Fed Slashes Rates ...
Stock markets came under further pressure this week. European stocks closed lower. The FTSE ended the week at 6,463, the lowest level since June 2016.
In the US, markets fared better. The Dow closed up on the week 250 points at 25,400. The S&P and NASDAQ held firm. Sentiment had been badly hit by reduced forecasts for world growth from the OECD and the IMF.
The Coronavirus could "halve global growth", according to the Organisation for Economic Growth and Development. "Covid-19 presents the greatest danger to the world economy since the financial crisis of 2008" it said.
The IMF warned the spread of the disease would push growth below the levels of last year. The IMF is to offer a $50 billion dollar emergency fund for countries hit by the virus.
In the OECD's base case scenario, a short lived outbreak, would suggest global growth would slow to 2.4% this year from a previous estimate of 2.9%. In China, growth is expected to fall to 5% this year, from 6.1% last year. Eurozone growth could fall below 1%, a similar scenario, would develop in the UK.
A longer lasting and more intensive outbreak, spreading through Asia-Pacific, Europe and North America could cut growth to 1.5%, the OECD claimed. So what's the outlook ...?
The number of cases of Coronavirus is set to hit over 100,000 this weekend. The good news ... data from the World Health Organisation suggests the crisis has passed in China. The number of cases has dropped to 140 per day compared to 4,000 at peak. The data suggests a 12 - 13 week cycle for the outbreak with a 1% infection rate and a 3.7% adjusted mortality rate. [See our "Say Goodbye to the God of Plague" Chart Update below]
60 million people in the Hubei confined zone presented 68,000 cases and resulted in just over 3,000 deaths. The adjusted mortality rate is less than 4%. Higher than flu perhaps but with a much lower infection rate per 000 of population.
Cases outside of China are highest in South Korea, Italy and Iran. The next week's data will be critical in determining the pattern of expansion. In China, the economy is slowly returning to normal, assuming no secondary wave appears.
In the UK we are moving into the "delay phase". If only we could move winter flu into the warmer summer months. Advice appears to be wash your hands regularly and rinse your mouth with alcohol, preferably vodka. "Nothing to fear but fear itself" was Roosevelt's warning ahead of the Great Recession. Analysis of the data from China would help ...
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