Saturday, October 18, 2014

As the stock market skids lower this week after several speed bumps have emerged in the global economy, there is one that could be more than a bump. Not to be a fear-monger, but the Ebola virus, a severe, often-fatal illness in humans, has spread like wildfire in Guinea, Sierra Leone and Liberia. According to the World Health Organization (WHO), the Ebola virus is killing 70% of the people who contract the disease.

So far there have only been a few reported cases inside the United States, but there is great concern – read that as fear – the disease could spread further, not just in the United States, but in other countries as well. As reported in October 2014, the WHO believes there could be up to 10,000 new Ebola cases per week in alone in Guinea, Liberia and Sierra Leone by the end of this year as the outbreak spreads.
 
recent World Bank study estimated that if the epidemic is not contained quickly, by the end of 2015 it could cost Liberia 12% of its gross domestic product (GDP) and Sierra Leone 8.9% of its GDP. The World Bank goes on to estimate that if the outbreak spreads more widely to neighboring countries with larger populations and economies, then the two-year financial cost could reach $32.6 billion.

We’d note that during October 2014, when the urgency was high and fear was climbing, there were no licensed Ebola vaccines, but two potential candidates were undergoing evaluation.

While certainly not a fad, the question to ponder at the moment is: what are the implications and economic effects of the Ebola virus?

Two companies that have received a ton of attention following the Ebola outbreak are Lakeland Industries (LAKE) and Alpha Pro Tech (APT) because of their disposable protective clothing and chemical protective suits, as well as infection control products that include facemasks and eye shields. Should the virus go from outbreak to epidemic, those two companies could see pronounced demand for their products. Airline stocks, like Delta Air Lines (DAL), United Continental (UAL), American Airlines (AAL) and others could see their revenues come under pressure if Ebola-concerned companies and consumers shun air travel — even though oil prices are retreating, given the current excess supply of oil.

Those are two examples, but there is another that will have a far greater impact on the everyday consumer. Simply put, Ebola is threatening the world’s supply of chocolate.

Even though, as of this writing, the Ivory Coast has yet to experience a single Ebola outbreak, the African country has shut its borders to neighboring Guinea and Liberia. At a minimum, that reduced the available workforce needed to process the 1.6 million metric tons of cacao beans per year – roughly 33% of the world’s total – supplied by the Ivory Coast, according to data from the United Nations Food and Agriculture Organization. That impact to global supply sent cocoa prices substantially higher, and, should the Ebola virus be found in the Ivory Coast, cocoa prices could move considerably higher.

But wait — it could actually get even worse if we fold the African country of Ghana into the mix.

That is because Ghana is also a major source of cacao beans; combined with the Ivory Coast, these two African countries are responsible for about 60% of the world’s cocoa. If we widen our view a bit further, we find West African countries supply around three-quarters of the world’s cocoa for chocolate production.

From the March 2013 low, cocoa prices have already shot up by 50%. That will hit any chocolate fanatic right in the sweet tooth and result in higher costs at chocolate and confection companies like The Hershey Company (HSY), Mondelez International (MDLZ), Tootsie Roll Industries (TR), Godiva, Mars, Switzerland-based Nestle SA (NSRGY) and even India-based Lotus Chocolate Company. Faced with substantially higher costs during the last few months that could climb even higher, if past patterns hold, these companies are likely to raise prices in order to preserve their profits. If we don’t see any wage growth in the near term, consumers may balk at higher chocolate prices this holiday season, even if gas prices continue to move lower.

3 comments:

  1. I don't know what they are going to have to do, but chocolate is the ONLY reason to save that part of the world. Even if they do the harvest in HAZMAT suits, they are going to have to get the fucking chocolate!

    I can't do without that!

    That is the only chocolate thing I like.

    Damn...we are already paying out the wazooo for a hershey's bar.

    They need to SEAL the fucking borders! Keep the LIBERIANS in LIBERIA!

    Why do we have to be a nation of dumbasses?

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  2. Hi there, Diane.

    Since you're so big into free speech and protecting one's rights, I'd appreciate you didn't censor this comment...you should agree that would be counterintuitive to your mission.

    As a student an early assignment in political science was to analyze satirical websites. I chose The Patriot Factor We'd both probably agree, you didn't mean it to be seen as a joke. However, it fits all criteria of a legal 'satire' and so I completed my assignment, which, unfortunately, required me to read your content.

    Barack Obama, despite his shortcomings, is not a 'traitor' to the American public. I could go on for many lines discussing the improvements and attempted improvements to the American people, notably the restructuring of General Motors and the assassination of Osama bin Laden (please refrain from using the standard argument, "But Obama didn't kill bin Laden, the Seals did!" Osama was killed after intel gathered by the Obama administration, and from an operation initialized and approved by Barack Obama)

    If you tend to support claims with data: 46% currently approve the job Obama is doing in office (http://www.forbes.com/sites/johnzogby/2014/10/19/new-zogby-analytics-poll-obama-approval-bounces-to-46/)

    Obviously, this isn't great. The 46% contrasts to the 51% who disagree, and 3% who are undecided. However, a mere 5% margin between those who approve and disprove suggest he is far more competent than you realize.

    Further support: from Time Magazine, 78% of voters (plus or minus 2%) that voted for Obama in the 2012 re-election would do so again, if he were running for a third term. This suggests, while he has lost some support over the past several years, he has generally accomplished or tried to accomplish what he promised.

    One of the biggest points I have seen referred to, on this blog, justifying Obama's possible impeachment (which, by the way and purely on opinion, is ludicrous and will never be brought to court as a possibility) is his 'circumvention' of the U.S. Constitution.

    So far, I have yet to see a single example correctly supporting the claim that his actions contradict the Constitution. I have seen countless claims of his using powers that are not given to him under the law, but these claims are factually false. I'd like to direct your attention to the Judiciary Clause in Article II of the Constitution, and sections 2-3 of Article II as well, clarifying the exact powers of the President.

    If you, or any other reader, could analyze these passages and determine one example where President Barack Obama has overstepped his presidential powers, I will gladly accept your rebuttal and reconsider my opinion (given your claim is true).

    Before I wrap up, I'd like to discuss one more point of contention: the Affordable Care Act, AKA Obamacare. It was upheld by the U.S Supreme Court on June 28, 2013, and I will gladly denounce my lack of expertise on this subject and refer to the experienced Judicial Branch of the U.S. Government to justify passing Obama's health care reform into law.

    Mainly, I'd like to bring to attention your blog as extremist, of an anti-government nature, possibly having racial or supremacist motives (comparing Obama to notable historical black 'villains' for example), misguided, promoting treason against the U.S. Government and our democratically elected President, and above all, satirical beyond reasonable belief.

    Thank you for your time. I hope you reconsider many of your extremist beliefs, as well as the fact that material banned from Facebook - repeatedly - should be taken as symbols of your radical, disloyal, and completely inappropriate comments and overall campaign.

    Thank you for your time, and I strongly suggest you withhold the urge to censor this message by not approving its publication to your blog. There are two sides of every story, and by censoring what you believe is false, you embrace the very behaviors you have been condoning throughout your blog.

    Have a wonderful day.

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    Replies
    1. If you want to see some real comedy, check out an article Diane wrote about the Keystone XL pipeline. She said it'll be good for the environment because all the cold animals will be able to gather around the pipeline for heat in the long, cold winter.

      Seriously, who wouldn't think this blog is satire? Oh, except perhaps for the sad, mad racists that comment here everyday....

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