When news first broke out of the Corona virus in January I said it would be a weak excuse for a sell off and as such would be short lived. That position was correct for several weeks however it would appear now that its impact may matter more in the short to intermediate term because more than a few major companies have now indicated that there's going to be a material impact on Q1 earnings and as such expectations are being lowered accordingly. In addition, the outbreaks are spreading to other countries and they are taking major precautions. Italy is imposing draconian measures to stop the outbreak even though the reported cases are are only about 150. I was looking forward to watching the Inter vs Sampdoria game today but it was cancelled to due virus fears. South Korea is another major country that's raised their alert to red. So, it would appear that there's potential for a notable hit to global GDP as a result of all the lock downs taking place across the world. But like I said before, any lost growth resulting from these lock downs will be temporary and made up for once things go back to normal. It should also be worth noting that on Friday there was a poor reading released pertaining to the service sector in the US on Friday which may have very well contributed to the downside action.
So, as I pointed out last week, the market was ripe for a modest to moderate correction due to the conditions of sentiment indicators alone. A possible weak patch in growth caused by corona virus and/or other factors may be serving as the catalyst to trigger the correction. But there's a silver lining to this for the bulls. The virus is creating the type of worry/fear you need to keep it ongoing. It prevents the bull market from entering the euphoria phase which ultimately kills it and it keeps government authorities accommodating. As noted previously, there was froth in the option market that needed culling and there's also a handful of stocks like Tesla which was showing pockets of froth but there hasn't been widespread froth as per equity fund flows which continue to show little to no participation of mom and pop investor for several months. Bond flows on the other hand are surging to record inflows and inflows have been strong for several months. You can see it being reflected in long term government bond yields which are hovering near last year's lows. Again, this is ultimately supportive for the stock market.
I have obviously changed my perceptions on the impact of the Conora virus. I have never had a problem changing my mind when evidence suggests I do so unlike the majority of pundits or "experts" who stubbornly stick to a view and never change it even when it's clear they are wrong. It's as if doing so would damage their precious ego. They will either give the "I'm not wrong I'm just early" excuse or "the market is irrational and I could not have accounted for that" excuse. This is typical of the legion of permabears out there who have been beyond laughably wrong about the market for several years and yet STILL have the audacity to make doom and gloom predictions showing little to no humility for being so horribly wrong. I've said this before many times and I'll say it again. It does not matter if the market was to crash starting tomorrow, the permabears have been wrong for way too long to claim any sort of victory. And now they have been pathetically clinging to the corona virus threat from day 1. This just goes to show you what kind of miserable SOBs they are. They are constantly looking for any and all negatives to support their doom and gloom predictions and miserable outlook on life in general. Don't listen to these fucking losers. The name of the game is to make money and that requires one to be objective and pragmatic not dogmatic. Fuck your pride and ego when it comes to the market because the market is an uncertain and ever changing animal which means your forecasts can't always be right and must be changed when the evidence suggests doing so. It also means that methods/statistics which worked well in past may no longer work in the future.
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