Ebola made its official debut in the U.S. yesterday. Government officials announced that a man identified only as a "traveler" had been hospitalized in Dallas. This "Typhoid Larry" arrived in the U.S. from Liberia on September 20th. He reportedly started showing symptoms four or five days later and was hospitalized Sunday. So far three Dallas Fire and Rescue workers and several ER employees are off work and "under observation." The rest of America remains free to panic.
The news of course sent speculative bio-tech stocks soaring. The biggest gainer was Tekmira (TKMR) , a Canadian biotech company that saw shares spread 25% higher after the bell. Tekmira shares have doubled since August when it announced that it was working with the U.S. Department of Defense on an Ebola counter-measure drug called TKM-ebola.
Other biotech stocks also popped on the news. The implications of the defense department working with Canadian biotech companies on what amounts to a weaponized virus have create a still small but real and growing surge in related commerce. Other biotech stocks gaining, of course but that's not all. Companies like DuPont (DD) with its Tyvek material for hazmat suits also benefit. Tyvek suit sales are up over 9,000% in the last 24 hours on Amazon.
We've seen deadly outbreaks before and we're still here. There was SARs in 2003. AIDS was a Pandemic. Flu outbreaks in 1968 and 1957 also qualify. Of course the biggest of them all was the Spanish Flu of 1918. The death toll then was as high as 50 million including at least 675,000 Americans.
More than a quarter of the country, the modern equivalent of about 100,000,000 Americans were hit by the Spanish flu. You think one guy in Dallas is bad? Imagine boarding a plane knowing every fourth person could cough microscopic death on you at any minute.
So what did markets do? Nothing. The Dow was up 10% in 1918 and added 30% the following year. It wasn't until 1920 when a baby depression hit the US that investors got hit.
Feel free to put your kids in plastic terrariums and living in a space suit there's no great trade here. Markets don't operate in a vacuum. Panic profiteers and biotech traders may make money trading this but you won't. Sit back, relax and consider skipping a night at the movies.