One Bit of Good News in a Sea of Disappointment

We are seeing something almost as destructive as a limited terrorist attack in terms of producing fear, panic, overreaction and economic injury.  Media misinformation and paniced responses from some world governments (like Egypt deciding to cull every pig, some 400,000 of them) has produced a sensationalized reaction from what at the end of the day will very likely be a very mild flu virus spreading around the world (http://www.latimes.com/features/health/la-sci-swine-reality30-2009apr30,0,3606923.story) but monitored like it was the bubonic plague.  Of course these scientists could be wrong and it is the fear of being wrong that has set the world in motion. 

This kind of economic damage (not simply to pork producers) but to grocery stores, theme parks, airlines, ball clubs, hotels, people's quality of life (fearfully staying home and avoiding human contact) etc. will exceed the impact of some of the bombings and chaos deliberately caused in the last five to ten years.  The curious thing about it is it will also serve, most likely, to be one of the "cry wolf" things that deaden people's response to real emergencies in the future. 

Trying to pin down today, how many confirmed deaths have occurred from the H1N1 outbreak is quite a slippery task.  Much of what is being reported is "suspected" H1N1.  Considering that the CDC website (http://www.cdc.gov/flu/about/disease/us_flu-related_deaths.htm) reveals that each year 36,000 people in the United States alone die from the garden variety flu bug (usually with complications leading to pneumonia), how could we even conduct anything like normal lives if all of those deaths were breathlessly (no pun intended) reported by the local and national media on a minute by minute basis each year.

As all of you are aware, most local and national media persist in calling it the swine flu based on its classification from 50 plus years ago, even as they report that the name is misleading and that it is not a disease of pork products or food of any kind. 

Now for the good news, sort of..., the Bureau of Labor Statistics reports that after two consecutive quarters of very negative percentage changes in food expenditures by people in the United States (down 7.3% and 14.7% for the third and fourth quarters of 2008), the first quarter 2009 number reveals a return (or just short of it) to the baseline 2008 values.  This is happening even as unemployment rises and only "green shoots" here and there can be observed in the broader economic garden.  This leading indicator of more green shoots though, signals the potential return of commodity price increases which will accompany the eventual recovery.  So our little green shoot comes to us with a rise in oil, corn and soybean meal prices and price outlook while hog prices cannot seem to stay even balanced on the launching pad, much less blast off the way they are supposed to at this time of year.

There will be some good news shortly.  We are so oversold, to borrow a saying from the commodity traders, "that buying opportunities abound".  That's a long way around saying this cannot go on forever and just as high prices cure high prices, the same applies to low prices.