A customer holds a bottle of flavored vape juice while exhaling vapor from an electronic cigarette at the NXNW Vapor store in Sacramento, California.
David Paul Morris | Bloomberg | Getty Images
At least three people have died from a mysterious lung illness doctors believe may be caused by vaping — a rising public health worry that has U.S. and state officials perplexed, the Centers for Disease Control and Prevention said Friday.
A new patient in Indiana died, in addition to the previously reported deaths in Illinois and Oregon, Ileana Arias, CDC’s acting deputy director of non-infectious diseases told reporters on a media call. Officials are investigating a fourth death, she said.
The CDC is urging people to avoid using e-cigarettes amid the outbreak.
“Until we have a cause and while this investigation is ongoing, we’re recommending individuals consider not using e-cigarettes,” said Dana Meaney-Delman, who is overseeing the CDC’s response. “As more information comes about and we can narrow down the specific e-cigarette products, we intend to revise that.”
Federal health officials are reviewing 450 possible cases linked to vaping across 33 states, including the 215 cases it has previously reported, Meaney-Delman said. It’s unclear what exactly is causing the disease, officials said Friday. Until they have more information, the CDC is urging consumers not to buy e-cigarette products off the street or add any substances that are not intended by the manufacturer, the agency said.
Many of the patients who became sick said they vaped THC, a marijuana compound that produces a high. Some reported using both THC and e-cigarettes while a smaller group reported using only nicotine, Meaney-Delman said.
New York officials on Thursday said they are narrowing their focus to vitamin E acetate. Federal officials on Friday said it’s too early to pinpoint one substance.
The FDA is analyzing more than 120 samples for the presence of a broad range of substances, including nicotine, THC, other cannabinoids, cutting agents, opioids, toxins and poisons, Mitch Zeller, director of the Food and Drug Administration’s Center for Tobacco Products, said on the call. Lab tests have shown a “mix of results,” and no one substance or compound, including vitamin E acetate, has shown up in all of the samples tested, he said.
Doctors published detailed reports of the cases they’ve treated in the New England Journal of Medicine on Friday in hopes of defining the illness and helping other doctors recognize it.
The New York State Department of Health shared photos of some of the products it found to contain vitamin E acetate, a key focus of the department’s investigation into potential causes of vaping-associated lung disease.
Source: New York State Department of Health
Patients in many cases experienced gradual symptoms, including breathing difficulty, shortness of breath and chest pain before being hospitalized. Some people reported vomiting and diarrhea or other symptoms such as fevers or fatigue.
X-ray images from the patients typically show shadows similar to the ones seen in patients with viral pneumonia or acute respiratory distress syndrome, said Dr. Dixie Harris, a pulmonologist with Intermountain Healthcare in Salt Lake City, who has worked on 24 cases in Utah.
That led her to perform bronchoscopies on the first few patients. Doctors did not find any infections. Then they considered it might be related to vaping. All of Harris’ patients said they vaped. Some used nicotine. Some used cannabinoids, including THC or CBD. Others used both, making it even more difficult for doctors to pinpoint a culprit.
“My stance is overall, as a lung doctor, I don’t want anybody putting anything into their lungs,” she said. “But I do think there is something going on and there is one common thing making all these lungs react.”
IMF lowers global growth forecast
Workers assemble cars at the factory of Chang’an Automobile in Dingzhou, north China’s Hebei Province, Feb. 16, 2020.
Xinhua News Agency
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All times below are in U.S. Eastern time.
China’s National Health Commission said 2,345 people have died in the country from the coronavirus, and over 76,288 people are infected.
7:00 am: IMF says virus outbreak will slow global growth
The International Monetary Fund (IMF) said on Saturday that the virus will likely cut off 0.1% from global growth, and drag down growth for China’s economy to 5.6%, which is 0.4% lower from its January outlook.
“But we are also looking at more dire scenarios where the spread of the virus continues for longer and more globally, and the growth consequences are more protracted,” said International Monetary Fund Managing Director Kristalina Georgieva at the G20 Finance Ministers and Central Bank Governors Meeting.
6:30 am: Iran reports fifth death among 10 new confirmed cases
Iranian health authorities said on Saturday that five people are now dead out of the 28 infected with the virus, which may have reached most of Iran’s major cities, including Tehran.
The fifth death was among the 10 new confirmed cases of the virus in Iran. The reported cases there suggest that the virus is being transmitted much farther than previously known or acknowledged. Health Ministry spokesman Kianoush Jahanpour, who made the announcement on state television, did not say when the fifth person died.
The rise in virus cases outside of China is threatening to turn the outbreak into a global pandemic, with more countries starting to shut down travel across borders.
2:46 am: China transportation sector to resume operations by late February or early March
China’s transportation sector is expected to start up operations again in late February or early March, a Ministry of Transport official told reporters on Saturday. Delivery service companies China Post, SF Express and jd.com have all resumed operations. The services are in high demand during the outbreak as people would prefer to order food and supplies online or have them delivered.
Investors need to face the warning signs in the global economy
Monticelllo | Getty Images
Global investors are being overly complacent about downside economic risks, aggravated but not limited to the growing impact of coronavirus.
They are underestimating the forces that are changing the very nature of the world economy – a growing degree of “deglobalization” in the face of U.S.-Chinese decoupling. At the same time, they are overestimating the power of monetary and fiscal stimulus to keep the global economic party going.
When G-20 finance ministers meet this weekend in Riyadh, they’ll do so at a time when all of the world’s ten major economies are slowing – and several confront recession. Next week, Beijing is likely to announce a delay in the meeting of its National People’s Congress due to the coronavirus outbreak.
This week, Apple raised fears of more global corporate troubles to come with a coronavirus-caused revenue warning. The full ripple effects of the virus, and of the economic impact of humans scared to be with other humans, will show up in first quarter results, in particular in tourism, travel and on all Chinese and global companies that depend on Chinese supply chains and markets.
Despite all that, investor complacency persists in no small part due to a fundamental misunderstanding of how rapidly the world has changed, economically and politically. We are only in the opening pages of this new era of major power competition and technological change, and there’s no model to “price in” its impact.
Within democracies, the public’s faith has been shaken in capitalism and globalization to produce results that deliver greater prosperity. Most recently, that has driven everything from the recent Irish election victory of Sinn Fein, to the UK’s departure from the European Union, to the erosion of the German political center.
Most dramatic is the growing possibility that U.S. presidential elections this year could produce a showdown between two populists of different stripes but similar decibels, Donald Trump and Bernie Sanders. Both are septuagenarian insurgents who appeal to hard-core, unconventional constituencies, and that’s prompted global concern that the new U.S. normal may be abnormal.
All of that is unfolding against a backdrop of a major power test that at its heart is a systemic struggle between democratic and authoritarian capitalist models. Though traditional security analysts continue to worry about how U.S.-Chinese, U.S.-Russian or U.S.-Iranian tensions could unravel into armed conflict, the more likely outcome is a resource-sapping, continual competition that stops short of kinetics but involves information warfare, cyber assaults, and economic clashes ranging from trade wars to targeted sanctions.
But let’s get back to investors and their complacency, which is as easy to explain as it is increasingly hard to justify.
Every time the global economy approached the brink in the decade since the Great Financial Crisis of 2008-2009, some intervening force pulled us back. The latest came last year when it looked as though the global economy might slow to below 2 percent GDP growth, generally considered a way to measure the onset of a global recession.
Central banks stepped up. As the International Monetary Fund has pointed out, 49 central banks cut interest rates 71 times last year. The result was a 0.5 percent global GDP boost, according to the IMF. Monetary policy saved the day.
Investors understand that coronavirus could be a major 2020 shock, but they are wagering again that something will prevent this from becoming an economic disaster. They realize the U.S. Fed and other central banks may have fewer monetary tools to deploy, so they are counting on increased fiscal stimulus from governments.
For example, Chinese lenders on Thursday cut their one-year loan prime rate, which is used across the financial system, by 0.1 percent to 4.05 percent. The result was a rallying of Chinese stocks that day of 2.2 percent of the benchmark CSI 300 index.
That followed the Chinese central bank’s cut to its medium-term lending rate this week, as well as dozens of other measures Beijing has introduced in recent days to support businesses hit by the epidemic. The Financial Times reports that China’s central bank thus far has made 300 billion RmB available to large lenders and local banks in hard-hit areas, particularly Hubei province.
Even so, the S&P Global Ratings forecast that China’s 2020 growth could fall to 4.4 percent from its 6 percent level last year, if the coronavirus hit continues through April. Most predictions of that sort probably err on the optimistic side, and it may be wishful thinking that China’s economy will make up most of what is being lost once coronavirus recedes.
At the same time, the eurozone economy barely grew in the fourth quarter of 2019, up only 0.1 percent from the previous quarter, the slowest rate since 2013. Germany had zero growth. Real GDP in the eurozone was up just 0.9 percent in 2019, the slowest rate since 2013. (With the UK now leaving the EU, its leaders failed to agree on their budget on Friday due to insoluble differences.)
Governments across the world see these storm clouds, and a Bloomberg survey of economic forecasts shows that budgets are loosening in more than half of the world’s 20 biggest economies, providing some of the fiscal stimulus that central bankers have been seeking from their government counterparts.
Markets are wagering that the combination of fiscal and monetary measures will again prevent the worst.
However, what if they’re wrong?
Other than the United States, major central banks are tapped out, some of them experimenting with negative interest rates. Some experts argue that our low interest rate environment allows greater borrowing for fiscal stimulus.
That’s risky business.
Near the end
Global debt is nearing $244 trillion, the highest level on record, and that’s not a good record to be breaking. Public debt is the highest in advanced economies since WWII. In a recent Atlantic Council report, Global Risks 2035 Update, author Mathew Burrows explores a worst-case scenario he calls “Descent into Chaos.” It starts with growing indebtedness hitting China first and then spreading to the Western world, triggering a worldwide economic meltdown.
Burrows isn’t in the business of predicting the timing of global downturns. Yet it would be unwise to take one’s eye off this ballooning debt at this moment of uncertainty.
Investors are counting on the playbook of the last decade to hold out for a little longer.
That’s a risky bet in this year of coronavirus, slowing growth, growing debt, and rising geopolitical uncertainty. We’re near the end of a bull run that’s in year ten of a seven-year cycle.
Frederick Kempe is a best-selling author, prize-winning journalist and president & CEO of the Atlantic Council, one of the United States’ most influential think tanks on global affairs. He worked at The Wall Street Journal for more than 25 years as a foreign correspondent, assistant managing editor and as the longest-serving editor of the paper’s European edition. His latest book – “Berlin 1961: Kennedy, Khrushchev, and the Most Dangerous Place on Earth” – was a New York Times best-seller and has been published in more than a dozen languages. Follow him on Twitter @FredKempe and subscribe here to Inflection Points, his look each Saturday at the past week’s top stories and trends.
For more insight from CNBC contributors, follow @CNBCopinion on Twitter.
Here’s how to tell a bear market is coming
A trader works at his post on the floor of the New York Stock Exchange, December 19, 2018.
Brendan McDermid | Reuters
Trying to time the market can be dangerous, but there are certain signals that the professionals look for when trying to gauge future risk in stocks which could be helpful for regular investors to monitor.
Bank of America Securities curated a “bear market signposts” list for clients to help predict when stocks might be close to embarking on a bear market. The list of 19 signals ranges from fundamental to sentiment-related indicators and uses data tracking back more than 50 years.
Currently 63% of the bear market signposts have been triggered, up from 47% in January. Since 1968, when 80% of the indicators are triggered, a bear market occurred, meaning stocks fell 20% from their most recent highs.
“Stocks appear to be pricing in more good news than bad,” Bank of America equity and quant strategist Savita Subramanian said in a recent note to clients.
The signposts list was almost triggered in October of 2018 when it hit 79%. The S&P 500 went on to briefly dip into bear market territory on an intraday basis following that signal, and suffered its worst December since the Great Depression. The Fed raising rates, as they did in 2018, is a trigger on the bear market signal list, as bear markets have always been preceded by the Fed hiking rates by at least 75 basis points from the cycle trough.
Here’s a full list of the bear market indicators from Bank of America:
- Federal Reserve raising interest rates
- Tightening credit conditions
- Minimum returns in the last 12 months of a bull market have been 11%
- Minimum returns in the last 24 months of a bull market have been 30%
- Low quality stocks outperform high quality stocks (over six months)
- Momentum stocks outperforming (over six to 12 months)
- Growth stocks outperforming (over six to 12 months)
- 5% pullback in stocks over the last year
- Stocks with low price-to-earnings ratio underperform
- Conference Board’s consumer confidence level has not hit 100 within 24 months
- Conference Board’s percentage expecting stocks go higher
- Lack of reward for earnings beats
- Sell side indicator, a contrarian measure of sell side equity optimism
- Bank of America Fund Manger Survey shows high levels of cash
- Inverted yield curve
- Change in long-term growth expectations
- Rule of 20, trailing price-to-earnings ratio added to CPI is above 20
- Volatility index spikes over 20 at some point within the last 3 months
- Earnings estimate revisions rule
Bearish signs to watch
Currently, if investors buy a 3-month treasury bill, they will be getting a higher yield than if they buy a 10-year treasury note. This is not normal. Typically, the more long term the holding period of the government security is, the higher the returns. This is a bond market phenomena called the inverted yield curve, which is known to precede recessions and sits as one of Bank of America’s bear market sign posts.
Another indicator that is currently triggered is muted price reactions for earnings beats this season. Stocks are getting their thinnest rewards for beating Wall Street’s estimates on earnings since the first quarter of 2018 and the third lowest level since 2000, according to Bank of America.
“Historically, small rewards preceded negative S&P 500 returns 60% of the time over subsequent quarters,” Subramanian added.
Stocks with low price-to-earnings ratios are also currently underperforming, flashing a bear market warning sign. Stocks with low PE ratios are generally considered undervalued and can be a good buying opportunity. When investors don’t buy into these cheap stocks it normally means they are crowding in high growth names. This means that the most expensive stocks are narrowly driving market returns.
Another flashing signal is tightening credit conditions, which occurs when it becomes harder to borrow money from the bank. In times of uncertainty or an economic slowdown, banks will tighten their lending taps to hedge for risk. Each of the last three bear markets started when a positive percentage of banks tightened lending standards. A recent Fed survey showed banks expected credit standards to tighten this year.
Bullish signs to watch
One indicator that remains at bay is Bank of America’s Fund Manager Survey recommended cash levels staying above 3.5%. Typically, when fund managers are not recommending positions in cash to clients, it’s bullish; however, Bank of America said it can be a contrarian measure of buy-side optimism. Therefore, since the current recommended cash position is above 4%, the signpost is not triggered.
A change in long-term growth expectations is another indicator that is currently not triggered. While stocks are off their recent highs due to worries about the Chinese coronavirus and companies like Apple and Coca-Cola downgraded their earnings expectations due to supply chain disruption, the consensus seems to be that the financial fallout of the virus will be short lived. Near-term pain is being acknowledged; however, Wall Street firms are optimistic growth will recover in the second half of 2020.
Another recent bullish signal is that consumer confidence in the U.S. grew more than expected in January as the outlook around the labor market improved. The Conference Board’s consumer confidence index rose to 131.6 this month from 126.5 in December. Economists polled by Dow Jones expected consumer confidence to rise to 128. Any reading below 100 signals a bear market could be coming.
When the Cboe Volatility Index, a commonly watched fear gauge, spikes above 20, it triggers another bear market warning sign. Despite coronavirus and U.S. presidential election uncertainty, the VIX sits below 17, which remains bullish for equities.
To be sure, while this method developed by the bank has a good track record, it’s always possible that different factors accompany the next bear market. And most professionals advise against trying to time the market based on technical factors such as these.
Still, it could be a helpful exercise for regular investors to go through this list in order to gauge how much risk they should be taking with their investments.
— with reporting from CNBC’s Michael Bloom.
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