I’ve been spending a lot of time this past week aggregating information sources and trying to piece together the key variables to track.

I did that to help me sleep better at night, make sure you feel ahead of the curve on this major news item, and to make it easier to write informed vs. paranoid pieces on a topic that offers no clear answers or experts.

The situation in Wuhan does offer many parallels to crypto: in terms of its emergent and distributed nature, its vitality, and (good news) its rapid, but still relatively digestible information flow. It’s an exponentially growing system you can still track because it’s still in its earliest phases. That won't be true if things keep accelerating, but it is for right now.

To recap, here are the things I’m updating for several hours a day now:

Google doc in which I’m providing live updates - you can literally watch as I type. This covers the primary dashboards and news sources I’m using; a synthesized news feed; some theories and rumors, which I’ll try to debunk bad info wherever possible, and a focus on the fundamental variables. (If that sounds familiar, it’s basically our approach to tracking crypto at Messari: same learning process, different topic.)

Additionally, here's a twitter list I’m using that is now my new default feed - feel free to DM me with other must follows or news items.

I’ll be writing short recaps of my research on this above the fold, and may do a live update on twitter starting later today or tomorrow, where you can ask questions, and I’ll do my best to track down answers. Share with friends or colleagues if you think they will also be interested.

Sourcing note: I’m not going to spend much time linking out to every piece of collateral I rely on in newsletter posts as there is already a pretty robust set of sources in the google doc.

Ok, today's update:

Is Wuhan "the big one” - our 100 year pandemic that rivals the Spanish flu? Probably not.

It looks like the mortality rate is probably closer to 1-2% (maybe less) vs. 10%, but that’s a very rough estimate that seems to be gaining traction. On the other hand, this is tremendously contagious. So we have something that could be an order of magnitude worse than Swine Flu, but an order of magnitude less bad than Spanish Flu.

While that previous paragraph is a good starting point, it's also fraught with a long list of faulty assumptions and potential errors. I'll try to “isolate” the variables that I can at least grok today, so you can better understand why this could all be either hilariously overblown or tragically understated.

1. How contagious is the virus? You can expect to hear the term R0 (“R naught”) quite a bit in the weeks ahead. R0 refers to the disease's infectiousness, i.e. how many people get infected per confirmed case. The seasonal flu has a R0 of ~1.3, while most current estimates for Wuhan CV are in the 2-4 range. That means you need to cut transmission rates by 60-70%+ to even contain the damn thing. R0 of 1.3 vs. 3 is a massive difference in exponential growth rates, which is why you’re seeing such draconian restrictive measures in China. If this virus breaks out in Europe and North America with an R0 of 3, most people globally could contract the virus until a vaccine is ready.
2. How deadly is the virus? This is literally a trillion dollar question, and is the difference between a few hundred thousand deaths (a bad seasonal flu), and tens of millions. These estimates are all over the place, but early consensus seems to be 3% looks like an extreme upper bound. If the mortality rate was closer to 2% vs. sub-1%, it could knock trillions of dollars off of Global GDP. That’s according to a World Bank study on pandemics last year.
3. Is the mortality rate tied to ethnic or environmental factors? You haven’t really seen this brought up much yet (political correctness?), but it’s worth contrasting the China stats with the stats throughout the rest of developed Asia, and then the rest of world stats. It will take weeks / months to have reliable data on this front, but once we do, it will likely show whether a) there’s something about the virus that disproportionately affects East Asians, b) how much mortality rate differs for populations that already have reduced lung capacity (i.e. how much worse does pollution and/or smoking make contraction of the virus). Singapore is cause for concern.
4. How long does it take to show symptoms? This is the scary one from a pandemic standpoint. There seems to be a bit of evidence that the incubation period for the virus could be up to 14 days. Big concerns here: a) there could be hordes of asymptomatic victims that are quietly contagious, and we won’t know about them and their impact for a month. b) there is an insanely high percentage of false negatives in early testing--people who test negative multiple times and then later test positive. This just happened to a case in San Diego, where it looks like a Wuhan evacuee was cleared prematurely by the CDC.
5. How much have infected people traveled? We’re likely past the point of no return here. One Brit seems to have gone on a trip to Singapore then come back to Europe and infected people in France, Spain, and the UK. Dozens of countries have evacuated citizens from China, and their home country quarantines seem to be coming up short.
6. How effective will the response be? This is the one that keeps me up at night. If anyone could crackdown on the spread of this disease, it would be the Chinese, who have taken extreme measures to curtail Wuhan: tens of millions are in actual forcible quarantine, and hundreds of millions more are in effective quarantine / self-isolation. There is zero chance a Western democracy would muster the same type of ruthless response to containing the spread. The tipping point for an uncontrollable epidemic in the U.S. and Europe seems to be much lower, so we should hope that current preventative measures hold up.
7. What is the ICU / critical case rate? Another variable I haven’t seen mentioned much has to do with what percentage of cases end up in the ICU. If the number is an order of magnitude higher than that of the normal flu (it looks like it could be), then it would cripple medical systems, more patients wouldn’t get access to the level of high-quality care that keeps the most severe cases alive, and the mortality rates for both the Wuhan virus and other acute cases would rise significantly.
8. Will we have collateral damage from supply chain shutdowns? That healthcare system breakdown would get exacerbated if we also see a prolonged shutdown of key medical equipment / pharma ingredient manufacturers, a topic where the former FDA commissioner is now sounding the alarms. Things get much worse if countries start to horde critical ingredients / equipment for their own populations and shut down exports. (Note: the business side is what I’ll be following more closely in future editions since I’m not a doctor, and most readers are investors.)
9. How long will it take to develop a vaccine? Sounds like it’s a year away at minimum. That’s a long-time to wait if we don’t get a reprieve on the spread of the virus from the spring and summer months.
10. Are the Chinese lying about their numbers? It is nearly impossible to believe that the numbers coming out of China are legitimate. Too many reasons to enumerate here, but suffice it to say you can treat the reported cases and deaths as the lower bound of what’s actually happening in Wuhan and mainland China. For better or for worse, we’re going to get better statistics soon out of Singapore, Korea, Hong Kong, Europe, the U.S., and that poor Petri dish of a cruise ship, the Princess Diamond.
11. Other known unknowns: Will the spring help kill off the virus? Has the virus aerosolized or is it merely contagious from droplets? How will it mutate as it spreads? Plus unknown unknowns.

I hope this is helpful. DM with questions, and I’ll address them in the live doc as I continue my research.

Otherwise, we'll be back with more (mostly crypto) content above-the-fold tomorrow. I'll continue to monitor and provide short updates, but there are DAOs to build and crypto assets to review.

Please keep reading and supporting the content from the rest of the Messari team. Crypto screeners here. Daily analysis here. And much more coming soon. ;)

-TBI