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Coronavirus crisis is a “black swan”

UNITED STATES (OBSERVATORY NEWS) — The health crisis caused by the new coronavirus is similar to the financial markets and the world economy to a “black swan”, namely an unexpected and major external shock, it is said at Carmignac.

Appearing in mid-December in China, the epidemic has spread to around fifty countries, has led to stock markets in corrective territory in Europe and the United States and has led the OECD to lower its growth forecast for the world economy at 2.4% against 2.9% expected in November.

“In our opinion, the coronavirus crisis, which has been shaking the markets for a few days, must be understood as an external shock of the” black swan “type, that is to say exceptional, unprecedented directly comparable”, writes Didier Saint -Georges, member of the Carmignac strategic investment committee, in a note published Monday.

No one can accurately assess the evolution of the epidemic today, he said, urging us to base ourselves on the available reliable data and to guard against any speculation.

“As in any external shock, the damage caused to the markets and to the economy tends to be largely created not by the initial cause of the crisis, but rather by the reactions to it (containment measures, voluntary breaking of chains supply, consumer stress), “he wrote.

The number of new contaminations seems to be slowing in China but has only just begun its acceleration phase outside the country, which explains the fact that international markets only react strongly now, says Didier Saint-Georges.

“This period is likely to last at least until the path of contamination outside of China itself passes to its deceleration phase,” he wrote.

“On an economic level, this period which sees governments invited by public opinion to take strong protective measures can have an immediate appreciable impact on world demand.”

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