Stocks Catch Corona Fever

After 3 years of stellar consumer confidence and soaring stock prices, investors reached a crescendo of exuberance and record setting optimism that warned of a market priced for perfection. Suddenly on our forecasted topping date of January 24th, the stock market caught Corona fever. Normally an excessively positive running of the bulls is a vulnerability in need of a modest correction and not a signal to run for the nearest fallout shelter. However, exogenous events such as the Coronavirus, are unpredictable. For a reality check, from the perspective of global contagion and mortality, this virus is likely to be minor in comparison to the annual flu that infects millions and typically kills on average almost 40,000 in the US, another 40,000 in Europe and almost half a million globally – every year! While the ultimate harm is unknown, history suggests the Wuhan Coronavirus outcome will be only a fraction of this normal influenza total, even though the economic impact will be multiples above normal. The annual global flu ritual as well as virtually all viral epidemics such as SARS and Corona are endemic to China. Instead of flu shots, mass quarantines and wishing for the improbable odds of timely vaccines for such outbreaks, there should be an intense global focus on cause and prevention “in China”. While China has become a technological leader in the global economy, they and much of Asia still have the vast majority of their population residing in third world conditions. As long as Farmers and livestock live under the same roof and antiquated food markets run without oversight there will be no realistic way to stop these pandemics. Fortunately these viral pandemics have never had a clear impact on the global economy or the various investment markets. This new China scare happens to coincide with a climactic run higher in stock markets that were quite vulnerable to bad news, so this time there is potential for a more notable short term correction.

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Disclaimer: This report may contain information on investments that are high risk and have substantial risk of principal loss. It is for informational purposes only. Statements in this communication ...

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