1. It’s Not Just the Market, It’s the Economy
U.S. stocks staged an epic rebound on Friday, a day after plunging to their worst defeat since the 1987 market crash. But while such wild swings are expected to be commonplace in markets over the next few months, the global economy is set for a gloomier backdrop, analysts warned.
"The worst for the economy is still to come over the next several months," said Joachim Fels, global chief economic adviser at Pacific Investment Management Co. (Pimco).
The stark warning comes as a slowdown in both demand and supply in China - amid Beijing's aggressive efforts to contain the virus - is expected to spill over into the world economy.
Fels' warning may even seem tame compared to those of his peers, some of whom are not only sounding the alarm on a coming recession but are urging investors to get out of risk assets.
"The sky is falling," said Chris Rupkey of MUFG Union Bank in a note last week. "Get out, get out while you can. Wall Street’s woes have to eventually hit Main Street’s economy hard. Bet on it."
Much of the forecasting power on the economic impact from the coronavirus centers on assumptions over when peak infections will likely occur, particularly in countries outside of China.
It appears they are forecasting an equity plunge based on a worst case scenario for the Corona Virus, and it certainly could get much worse... But IMO, this "overreaction" on both a government and individual level is likely to mitigate the worst case. I think abandoning equities at this low point is a profound losing proposition. We may not see a continuation of Friday's gains on Monday, but it was a preview of things to come sooner more likely than later.