The Markets Are Getting Hammered
We are seeing the stock markets suffering big losses today. All the major indexes are off more than 3% as fears of the spread of coronavirus is sending fear in the markets.
It looks like they are embracing the fact that this could affect the global economy to a great degree.
Bears have been waiting for a black swan event and this could be it. If the global economy was not in trouble before, it could be now. Reports are sketchy out of China as to the shape of production out of the different factories. Many opened up a few weeks back but we are unsure how production is going. Apple has announced they are going to suffer a setback in earnings due to productions issues.
China is still the major manufacturing hub for the world. This is going to cause supply chain issues if it goes on too long.
For a couple decades, China was the driver of global growth. Over the past decade, the growth rate slowed but is still an outstanding 6%. This is certainly in jeopardy as many believe China's grow rate for this quarter will be flat, if not negative.
Of course, markets have a mind of their own so this could be a massive buying opportunity. The bull is still in place until proven otherwise. Volatility at these levels cannot be totally unexpected. If we see another couple days of pulling back, expect the Administration start the bullish rhetoric as they did during every sell off the last few years.
And we can never overlook the Fed. The market might take this as a reason for the Fed to get more aggressive with interest rates, something the market loves.
It will likely be a wild ride the next few weeks.
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Posted via Steemleo
They are staying the rate of infected people in China is decreasing, but increasing globally, thus, the equity markets have a bit more downside to go before the buyers step in.
Posted via Steemleo