Bad news related to the outbreak of the Novel Coronavirus, COVID19, is unlikely to be fully priced in. Yet over the next few months, I still expect TINA (There Is No Alternative) to remain the prevailing market regime.
Equity Markets Have so Far Shrugged off Coronavirus Concerns
Equity markets’ resiliency to COVID19 could reflect expectations of early containment of the epidemic or of limited impact. But the former, at least, appears unlikely. COVID19 is spreading faster than either SARS or the Swine Flu (Chart 1). In addition, there are doubts on the numbers reported by China, and contagion chains without a direct link to China have already appeared – for instance in Singapore. So at this stage, a global pandemic seems more likely than not.
TO READ THIS HIVE EXCLUSIVE
SUBSCRIBE TO MACRO HIVE PRIME