Markets started with a gap down on renewed Coronavirus news but quickly recovered as the morning went on. This seems like more of an excuse to jolt things than anything else, though I think this is something not being taken seriously enough by the market right now.
And we’re relying on rock-solid Chinese government stats. Something you can put your trust and faith in… right?!
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With the death toll past 1,000 and over 145K infections worldwide, this isn’t a good one. Although the mortality rate is lower than SARS, this seems to be spreading much further. Estimates are it will take a year to come up with a vaccine. I’m seeing forecasts for a 4.6% GDP in China, which would be extraordinary.
One place that’s finally starting to move is energy. Crude oil is up over 1% on the day, although natural gas is barely up. I still believe this is the bottom in energy for a little while. Longer-term, the energy production complex is changing. But that’s years in the making. We haven’t seen a technology change like fracking that would flip the industry within a couple of years.
Even though the indexes are back to breakeven on the day, the VIX and VVIX are still elevated. That might mean we get a selloff before the end of the day. We shall see.