Equity markets have bounced around rather dramatically in recent weeks (up and down) as investors are trying to get a grasp of the impacts of Covid-19 (aka Coronavirus). While there will clearly be economic softening from Covid-19, the base case is that it will be transitory. A key question remains, when will fiscal and monetary policies assist a turn-up in economic activity? This also begs the question: Is our biggest pandemic actually a public panic?

The markets are now also digesting the impact of an impasse between OPEC and Russia to curb oil production in an effort to stabilize prices. This is the primary driver of the market’s reactions on Monday, March 9th. Oil prices were sliding on expectations of global softening due to Covid-19.

Before we address oil, let’s review Covid-19. Please also reference our posts on February 25th and March 3rd, as well as the recording of our February 28th conference call for related information on the virus and how diversification and portfolio construction can help weather these times. Within this update, we also discuss what issues could help change the narrative.

We should also wish those impacted by Covid-19 our sincerest thoughts and prayers.

Watching the Outbreak (Update)

While the following chart shows that China still represents the vast majority of cases, it is important to note that the daily cases inside of China have dropped dramatically (according to the World Health Organization “WHO”). Korea was one of the countries outside of China to be hit with escalating cases. The number of new cases reported daily in Korea have also declined. Korea has reportedly been very aggressive in testing and appears to have curbed the momentum.

The focus is now elsewhere, particularly on Iran and the European region.

Exhibit 1: Tracking Recorded Cases – Shift in Focus to Outside China


Source: World Health Organization. As of March 8, 2020.