A Chinese Black Swan Dive Bombs The Market

The market finally pulled back substantially today as the accumulating news of events in China unfolded.  We have been anticipating a pullback for some time, as our previous post indicated.

As more information comes to light on the corona virus situation, it is becoming clearer that officials have underestimated the economic and personal impact of the disease.  As Dr Neil Ferguson, epidemiologist from the UK suggests, it is likely over 100,000 individuals are currently infected.  The official number is only 2886 as of January 27.  Recent papers from medical journals indicate the severity of the outbreak both in shear numbers and infectiousness of the virus.  
The Lancet 
If the numbers show are reasonably accurate, each infected person will infect 3 to 5 others, and the mortality rate could be as high as 15% as early results shown in The Lancet.
Based on these preliminary numbers, total infected persons could balloon from 100,000 currently to half a million by mid February, and 5 million by the end of February.
Even if authorities manage to partially contain this epidemic, economic damage will be substantial, in addition to the human impact.
Our view is the market has not fully accounted for the spin off effects of this epidemic.  It seems to be a black swan event that will continue to hit stocks and push up demand for safe haven assets such as precious metals.