Dear readers, as you all know we always advocate a sensible and calm approach to turbulent market events. We are not easily scared however we are neither unaffected nor paralyzed in the face of black swan events such as COVID-19. ESGFIRE was able to time the market crash of COVID-19 in 2020 almost perfectly. The ESGFIRE portfolio went into 90 % cash position in late February/ early March of 2020 which made us avoid the crash which occured in the global stock markets following the COVID-19 outbreak.
The latest weeks and especially the latest days there has been very uneasing reports of Monkeypox (a relative virus of the highly contagious, deadly and nowadays extinct smallpox virus) breaking out in several European countries such as Great britain (9 cases), Portugal (34 cases), Spain (32 cases), Sweden( 1 case) and also Canada (22 cases) and Australia( 1 case). There has today also been reports of a few cases in the United states. Number of cases in the UK is expected to DOUBLE today.
There has been previous occasions where monkeypox has spread from animals to humans however what is deeply concerning is that the virus has spread so quickly in so many different countries. Normally the virus only spreads due to close skin contact however the fast transmission rate in the current outbreak indicates that this COULD be airborne in which case we have a very different situation on our hands for the global community. There are two different strains of monkeypox : The Congo Basin clade which has historically caused more severe disease and was thought to be more transmissible and the West African clade. Luckily the cases in the current outbreak appear so far to come from the West african clade which is less deadly of the two strains however it still could have a fatality of anywhere from 0,5-5 %. The Congo Basin Clade however has a mortality rate of 10 %.
On the positive side of things there IS an existing vaccine for smallpox which has proven to be up to 85 % effective against current strains of monkey pox and there are several countries which have stores of this vaccine. Also the vaccine can apparently from what we have learnt be given even after someone has caught the disease to milden the symtoms. The negative part of this scenario is that it will take time to produce and distribute smallpox vaccine to the entire global community should this be needed. Another negative part is that unlike COVID-19 smallpox ,and potentially also monkeypox, is most lethal against children and younger people of the human population.
What could be the potential global consequenses of this outbreak?
We currently do not know HOW contagious monkeypox is or HOW it is transmissible. WHO just announced they are holding an emergency meeting about the virus which shows just how serios they are taking the situation. IF this virus is highly contagious, transmissible and even if it only has a mortality rate of 1 % it could still cause huge distrubtions in global supply chain, new lockdowns and other movement limiting restrictions by governments. Considering this disease is most likely especially rough on children the pressure on governments to act will be enormous even though it can be presumed that the majority of the global population is very tired of lockdowns by now. Smallpox was eradicated in the 1980s and most people below the age of 50 have not been vaccinated for smallpox which makes them more susceptible for monkeypox.
Bear in mind that china is already imposing strict lockdowns for COVID-19 for which the majority of their population has been vaccinated, its anyones guess what kind of measurements that will restrict their industry production they might take feel forced to take against the monkeypox virus if it becomes widespread.
ESGFIRE action:
We have chosen to be better safe than sorry following these worrysome reports of the monkeypox. Considering the global stock markets are already trying to cope with high inflation, raising interest rates and the War in Ukraine adding a new black swan event such as new pandemic event is setting the market up for the perfect storm. Our portfolio therefore as of today is consistent of 40 % cash on the total and out of our listed assets we have a cash position of almost 60 %. We also aim to buy a small portion of physical gold as an investment and backup for emergency use. We intend to stay on this cash position level for atleast a couple of weeks until we can analyze the situation better further and assess what impact it will have for the global economy, we also intend to allocate all our cash back into stocks as soon as the implicaton of the current event has unfolded.
We intend to buy stock in pharmaceutical company Emergent Biosolutions which has the ONLY FDA approved vaccine for smallpox which they bought from Sanofi for 125 MUSD .
We have also purchased stocks in Bavaria Nordic who recently got several orders for their smallpox vaccine which is approved in the European Union. This is ONLY intended as a hedge incase the monkeypox outbreak goes massively viral on a global scale.
Investing in stocks is combined with certain risks and it is possible to lose your entire investment. Our posts are made for Educational purposes only and are not to be interpreted as tips , financial advice or recommendations of any kind to either buy or sell any stocks.
