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“Covid-19 is self-evidently beyond the point of meaningful containment. Virologists and infectious disease experts have known for three weeks that this was highly probable, and certainly not a mere tail-risk as suggested by equity market pricing. We are now there.

The global economy may be heading for some sort of “sudden stop” in supply chains, trade flows and tourism more akin to the outbreak of the First World War than the Lehman or dotcom crises.”

https://www.telegraph.co.uk/business/2020/02/25/coronavirus-threatens-global-economy-sudden-stop/


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The U.S. stock-market rally is unraveling, with a period of historic gains coming to a screeching halt, as fear that the coronavirus epidemic may reach America rattles Wall Street…

“The Dow finished Tuesday down nearly 880 points to mark its sharpest-ever two-session slide in point terms, losing about 1,910 points, according to Dow Jones Market Data.”

https://www.marketwatch.com/story/the-dow-just-logged-its-worst-2-day-point-slide-in-history-here-are-5-reasons-the-stock-market-is-tanking-and-it-isnt-just-the-coronavirus-2020-02-25


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Gene Seroka, executive director of the Port of Los Angeles, told CNBC on Tuesday that based on a sharp slowdown in shipping he believes the economic drag from the new coronavirus will turn out to be larger than SARS:

““At that time, we were all grounded. We weren’t moving around domestically nor internationally. This appears to be much worse because of the number of folks who were infected and the lack of productivity that is taking place through the supply chain, starting with the manufacturing base,” Seroka said…”

https://www.cnbc.com/2020/02/25/port-of-los-angeles-director-gene-seroka-on-coronavirus-versus-sars.html


After showing signs of improvement in December, India’s economic report card deteriorated again in January, with 10 of the 16 high-frequency indicators tracked by the Mint Macro Tracker in the red (below the five-year average trend).”

https://www.livemint.com/news/india/india-s-economy-backslides-after-a-brief-improvement-last-month-11582702717988.html


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Should China enter financial crisis, the world would be severely impacted. Bank failures and loan defaults would spike, sending ripples around the global banking system. Given the record amounts of corporate debt at U.S. corporations, any increase in global lenders’ fear levels would impact borrowers.

“As China is a main supplier of numerous Western companies, the ensuing disruptions and restructuring would add to the supply-chain shocks already present with COVID-19.”

https://www.marketwatch.com/story/china-faces-the-possibility-of-a-financial-crisis-which-would-send-a-shockwave-through-the-world-2020-02-25


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Central banks are nearly out of ammo:

“The underlying policy motivation is the growing recognition that prolonged and excessive reliance on central banks has reduced the power of both conventional and unconventional measures; it has even risked making them counterproductive.”

https://www.bloomberg.com/amp/opinion/articles/2020-02-25/central-banks-seek-an-edge-in-a-game-they-can-t-win


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The global economy was already vulnerable in 2019:

“Global trade had a rough 2019 as weaker world growth and a manufacturing recession took their toll. As the world now watches the spread of the coronavirus and its impact on businesses and households, updated figures from the CPB World Trade Monitor show trade volumes fell 0.4% last year.”

https://uk.investing.com/news/economy/global-trade-suffers-first-fullyear-drop-since-financial-crisis-2058994


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The Covid-19 health emergency that started in China and is now fast spreading worldwide is having extreme contagion effects on the oil industry as global demand and prices coincidently fall

“The collapse in Chinese demand is being likened to the biggest shock to oil markets since the 2008-9 global financial crisis.”

https://asiatimes.com/2020/02/virus-crisis-a-killer-for-global-oil-prices/


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The potential implications for the world economy are beyond dire. Already, we’ve seen the isolation of the world’s second largest economy, China. No flights in and no flights out. Russia, Mongolia and North Korea have closed their borders with China. Turkey and Pakistan have closed their border with Iran. Israel is considering quarantining visitors from Italy and Australia. Austria has closed its borders with Italy. Italy has locked down 11 towns in Lombardy.

“This time is different. We have something very real to fear, which is producing real-time economic reactions, like the closing off of China, that are truly beyond belief. These reactions are fully capable of panicking billions of investors and consumers in our highly interconnected and mutually dependent global economy.”

https://thehill.com/opinion/finance/484500-will-the-coronavirus-kill-the-global-economy


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