Going Viral: Realities of the New Market

Back on January 8th, we reviewed credit market conditions in the wake of the killing of an Iranian general. Could this be the exogenous factor that sparks a Middle East war, and triggers a recession?

We concluded with the following observation: “Whether the Fed can continue mainlining enough liquidity all year to overcome any exogenous risks – bubbles or stickier stuff – remains to be seen.”

Well, stickier stuff arrived. Not sub-prime mortgages, tech, or leveraged loans, but a lethal virus from a seafood market in Wuhan, China.

Today that virus has upended global markets and captured worldwide attention in a way that nothing ever has. Did anyone notice North Korea’s three missile launches this week?

We have seen other dips that didn’t end in a recession. But this is different. As one strategist put it, “It affects the way people go about their lives.”…

▶︎ Read March 9 2020 newsletter: here

▶︎ Chart of the Week: here (by CBOE)