The World Health Organization has called the outbreak of Swine Flu as severe with Pandemic potential.
Even though current infection rates are low with less than a couple of hundred cases reported the outbreak should spread exponentially from here on out.
If history is any indication this will put pressure on global stock markets pretty much right away from Monday's opening. A prior study has shown that a global pandemic has the potential to curb global GDP by up to 3 %. This would obviously be a worst case scenario and I am certainly not forecasting a decline of that magnitude unless the situation becomes a truly, long lasting global problem.
I do believe though that the uncertainty surrounding the Swine Flu outbreak will trigger weaker stock prices and therefore expect a reversal of the current positive market trends to the downside.
I usually do not engage in individual market calls but I believe the current situation can deliver some easy winners.
So, for those of you who want to buy some stocks on Monday...here they are:
Small Cap stocks: BioCryst Pharmaceuticals (BCRX) and Novavax (NVAX). Both companies are active in the development of next generation anti viral medications.
On the large cap side buy Roche Holdings, the maker of Tamiflu. (ROG).
Let's hope that we won't face a global pandemic.
Until Monday,
Steve Benger
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