You Can Go to Starbucks in China... Just Take Your Temperature First

The markets' coronavirus jitters... More stimulus is on the way... A Google Trends-type indicator... You can go to a Starbucks in China, just take your temperature first... A breakthrough treatment?... Why gold is still a good buy after hitting a seven-year high...

We're not done with the 'coronavirus crisis' just yet...

All three major U.S. stock indexes finished down today. The benchmark S&P 500 Index and the Dow Jones Industrial Average each dropped about 0.4%, while the tech-heavy Nasdaq Composite Index lost nearly 0.7%.

Most of the losses occurred during a single, sharp midday sell-off that dropped the indexes roughly 1%. And this move "confused traders," according to the top story we came across on CNBC's website this afternoon.

I (Corey McLaughlin) try to read and watch as little CNBC as possible. Regular Digest readers know the financial-news outlet really "grinded my gears" in December.

But today, CNBC speculated in a few paragraphs about the reasons behind the midday drop. And we find them notable enough to pass along, if only to make a point...

Some traders pointed to a report from the Chinese state-run Global Times, which said there had been a sharp increase in coronavirus cases.

While the timing of the story did not match with Thursday's move lower, it does tap into the market's fears about the coronavirus weighing on the global economy.

If "some traders" (and of course, we don't know specifically who they are) are citing a potential increase in coronavirus cases reported by a Chinese state-run media outlet as a reason for the midday sell-off, then that's exactly what they're worried about...

At a minimum, it proves a lot of uncertainty still exists in the global financial markets about the coronavirus. And uncertainty in the markets likely means one thing...

More economic stimulus is on the way...

Many of the world's central banks have shown they will do anything to keep the global economy humming along – previously unknown virus and future debts be damned.

Earlier this month, we wrote about the Chinese government injecting billions of dollars into its economy, aiming to limit the financial fallout from the spread of the coronavirus. As we said in the February 5 Digest...

Over the past couple of days, China's central bank – the People's Bank of China ("PBOC") – has pumped $243.7 billion into the country's financial system. For perspective, the $172 billion stimulus package China introduced on Monday alone is bigger than bitcoin's total market cap.

And we noted that this was likely just the start of virus-related "easy money" policies. We quoted DailyWealth Trader co-editors Ben Morris and Drew McConnell, who said in a recent issue...

You can bet that China's efforts to prop up its economy and markets won't stop here. They likely won't stop until the situation with coronavirus is more or less under control.

Well, today, the situation is 'less' under control than 'more'...

More than 75,000 people have now been infected with the "Wuhan virus" – a previously unknown strain of coronavirus. And almost 2,130 people have died from it, with all but 11 of those deaths in mainland China.

The anecdotes we keep hearing connected to the Wuhan virus are indeed scary...

Roughly half of China's citizens – more than 780 million people – are under some sort of travel restriction. One-tenth of these folks have been told to stay in their houses.

That means business-as-usual is way off the tracks...

Companies around the world are dealing with the situation, too – some better than others...

Many companies are warning of earnings hits over the next quarter or two.

The story is becoming a major narrative in companies' conference calls with analysts... In a Google Trends-type indicator, 38% of earnings calls from January 1 through February 13 included the term "coronavirus" at least once, according to market-research firm FactSet.

At the start of this week, tech giant Apple (AAPL), which has major iPhone production facilities in the Chinese province that's ground zero for the virus outbreak, said it would probably miss second-quarter expectations... 15% of its business comes from China.

Just today, Air France said the impact of the virus will be "brutal" for the airline... consumer-goods company Procter & Gamble (PG) is dealing with supply chain issues... and Norwegian Cruise Line (NCLH) canceled Asian trips through the third quarter of 2020.

That brings up another issue... What about those poor people stuck on a cruise ship in Japanese waters in fear of spreading the virus?

More than 3,000 people were quarantined for roughly two weeks in Tokyo Bay on the Diamond Princess, operated by a subsidiary of Carnival (CCL). And yesterday, two passengers in their 80s died, according to Japan's health ministry.

You can't get much worse publicity for the cruise industry in Asia moving forward.

Elsewhere, McDonald's (MCD) and Starbucks (SBUX) have pivoted...

To keep money coming in, they're now using "contactless" food and drink delivery options in China.

The processes, which limit customer and worker contact and sometime even monitor prospective customers for fever, sound post-apocalyptic.

But people apparently want their hamburgers and coffees enough that demand still exists. (Of course, that's what you can expect to happen with these addictive products.)

Yesterday, our colleague Daniel Smoot shared the details in the Stansberry NewsWire...

SBUX now asks customers to order its products through the firm's mobile app and then wait outside a designated store location until they're notified to pick up their order from a table inside.

No worker-to-customer contact occurs in SBUX's Chinese locations. Customers are also required to have their temperatures taken before entering the store. And workers must wear masks, wash hands every 30 minutes, and sterilize containers and public areas every two hours.

As for MCD, customers can order food on their mobile phones or through in-store computers. MCD employees are required to use specialty sealed meal bags and place them in designated pickup spots to avoid any human contact.

It has been a good move for Starbucks at least... So far, mobile orders have made up 15% of the coffee retailer's first-quarter revenue in China.

The full impacts on these companies and the global economy will come to light over the next quarter or so as they release their earnings reports.

In the meantime, as we predicted...

The Chinese and other central banks aren't waiting to see what happens...

This week, the PBOC cut its benchmark one-year loan prime rate – which is used to set rates for mortgages and other lending – from 4.15% to 4.05%... The PBOC hopes the change helps move money around its economy.

The bank also cut its five-year rate from 4.8% to 4.75% and lowered its "medium-term lending facility" by one-tenth of a percentage point. This move makes lending between banks cheaper.

And as my colleague and True Wealth analyst Chris Igou noted in yesterday's Digest, Japan is continuing its massive stimulus efforts...

Japanese Prime Minister Shinzo Abe's latest efforts started in December – before anyone knew what the coronavirus was – with a stimulus package to mitigate any risk associated with the 2020 Tokyo Olympics. Now, Bank of Japan officials say they won't hesitate to enact similar policy if they feel the spread of the coronavirus hurts growth in the country.

Elsewhere, our roving international editor Kim Iskyan, who lives in Singapore, told us earlier this week that the country "is reeling from the coronavirus"...

Economic growth forecasts for 2020 were cut last week, from a range of 0.5% to 2.5%, to negative 0.5% to 1.5%. The tourism sector, which relies on visitors from China more than from anyone else, is swooning.

My local mall is probably seeing around half the foot traffic than it would normally. There are more cases of [the coronavirus] in Singapore than any other country except China.

I'm hoping that no one starts imposing travel restrictions on people arriving from Singapore...

Here in the U.S., Federal Reserve governors recently said they're concerned about the potential impact on the global economy. It's something the Fed will need to factor into any potential interest rate cuts this year.

At the same time, a big positive development in treating the coronavirus...

Stansberry Innovations Report analyst Christian Olsen shared this story with us earlier today.

In a paper published in the journal Science on yesterday, scientists from the University of Texas and the National Institutes of Health ("NIH") said that they had successfully mapped the part of the previously unknown virus that attaches to and infects human cells.

In other words, we're one step closer to hearing about a coronavirus treatment or a vaccine.

The scientists used the genetic code of the coronavirus shared by China last month, when widespread fears of the coronavirus hadn't yet reached its peak. We wrote about this in the January 22 Digest...

Chinese scientists said they had quickly determined the DNA sequence of this new strain of coronavirus. That means they could soon develop a treatment... or even a vaccine.

The only thing we got wrong was that "they" didn't do it. U.S. scientists did...

In short, the U.S. scientists used a cutting-edge technology to make a 3D map of part of the virus, which they then engineered to create a stabilized part of the sample called a "spike protein"... This protein is now with the NIH and is being tested as a coronavirus vaccine.

For years, this group of scientists in Texas had already been studying members of the coronavirus family – like severe acute respiratory syndrome ("SARS"). That gave them a head start on this research.

In that January 22 Digest, we also tracked how the U.S. benchmark S&P 500 Index performed while a similar narrative played out at the start of the century in Asia... the outbreak of SARS.

We're talking about a lot of short-term concerns today. But in the long term after the SARS outbreak, everything turned out just fine in the markets and the recovery didn't take long.

Stansberry NewsWire editor C. Scott Garliss just updated a chart we've shared a couple of times recently. Here's what the comparison looks like now...

Now, this breakthrough by U.S. scientists might not end coronavirus fears instantly. But at the same time, it could be just what the world needs. As Scott told us in the office today... "It's an incremental piece of news, but it's a big incremental."

If "some traders"... other investors... central bankers... companies with footprints in China... and any other stakeholders... believe a "cure" or effective treatment for the coronavirus is on the way, they can more confidently plot a course forward.

As we've said before, markets hate uncertainty...

Today's market movement proved that statement true once again.

And whenever some uncertainty pops up on investors' radars, they tend to move at least some of their money into "safe haven" assets... like gold.

If you've followed our work for any length of time, you know that many Stansberry Research editors recommend owning some gold as a "chaos hedge" for your total portfolio.

So it shouldn't surprise you that the price of gold jumped to a seven-year high today. It's around $1,620 per ounce as we go to press. And the spike may be part of a bigger trend...

Just last week, Stansberry Gold & Silver Investor editor Bill Shaw noted that gold has "quietly" climbed in recent months. But as Bill noted, the movement in the precious metals space hasn't yet reached a "mania"... meaning the biggest gains are likely still ahead.

The good news is, many of Bill's Hard Rock Portfolio recommendations are still within "buy" range. If you don't have any gold exposure in your portfolio, it's a great time to add some today. Learn more about Bill's research in Stansberry Gold & Silver Investor right here.

New 52-week highs (as of 2/19/20): AllianceBernstein (AB), Amazon (AMZN), American Express (AXP), Blackstone Mortgage Trust (BXMT), DB Gold Double Long ETN (DGP), Quest Diagnostics (DGX), Dolby Laboratories (DLB), DocuSign (DOCU), New Oriental Education & Technology (EDU), Equinox Gold (EQX), Franco-Nevada (FNV), Fidelity Select Medical Technology and Devices Portfolio (FSMEX), SPDR Gold Shares (GLD), Barrick Gold (GOLD), Alphabet (GOOGL), GrowGeneration (GRWG), Hannon Armstrong Sustainable Infrastructure Capital (HASI), JD.com (JD), Kinder Morgan (KMI), Leagold Mining (LMCNF), Lonza (LZAGY), Motorola Solutions (MSI), NovaGold Resources (NG), Norilsk Nickel (NILSY), NetEase (NTES), Nuveen Municipal Value Fund (NUV), Nvidia (NVDA), New York Times (NYT), Pan American Silver (PAAS), Polymetal International (POLY.L), ResMed (RMD), ProShares Ultra Technology Fund (ROM), Service Corporation International (SCI), Sea Limited (SE), SolarEdge Technologies (SEDG), Splunk (SPLK), Square (SQ), ProShares Ultra S&P 500 Fund (SSO), Stryker (SYK), TAL Education (TAL), T-Mobile (TMUS), The Trade Desk (TTD), ProShares Ultra Semiconductors Fund (USD), Vanguard S&P 500 Fund (VOO), Wheaton Precious Metals (WPM), and W.R. Berkley (WRB).

In today's mailbag, True Wealth analyst Chris Igou answers a question following his Digest about investing opportunities in Japan... Do you have a question or comment? As always, shoot us an e-mail at feedback@stansberryresearch.com.

"Chris Igou wrote a piece on the Japanese stock market, released 2/19, describing what P.M. Abe has done the last several years to turn the economy around...

"Abe has [succeeded], big time. Chris recommended we look into EWJ, an ETF that covers a few hundred stocks there. So far, so good.

"However I'm concerned about the Japanese national debt- 230% of GDP. What is the impact of that on this type of investment?" – Paid-up subscriber Thomas C.

Chris Igou comment: While Japan's debt-to-GDP ratio is around 230%, it has been at that level for nearly eight years. And it has been above 200% for more than a decade. The high debt levels haven't stopped Japan's stock market rally over the past decade.

And Abe is doing everything he can to keep the bull market in Japan going...

So yes, eventually, Japan's debt will be an issue. But it likely isn't the boogeyman that brings down Japan's market anytime soon.

All the best,

Corey McLaughlin
Baltimore, Maryland
February 20, 2020