Almost 700 traders showed up for the Securities Traders Association (STA) annual meeting on Wednesday in Washington. While much of the conference was taken up with arcane debates on market structure, much of the chatter in the hallways and the evening cocktail parties were about risks to the market.
Two issues which have come almost out of nowhere dominated those discussions: Hong Kong's democracy protests and, of course, the Ebola outbreak. These worries fell neatly into the category of risks that Donald Rumsfeld famously characterized in 2003 as "known unknowns" and "unknown unknowns:"
1) the Hong Kong democracy protests are being characterized as a "known unknown" ("known" because everyone was aware that elections were coming down the road, but we did not anticipate the Chinese government would insist they have veto power over who could be put on the ballots), and;
2) Ebola is an "unknown unknown" ("unknown" because it was not possible to anticipate the outbreak). Of the two, Ebola elicited more concern, particularly with its possible impact on the economy and travel.
Statements that the government could contain the spread was met with some skepticism. Reports that the confirmed U.S. Ebola patient was vomiting outside his apartment before he went to the hospital in Dallas confirm that it may be very difficult to identify infected people. On average, symptoms only appear 5 to 10 days after exposure, and may take three weeks or longer to completely manifest.
Some were not as concerned, citing what happened with SARS in 2003 (no deaths), which was successfully contained. That did not cause any significant economic slowdown.
Let's hope that's the case in the U.S. Unfortunately containing the outbreak in Africa has not been as successful, and it is not clear if there will be some sort of global pandemic.