COVID-19 UPDATE
02/27/2020
By Mark Simenstad, Chief Investment Strategist | 02/27/2020
Although the investment world continues to assess the long-term impact of the coronavirus (formally known as COVID-19), the obvious short-term impact has been a decline in stock prices, oil prices and bond yields.
The virus has spread well beyond the borders of China and the Far East, with nearly 30 countries outside of China reporting confirmed cases of COVID-19, including the U.S., western Europe, Iran, and Latin America.
Beyond the investment markets, we’ve seen the epidemic affect businesses well beyond China. Supply chain disruption is among the chief concerns. Many suppliers of goods for both end-products and components of production systems are based in China and the Far East. As a result, companies in the United States and abroad are finding it increasingly difficult to source inventory or parts necessary to manufacture their products:
The short-term economic impact continues to be real. Global economic output will be negatively impacted by the virus and the actions taken to stem the spread. Until there is confirmation that the virus has been contained, it will be impossible to fully quantify its full effect.
The growing crisis has had a significant impact on several areas of the economy:
At some point, the spread of the virus will be contained, just as it was for other epidemics and pandemics. At that point, we believe it is highly likely that economic activity will rebound, perhaps sharply, as spending that was either delayed or deferred resumes, production recovers and inventories are restocked.
In the meantime, financial markets will likely continue to be volatile and will continue to react to the incremental news headlines related to the expansion or containment of the disease. No doubt, risks to both the economic and equity market outlook have increased, but, in the absence of a recession, any equity market correction related to this event would likely be reversed with positive signs of progress in containing the virus.
Media contact: Samantha Mehrotra, 612-844-4197; samantha.mehrotra@thrivent.com
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All information and representations herein are as of 02/27/2020, unless otherwise noted.
The views expressed are as of the date given, may change as market or other conditions change, and may differ from views expressed by other Thrivent Asset Management, LLC associates. Actual investment decisions made by Thrivent Asset Management, LLC will not necessarily reflect the views expressed. This information should not be considered investment advice or a recommendation of any particular security, strategy or product. Investment decisions should always be made based on an investor's specific financial needs, objectives, goals, time horizon, and risk tolerance.
Past performance is not necessarily indicative of future results.
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