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The commodities guru who warned about silver falling now is saying the hantavirus could do the same to oil

What if the Hantavirus turns into a black-swan for oil? This former hedge-fund executive is taking out some insurance against that.

While oil has already had a blowout year due to the unresolved and devastating Iran war, some say it’s underpriced as big shortages loom.

But sometimes, one shock can offset another.

Our call of the day from the former head of commodities at hedge-fund giant Bridgewater and chief executive and founder of Black Snow Capital, Alexander Campbell, is ringing alarm bells over a deadly virus outbreak on a luxury cruise.

Writing in a Thursday Substack post, Campbell said he was recently asked whether oil could “go negative” with the hantavirus, similar to what happened during COVID 19. Initially dismissing that idea, he started thinking and decided to take some protective action on his portfolio.

“Well, tonight I sold my oil. R0 of 2.7 so far. On a ship. Sure. Not airborne, sure. But it’s going to get worse before it gets better,” said Campbell.

R0 is a basic reproduction number measuring the contagion potential of a virus, so an R0 of 2.7 means one infected person will spread it to 2.7 other people on average.

He said he’s taken out some insurance against a black swan-type event by adding a defensive short on oil futures, equal to 15% of his oil call options — giving him the right to buy those assets at a set price by a certain date. The goal is to render the portfolio neutral should oil prices suddenly crash.

“I want the vol [volatility], I don’t want the direction. Not until we show we can slow the spread of this thing, which public health officials seem loathe to enforce,” said Campbell. He’s concerned about its long incubation period and “boomers running around out of quarantine and infecting who knows how many people.”

“The reason I am writing this, is because the very same tools I didn’t trust enough during COVID — the simple estimates of a) how infectious is this thing, and b) how deadly —imply this is something that has the potential to get out of hand,” he said.

While COVID-19 was airborne and far more contagious, he guesses hantavirus is 50 times more deadly.

Investors in “transportation sensitive markets,” such as oil cruises and airlines “own this exposure whether you want to admit it or not,” he said.

But he hasn’t gone all in on his dark hantavirus call because he sees a prolonged Iran conflict driving oil shortages for many. So he’s holding onto calls allowing him to take advantage of any spikes in oil prices.

Campbell, who made a prescient call on silver last year and warned of a pullback, said the hantavirus is “probably containable,” but there are still lots of unknowns

He pointed to a recent study of the outbreak by Virginia Tech, which discussed that given the virus has a high basic reproduction number, there was likely “sustained onboard transmission” before quarantine measures were put into place.

Jiaming Cui, assistant professor of computer science at Virginia Tech who authored the study, suggested more cases can’t be ruled out.

“Simulations further suggest that several exposed individuals may remain unidentified during the early outbreak phase, creating a hidden reservoir that symptom-based surveillance alone may fail to detect,” he wrote, providing a chart to illustrate that point:

“These findings highlight the importance of rapid surveillance, widespread testing, targeted quarantine and active monitoring of exposed individuals in confined travel settings,” added Cui.

Campbell said he’s also hanging onto agriculture exposure. “And diseases and potential lockdowns may be bearish for fuel, they are not bearish for agriculture, which requires folks to go out into the world and grow, harvest, process and deliver it to you. So we’re keeping the food,” he said.

Read: A look at which assets are following the script, and which aren’t, on day 75 of the war

The markets

The Dow is retaking 50,000, and the S&P 500 and Nasdaq are also climbing, the 10-year Treasury yield is dropping and oil is falling.

Key asset performance	Last	5d	1m	YTD	1y
S&P 500	7444.25	1.07%	6.00%	8.75%	26.33%
Nasdaq Composite	26,402.34	2.18%	9.94%	13.60%	37.89%
10-year Treasury	4.459	6.40	13.90	28.70	2.40
Gold	4696.6	0.03%	-2.37%	8.41%	44.78%
Oil	101.58	4.08%	13.31%	76.94%	64.66%
Data: MarketWatch. Treasury yields change expressed in basis points

The buzz

Retail sales met expectations with a rise of 0.5% in April, with the Iran war driving higher pump prices and a 2.8% jump in sales for gas stations. U.S. import prices jumped 1.9% in the same month, also higher than forecast due to energy costs. Weekly jobless claims were slightly higher than expected at 211,000.

Chinese leader Xi Jinping reportedly warned President Donald Trump during a meeting that a mishandling of Taiwan could lead to conflict between the countries. The White House characterized the meeting as “good” as it stressed commerce between the two countries and Xi’s opposition to Iranian tolls in the Strait of Hormuz.

Nvidia stock is rising on a report that the U.S. had cleared ten Chinese companies to buy its highly-advanced chips.

Cisco stock is surging 20% after the networking giant said it would lay off workers and invest more in AI, and delivered forecast-beating results.

Inference-chip maker Cerebras Systems will debut Thursday after pricing its IPO at $185 a share, far above the top of a previous range.

Business inventories are due at 10 a.m. Several Fed speakers are on the calendar, including Kansas City Fed President Jeff Schmid at 10:15 a.m. and Federal Reserve Governor Michael Barr later.

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The chart

Goldman Sachs has done a deep dive into the rise of retail trading in U.S. stocks, with a chart a reminder of just who owns most of those companies — the top 1%. “The top 10% of households own 87% of total household equity assets while the bottom 50% of households own just 1% of the total,” said a team of analysts led by Daniel Chavez. That’s as the bottom half tend to make more quarterly adjustments. “Across the average quarter since 1990, flows into and out of equities from the bottom 50% of households amounted to 3% of their assets, nearly three times the average for the top 10% of households.”