Posted on 02/15/2020 8:19:12 AM PST by DoodleBob
The coronavirus outbreak has closed factories, curbed spending and disrupted supply chains in the world's second-largest economy. But U.S. stocks have held close to records.
The market's resilience stands in contrast to how quickly the epidemic has spread and how difficult it has been to assess the accuracy of information coming out of China, money managers say.
"We're surprised at how sanguine the market is," said Sharmin Mossavar-Rahmani, chief investment officer of Goldman Sachs Group Inc.'s private wealth-management group, adding that "realistically, the data are very, very uncertain."
Markets had initially lost ground after officials reported the outbreak had spread beyond China's borders. The S&P 500 dropped 3% between Jan. 23 and Jan. 31, while the Stoxx Europe 600 lost 2.2% over the same period. China's Shanghai Composite Index dropped 7.7% on Feb. 3, its steepest one-day decline in more than four years, after reopening following the Lunar New Year.
Just weeks later, though, markets have managed to claw back much, if not all, of their losses.
Companies that were among the worst-hit by coronavirus-related selling last month have recovered in recent days. Wynn Resorts Ltd. owns a luxury casino resort in Macau, where officials have asked operators to suspend operations for now. Its stock gained 4.1% for the week -- outperforming the S&P 500, which rose 1.6%.
...
The rally has divided money managers and analysts. Some believe the market rebound is justified, pointing to research showing the long-term impact of prior outbreaks has been muted and a sense that the epidemic is being contained effectively. Others are less convinced. .
(Excerpt) Read more at morningstar.com ...
Much of the market's rebound appears to have been fueled by relief over Chinese officials unleashing a wave of spending to help relieve the pressure on the Chinese economy, analysts and investors say.
The People's Bank of China deployed 1.7 trillion yuan in open-market operations on Feb. 3 and 4. Not coincidentally, many global stock indexes bottomed out around then. The Shanghai Composite rose every single trading day from Feb. 4 to Wednesday, logging its longest streak of consecutive gains in more than a year. The S&P 500 has also pared losses, closing Friday up 4.6% for the year and at a record.
So far, though, economists believe the long-term impact of the epidemic will likely be relatively muted. Among S&P 500 companies, just 5.8% of sales are generated from China, compared with 62% from the U.S., according to FactSet.
Bond market is pricing a recession. Stock market is pricing a boom. I wonder which has a better track record for analyzing risk?
At no point did any financial market think Trump was not going to be acquitted.
Off topic slightly, Amazon won its case to halt the 10 billion dollar deal the pentagon had with microsoft, at least for now.
But it didn’t really affect microsoft.
I think people are figuring msft will hold onto the contract in the end.
I think the market is looking at the “out of asia” cases, and it looks contained right now. 6 of the 29 countries have complete resolved their cases and have no active cases.
They are also looking at past events of SARS and Ebola and the effects were temporary.
In the long run, I expect this will be good for most countries and bad for china and international trade.
But how bad will the whipsaw be? And how bad will this virus be? Can it be contained? Will it fizzle out over time like SARS? Is it here to stay?
The sky is falling send US taxpayer money.
Just like everyone may overreact to the virus, I also think people may overreact to this ruling. Microsoft is a pretty strong, entrenched firm. They aren't the new kid on the block but they're not IBM.
There are lots of sectors, such as semiconductors and equipment that hugely depend on China, they they are riding sky high. It’s difficult to explain.
Good point.
I will admit I was expecting 3 to 5 percent correction.
It was not to be.
Oh that’s interesting!!
I wonder if we could find a daily source for those charts.
I expect it would take a couple of days for the polution to ramp back up. But still that’s a pretty good indicator.
I agree acquittal was likely priced in prior to Feb 5, but there isn’t anything quite like the conclusion of something people THOUGHT may happen.
PM 2.5 is the size particle that has been linked to diabetes.
They compared maps of pollution of PM 2.5 and maps of diabetes rates, and they correlated strongly.
Well one thing driving it in America is the employment. You have that many more people working. That many more 401k’s being funded and the money is looking for somewhere to go.
No rising market can escape correction. When the correction is near, the slightest bad news will cause to begin, and the politicians will put forth whatever they dislike the most as what is causing the decline. Hate war? CNN will attribute the decline to bad news from the Middle East. Hate the Fed? The problem is interest rates that are too high. Etc.
perhaps, but remember, President Trump is ‘Dangerous for this Country” According to dems
(Record unemployment, record stock market, record jobs brought back home, record employment for nearly all demographics, all races, record money back, on and on it goes- and the left ignorantly claim Trump is dangerous for the country)
Markets are where they are because the big boys want the indexes there. Meanwhile, gold buying spiked, treasury bonds buying spiked and charts are showing near complete stoppage of movement of goods in China and other places in Asia. Nothing to see here...move on.
Make that 8 of the 29 countries have resolved all their cases.
But still, how much is being missed and not tested.
Here’s traffic congestion in Shanghai from TomTom.
https://www.tomtom.com/en_gb/traffic-index/shanghai-traffic
That, and the central banks already said they will print money to cover this.
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