Random Thoughts on The City, Wall St & Capitalism

The panic over bird flu has lost its entertainment value. The only people now amused by it are the makers of Tamiflu, namely Roche and the other generic providers. The effect on Roche's share price over recent months is not to be sneezed at,( http://www.roche.com/home/investors/inv_share/inv_share_fin.htm). Is there fowl play afoot? Not really, as every good stockbroker knows getting investors to panic can be very profitable. In the age of the health obsessed it gets ever easier. The odd thing about bird flu, unlike normal flu, is that it tends to affect people in the 20-40 age range, not the young and the old. Estimations of potential fatalities are always increasing. The last time the WHO said it would be likely to be 40 million. The deaths toll to date are about 70 people. In addition the vaccine itself has apparently killed about 11 people. So the disease is approximately 7 times deadlier than the cure. The odds aren't that bad so I think I'll stick with lemsip and hope for the best. Lets assume it did hit the country. If it wipes out a goodly proportion of 20-40 year olds, this means that the people remaining in that age group would instantly command higher salaries given the labour supply pool will be depleted. There is a historical precedent for this, the Black Death. Secondly older workers will be welcomed back into the work force. Best of all, companies having to report pension deficits under IFRS and FRS 17 will instantly see these liabilities go down, any CFO with half a bird brain will write this back to P&L..Voila the stock market rises.So all the survivors with pensions in DC schemes see their retirement funds go up.Its a virtuous circle. All in all as good capitalists we should kiss chickens and welcome bird flu.You know it makes sense.

RB