Stocks have plummeted around the world in response to the global coronavirus crisis, as the pneumonia-like disease spread across more than 100 countries and infected well over 100,000 individuals. The S&P 500 closed in a bear market last week, thus ending the longest bull expansion on record. The World Health Organization officially designated the coronavirus outbreak a pandemic and the market is aggressively pricing for a major global recession. On Friday (March 13), in the US, 1500 of Goldman Sachs investee companies reportedly dialled in, according to a post by r/investing/ community on reddit.com
Here are the key takeaways of the predictions in the investment bank's presentation:
Over the next 6-8 weeks we are going to see a global health and economic collapse.
50% of Americans will contract it (150 million people)
70% of Germany will contract it (58 million people)
Of those impacted 80% will be at early state, 15% mid stage, and 5% critical stage.
Overall mortality will be 2%.
Europe and US do not seem to be well equipped to deal with it at all. Need both of them to effectively control the pandemic (like several Asian countries like Taiwan and Singapore) to ensure that the global economy does not collapse further.
China's economy will be impacted by imports and exports. There might be shortage of raw materials and the global supply chain will be broken for a period of time.
Global GDP growth rate will be the lowest in 30 years at under 2%.
S&P 500 will see a negative growth of -15% to -20%.
Stock markets will collapse only to hopefully recover in the 2nd half of the year
Reportedly was “a really really depressing call”.
Last month, Goldman Sachs warned equity markets look "increasingly exposed" to disappointing earnings growth due to the new coronavirus outbreak. The bank told clients that a near-term correction, in which the market slides at least 10% from a recent peak, "is looking much more probable" CNN reported on Feb.22.
(David Levy, chairman of the Jerome Levy Forecasting Center)
David Levy, chairman of the Jerome Levy Forecasting Center, told Yahoo Finance on March 12 that “the pandemic’s economic disruptions threaten to trigger a global financial crisis that will be worse outside of the United States than 2008-2009.”
He added that “several factors make the situation particularly worrisome” — including record debt levels, lack of wiggle room on monetary policy, and major economies that are “squabbling, economically strained...[and] poorly equipped to cope with a global financial crisis that will be especially acute in the now vast EM sector.”
There is total uncertainty and no one in the market has ever dealt with this kind of thing. No one knows what a total economic shutdown, however temporary, looks like. Shares are simply reflecting deep anxiety about the global economy.
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.
More to follow. We will keep you updated.