Market Snapshot February 13, 2020

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Good Morning on this Thankful Thursday,

 

I have to emphasize that the reason there is so much doubt about news and data from China is that it is proven over and over again to be unreliable. Last night Chinese officials from Hubei province, where the virus is believed to have started, changed the accounting method on whom to report as testing positive and who has died. This is too serious to make a sarcastic joke of, but the numbers have now exploded. 60,300 confirmed cases and now more than 1300 deaths. Officials and markets believe this is largely contained in China, but the statistical probability of that becomes less likely as time goes on and the numbers increase. The equity markets are pausing to assess (Dow down 90 points), but I doubt they will see this as more than a minor speed-bump and an anomalous 1 quarter drag on growth. Bonds see this a bit differently as the risk on/off stance that determines bond prices are not only driven by markets but also on Central Banks monetary policy. I would think most Central Banks will have to cut rates end of Q1 beginning of Q2 if the Coronavirus is not under control shortly.

 

We had some economic data today with CPI but that is backwards looking and also was weak to neutral.

 

Pictures say it better to share the correlation of the virus and growth,. The WSJ does an excellent job of that:

 

Here is the latest count.

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Make today great!