I am unsure how you imagined the volatility and fear have peaked. Australia has not even released its COVID modelling yet. Far too many people - especially in the markets - still believe this is a flu that is going away in a few months. Far too many analysts are stating fear and panic as if this is all psychological. The impact on the economy is in no way priced into the markets. Many many many business will never recover. Many.
I think you deserve credit for putting your views out there. But... With a second wave of infection commencing in China, the EU decimated and unlikely to recover for 2-3 years, the US simply kept afloat by massive sugar hits (diabetic coma not far away), Indonesia etc unable to even quantify the growth of infection, not to mention what happens when (not if) the virus cripples large chunks of Africa... I can't see a sustainable recovery likely for several years, Which means I can't see anything that warrants investment in stock markets (as opposed to gambling which is really all that the markets are at the moment and great fun if that is your thing).
Has anyone heard of what the criteria for easing lockdown will be? No, because it would need to be a period of at least 2 weeks with NO NEW CASES! This is a long time away and all the while lockdown continues [which it has to quite rightly] and the economy is being strangled. A bit early to be charging back in for "bargains".
Good comments and certainly a very fluid environment. WRT volatility, we reference the VIX.ID which peaked at 85.5 on 18/3 and stuck above 80 most of that week. Last close is 57 so whilst still very elevated, it has declined substantially. WRT businesses recovering etc this is a critical aspect; i've covered off on our views re: Government stimulus in 2 prior pieces so perhaps you may have time to read them. In terms of 'could this take longer to recover' the answer is absolutely. The emphasis of this piece is to remain a) remain focused on infections and not get swamped by the noise and b) to highlight that it is premature and at the EARLIEST we need to see progression along the US Infections Curve before deploying real capital. If i may add one final comment, the term 'Planet America' is apt! They really are predominantly focused on what happens on their shores. So whilst the virus may have a greater impact elsewhere, it is what is happening domestically that will drive their markets and hence ours. Visa vis the Dow Jones made a record high in mid Feb even though Covid-19 was ravishing Wuhan. It wasn't until it reached US shores that the markets reacted!
Thanks Romano , great article. How do you also factor what is unfolding in India? I feel we haven't factored in correctly the economic impact of what is currently unfolding in India, given it's importance for our resource Industry.
It is still too early to call what impact temperature has on the Covid-19 virus so this could be a material mitigating factor. But yes there is a real possibility that India and elsewhere could experience devastating crises. As difficult as this may be, we do need to separate human crises from the financial impact. Australia's trade with India is 1/6 that of our trade with China give or take. So there will be an impact but it is well down on our list; dare i say it some of the 'noise' we need to remove to enable us to focus on they key drivers over the next 2-3 weeks.