One of the Wall Street bulls Edward Yardeni believes that there is currently no bigger threat to the financial market right now than the coronavirus outbreak. The number of death cases is growing.
The world already has more than enough evidence that the coronavirus is a big enough market threat. In the very recent past, we have seen the unpleasant effects of the coronavirus on the world’s financial markets. Oil prices also took a beating, as well as several businesses. Even though investors didn’t seem to mind at the beginning, major Wall Street bull Edward Yardeni is starting to think differently.
Coronavirus Is a Strong Market Threat
In a recent conversation with CNBC, Yardeni seems to be convinced that it’s only a matter of time before market investors begin to retrace their steps. He believes the current stock market rally could easily be pulled down by the coronavirus.
Yardeni said:
“The longer that this virus threat continues to weigh on the global economy, the more it poses a risk for at least a correction in the stock market.”
According to him, things looked very positive for the stock market, until the coronavirus epidemic got worse.
As January slowly ended, financial markets around the world began to crash in response to market conditions caused by the сoronavirus. At the time, warnings about a possible global recession began to spread.
Just last week, after enjoying a surprising market rally, Tesla stock crashed. TSLA plummeted 17% after the company announced a product delivery postponement because of the Coronavirus.
Coronavirus Threat Has Not Yet Destroyed the Market
Although his prediction is a little worrisome, Yardeni suggests that at the moment, the market is doing a fine job of fighting back.
He said:
“The markets have done remarkably well in the face of headline news that’s still unsettling like cruise ships being quarantined and China basically bring completely quarantined because of cancellations of flights. That’s got to be disruptive for supply chains.”
Yardeni also believes that if the virus proves to be more than a market threat, stocks will rebound. He backs this up by pointing out how interest rates are currently “extraordinarily low”.
Other Coronavirus Developments
As of last night, the Chinese government confirms that at least 908 people have died from the virus. It also said that the number of confirmed cases has hit 40,171.
Also, popular online lodging marketplace Airbnb has suspended all bookings for lodging in Beijing. The company announced that it will fully refund or payments already made.
According to China’s National Bureau of Statistics food prices in the country went up by 20.6% last month, from January 2019. This in turn increased the general consumer inflation rate to 5.4% from rates in the same period last year.
Authorities say that the price increase was caused by the lunar New Year celebration as well as the coronavirus outbreak. Unsurprisingly a break in the normal supply chain for food has and might continue to inflate prices.
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