The COVID-19 epidemic continues to spread to all four corners of the globe. There have been some encouraging signs in the early-infected countries, such as China and South Korea in terms of new cases. However, the surge in cases and deaths in Europe and North America underscore that there is still a long way to go, and considerable near-run economic downside as well as further financial market turbulence.
Belatedly, politicians in the West have finally received the message from rioting financial markets and are taking harsh public health countermeasures. The latter will ensure that economic activity declines significantly over the next few months. Such steps were inevitable, and it is now critical that monetary and especially fiscal policy become open-ended in terms of providing economic support, as discussed in a just-published report. There are still critical public health steps needed to eventually contain the virus, but at least there is now a sense of serious urgency.
The outlook remains highly uncertain and investors will remain prone to panic until it is clear that economic activity is re-starting in Asia and the containment measures are starting to pay off in the West. MRB Partners will be providing more frequent updates on how conditions are evolving in the days and weeks ahead, and the unfolding investment risks and, eventually, the opportunities.