The Corona pandemic has us under its spell. Although there is no tangible evidence to date, except in relation to China, of the real economic impact of the flu wave, fear and uncertainty have ploughed through the capital markets. The stock markets have lost a good 10 percent in recent days. The US Federal Reserve has surprisingly cut interest rates by 50 basis points and yields are close to all-time lows. The financial markets have priced in a significant economic slowdown, if not more.
The growing concerns about a collapse of the global economy or at least a significant slowdown in global economic activity are also reflected in noticeable forecast reductions. While this development is not yet reflected in the hard economic data from Europe or the USA, at least the high number of cancelled major events here gives a first impression that an economic slowdown is likely to occur.
The corona virus has not yet been stopped, but the average course of the disease seems to be rather mild so far. Moreover, the risk groups are clearly defined. However, uncertainty about the consequences of the flu epidemic remains very high. The financial markets have already anticipated a great deal that has yet to happen on the real economic side. For this reason, we should not react to further horror scenarios in a hurry, but should also give some room to reality.