What is going on in Africa is an absolute tragedy. Unfortunately it appears as if this situation is getting out of control and now we have reports of an Ebola victim in Atlanta. Additionally: “Our government has declared this now as a humanitarian crisis that is above the control of the national government,” Tolbert Nyenswah, Liberia’s assistant minister of health, told CBS News. Also a good friend of mine told me today he is thinking of canceling his trip to London this October due to the Ebola news. The sector most levered to this situation is the airline industry. The earnings leverage is immense and if people start to cancel or if governments restrict travel these stocks will get absolutely decimated. These stocks have been home runs but they are very cyclical. So far the charts are not indicating anything is amiss but that could change quickly. I am not going short these stocks because it feels wrong to profit off of misery but if I was long I would be thinking of ringing the cash registrar.
FYI: I personally think this ebola scare is nonsense. 2-5 million get the flu every year and about 200k-500k people die and we don’t ban travel or stop flights. My fear is that governments need people to believe they are good at something so there might be a knee jerk reaction from the powers that be. The fear imposed on joe six pack will be greater than the reality. Bleeding from your eyes is sensational while dying in your sleep from the flu is common place. It has been reported that the national guard has received ebola detection kits in all 50 states. They received these kits in April. We live in very interesting times.
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