Historically, epidemics like SARS, Ebola, Swine Flu, … (see list below) have had short-term impacts on the economy and stock market. Obviously, not all viruses are the same and no one knows the total impact yet of the coronavirus. There is no doubt that the coronavirus will minimally impact GDP and corporate earnings for the current quarter. Also, as we wrote on February 5th, “While the liquidity backdrop is favorable and the economy is growing, investors should brace for more volatility due to these ongoing developments and the proliferation of trading algorithms, which can cause wide swings in prices.” We have seen this daily over the past several days, and expect it to continue in the near term.
