World Health Organization today declared the coronavirus a pandemic. Epidemics are much more common and localized but the global outbreak of a pandemic causes a much larger chain reaction as panic spreads faster than facts.
Markets are making history this year and some of this is uncharted territory. Bear markets in the past have never happened this fast. Here we are already down -20% from ATHs (All-Time-Highs) and today the declaration of a pandemic. I can’t imagine we’re going up until this coronavirus is under control.
Not every pandemic causes a bear market but when entire countries are on lockdown (looking at you, Italy), it’s likely to cause not only a deep recession for those countries but will trickle out to global markets as it puts a toll on economic spending. Markets are in ‘Fear’ and ‘Panic’ mode now, but what happens when these lockdown numbers start hitting growth numbers next quarter? If we’re already down -20% now, how far will it fall during next earnings reports?