INSUBCONTINENT EXCLUSIVE:
By Marcus AshworthGlobal markets have entered the meltdown stage, accelerating in the past few days beyond a relatively orderly stock-market
With coronavirus cases now on all continents this is no longer a domestic China problem; that suddenly dawned on complacent investors after
Any attempt by the stock markets to bounce is just being seen as an opportunity to offload more shares
This is a catch-up effect and is starting to look overdone.
Yes, investors hate uncertainty and the deluge of virus warnings from businesses
Largely, this is down to portfolio protection
As my colleague Chris Hughes has noted, many of the biggest European companies have problems that predate the virus scares
Re-weighting out of equities into the perceived safety of bonds is the knee-jerk reaction, even if yields are non-existent
It becomes a return of capital game (that is, putting it back somewhere safe) rather than return on capital
Poor corporate results are going to be punished more heavily in a febrile market environment.
BloombergThe United States economy in
particular is still in decent shape
is readying for its biggest fiscal boost in history and there are even signs Germany has got the message
Noises out of the European Commission are that budgetary limits can be eased
China has managed the crisis steadily and Japan cannot be far away from pulling the stimulus lever again
Are you listening G20? That is where the concerted political and economic response needs to come from.
This is not a deadly killer like
Countries heavily dependent on tourism will suffer longer
Fixed-income markets in particular have got ahead of themselves in driving toward all-time lows
This effectively signals recession, with a further three United States Federal Reserve interest rate cuts now being priced in for this year
So far the reaction from the Fed, the European Central Bank and the Bank of Japan is that none will be forthcoming.
This might change, of
course, given the deep selloffs on Friday
This is both a demand and supply shock, given the strain it puts on global supply chains and on consumers and travelers
The Hong Kong government even tried helicopter money this week, without any discernible effect
Monetary policy is practically useless in this context
Bloomberg LP and its owners)
