Last week’s post highlighted the likelihood that the scope of the problem was significantly under-reported in China. Markets spent the week digesting this reality, commodities were hurt the most. This week Chinese economic activity will grind to a halt as measures to contain the virus hit the broader economy. There is is a very clear trade-off - the more effective the response; the bigger the hit to growth (though expect more stimulus as well). 2020 GDP is likely to be lower by 1-2% even if this is contained. The hit could be as much as 3% in a more protracted lock-down. Even China’s own propaganda machine has acknowledged growth could fall in the 4% range from 6% today. Efforts to contain the virus will be painful given how widespread the virus is - China now has over 14k cases and 14 regions with over 100 cases.