Health Warnings in Perspective By Francisco Suárez, Head of Equity Research at Actinver
• Photos by Jesús de Avila • June 2009
Just as having access to and the ability to process valuable financial market information are key factors in making correct personal finance decisions, the same principles can be applied to almost everything else. In this period of the AH1N1 influenza outbreak, you should follow important indications from very highly respected authorities. Here are two of them:
The CDC or TheCenters for Disease Control and Prevention (http://www.cdc.gov/)
A dedicated web page from the US Department of State that deals with crucial information when traveling abroad. (http://travel.state.gov/index.html)
Usually, when we deal with something new, with unknown and potentially material consequences, it is perfectly acceptable to err on the side of caution, taking the most conservative actions, even if in retrospect these were perhaps overboard. We act this way to protect our client’s capital, we do the same to protect our families, and authorities will do the same for the welfare of their citizens. The US authorities and of course the World Health Organization (WHO) acted responsibly, issuing several warnings when the threat began, and with good reason: this was a new virus, we didn’t knew how severe it was, nor how easily the virus could spread over the world, and, more importantly, whether the virus could mutate into new strains, making it virtually impossible to stop its spread. For the same reasons, the Mexican authorities acted accordingly and decided to carry out radical actions for the benefit of the whole world: an overall reduction in economic activity, school closures, even closure of restaurants in Mexico City and, of course, providing key information to stem the growth rate of infection. Everything worked, and we have seen other jurisdictions abroad taking identical actions.
A few weeks ago we mentioned how markets overreact to both positive and negative events. It is human nature. We focus on the number of people infected (less than 10,000 according to the WHO) but we don’t pay attention to the trillions not infected. The following are examples that lead us to believe that we may have over reacted somewhat, but, as I mentioned, it is ok to do that for the greater good:
The CDC removed its travel health warning for the novel H1N1 flu in Mexico. On the CDC’s website (follow this link http://wwwn.cdc.gov/travel/content/travel-health-precaution/novel-h1n1-flu-mexico.aspx ), the organization states that “CDC’s Travel Health Warning recommending against non-essential travel to Mexico, in effect since April 27, 2009, has now been downgraded to a Travel Health Precaution for Mexico.”
The US State Department's Travel Alert relating to the 2009-H1N1 influenza outbreak is no longer in effect, reflective of CDC’s action. The complete press relates from the US Department of State can be found at http://travel.state.gov/travel/cis_pa_tw/pa/pa_3028.html
Factors behind the CDC’s decision to downgrade the Health Warning were: “There is evidence that the Mexican outbreak is slowing down in many cities though not all. In addition, the United States and other countries are now seeing increasing numbers of cases not associated with travel to Mexico. Finally, the risk of severe disease from novel H1N1 virus infection now appears to be less than originally thought.”
What to do now? Well, it is perfectly ok to enjoy the many resorts Mexico has, such as Puerto Vallarta and Riviera Nayarit. Take advantage of the exchange rate, and, of course of good prices, as it is expected that businesses will try to attract customers. Of course, please follow the basic principles for this disease: wash your hands frequently, use sanitizing gels and the like, follow instructions from the authorities and everything that the CDC says it is ok to do, and avoid bringing very young, senior, or other travelers who are at “high risk for complications from any form of influenza” (see the CDC website). Make it safe, and at the same time, make it a bargain.Email to a friend
• Francisco Suarez is the Head of Equity Research at Actinver. Before joining Actinver in September 2008, he rated financial institutions at Standard & Poor’s for four years and prior to that was an equity analyst at Banorte for eight years.
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Usually, when we deal with something new, with unknown and potentially material consequences, it is perfectly acceptable to err on the side of caution, taking the most conservative actions, even if in retrospect these were perhaps overboard. We act this way to protect our client’s capital, we do the same to protect our families, and authorities will do the same for the welfare of their citizens. The US authorities and of course the World Health Organization (WHO) acted responsibly, issuing several warnings when the threat began, and with good reason: this was a new virus, we didn’t knew how severe it was, nor how easily the virus could spread over the world, and, more importantly, whether the virus could mutate into new strains, making it virtually impossible to stop its spread. For the same reasons, the Mexican authorities acted accordingly and decided to carry out radical actions for the benefit of the whole world: an overall reduction in economic activity, school closures, even closure of restaurants in Mexico City and, of course, providing key information to stem the growth rate of infection. Everything worked, and we have seen other jurisdictions abroad taking identical actions.
What to do now? Well, it is perfectly ok to enjoy the many resorts 