The words 'bear market' and 'recession' are being used with ...
NEW YORK - The words “bear market” and “recession” are being used with increasing frequency as investors try to assess how badly the coronavirus outbreak will damage global growth and to what extent it could further weigh on asset prices.
Rabobank in a note earlier this week said the initial strategy in most Western countries, which was to do nothing and tell people all is well, was not effective. Nineteen people have died out of about 450 reported U.S. cases of the novel coronavirus, which originated in China and rapidly spread around the world. More than 3,600 globally have been killed.
The bank’s main scenario forecasts a drop of 15% to 20% in U.S. stocks followed by a rebound. A more pessimistic outlook sees a larger drop and a recession.The explosion in market volatility has come as the bull market marks its 11th year. The S&P 500’s lowest close following the 2008 financial crisis was 676.53 points on March 9, 2009. The index’s most recent high was 3,393 on Feb. 19.
Some analysts are focusing on potential pressures on cross-currency basis swaps, which institutions use to hedge currency exposure and obtain access to foreign currency funding, and other instruments that function as the “plumbing” of money markets. Others are worried about the credit markets and businesses’ access to cash.
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