MARKETS IN THE CORONA VIRUS CRISIS (Continued on 2019-04-09)
This is the update of last weeks' blog as we promised. We have now completed seventh weeks of the COVID-19 Black Swan.
During the seventh week of the COVID-19 Black Swan something strange happened:
- The US Corona Virus related death toll topped Italy, reaching 18,300.
- Unemployment rate is increasing at a record pace. Economists are expecting unemployment rate to reach the Great Recession levels.
- Yet, S&P500 index gained 12% in this four-day week, the best week since 1974.
- We can only conclude that confusion became the norm. It is difficult to explain this as just the market is getting used to the bad news.
- We believe that the reality of jobless claims has not set into the markets yet. Even optimistic estimates are topping 20% unemployment rate when all is said and done
- Annualized volatility continued to decrease slightly but is still around the historical high levels.
When the dust settles, no assumption will be spared. We will re-examine, disect and digest all of our assumptions.
The graph below shows the value of a $10,000 portfolio during the two most severe downturns in the past 80 years.
Volatility is more severe in the Corona Virus Reality down-turn.
Please share your thoughts in the comments section.
Check out previous posts here:
- Part 1: https://www.altadata.io/blog/markets-in-the-corona-virus-crisis
- Part 2: https://www.altadata.io/blog/markets-in-the-corona-virus-crisis-first-update
- Part 3: https://www.altadata.io/blog/markets-in-the-corona-virus-crisis-second-update
- Part 4: https://www.altadata.io/blog/markets-in-the-corona-virus-crisis-third-update