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Bloomberg Businessweek

Bloomberg Businessweek March 16, 2020

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Each issue of Businessweek features in-depth perspectives on the financial markets, industries, trends, technology and people guiding the economy. Get the digital magazine subscription today and draw upon Businessweek's timely incisive analysis to help you make better decisions about your career, your business, and your personal investments.

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United States
Bloomberg Finance LP
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50 Edities

in deze editie

2 min.
what will this mean ?

The coronavirus that causes Covid-19 is a minute, studded wrecking ball that’s not even truly alive. But in its machinelike way, it’s defeating every effort to halt its spread. More than 100 nations had reported infections as of March 10, and almost 4,000 people had died, according to a Bloomberg tally. On March 11, the World Health Organization declared the outbreak a pandemic. As Covid-19 inflicts its toll on the economy, business activity, profits, and stock prices have plunged. N95 masks have become rare and precious, and things that were once valued are in surplus—take crude oil, the price of which plunged as spigots opened in an impromptu geopolitical knife fight. The most valuable commodity? Distance. There is security in the ability to stay more than a cough’s distance away from others.…

5 min.
what will this do to the economy?

When Covid-19 strikes, the worst of the damage is done by the body’s effort to fight off the disease. The immune system can overreact in what doctors call a cytokine storm. Immune cells attack not just the viral invader but healthy tissue as well. Victims gasp for breath as their lungs fill with fluid. The novel coronavirus, which scientists have christened SARS-CoV-2, tricks us into fighting it so hard that, in the most extreme cases, we kill ourselves. As with the body’s immune system, so with the defenses of the global economy. There’s a virtual cytokine storm going on: The all-out effort to battle the disease is doing more harm to global growth than the disease itself. Quarantines, travel restrictions, business closings, and citizens’ voluntary self-protection measures have frozen business while…

1 min.
how much could this hurt gdp?

The coronavirus threatens to bring the world economy to a standstill. The fallout could include recessions in the U.S., euro area, and Japan; the slowest growth on record in China; and a total $2.7 trillion in lost output—equivalent to the gross domestic product of the U.K. That’s the most extreme of four scenarios developed by Bloomberg Economics. The outcome many had in mind a month ago—with a major outbreak confined to China and other countries suffering limited effects—is rapidly becoming too optimistic. The chances of the worst-case scenario—with all major economies suffering a significant shock—are rising by the day. The graphic below shows how they would fare under each scenario.…

3 min.
what happened to the bull market?

The 11-year bull market in U.S. equities is over, at least by one measure. At the close of trading on March 11, the Dow Jones Industrial Average had recorded a 20% drop from its highest point. The S&P 500 closed 19% below its high, just outside of bear territory. But the events of recent days had already provided the sense of an ending—the world was anxious about much more than stock prices. “The most unloved bull market” is the nickname this rally earned, and for good reason. While it was the longest in history, for much of its life it never quite felt like a boom for most people. It was born in the wake of the 2008 financial crisis and a massive, controversial effort by the U.S. government to rescue…

4 min.
how quickly will china bounce back?

Across China, factories that produce everything from smartphones to sneakers have been dormant since the Lunar New Year holiday in late January as the nation battled to contain the spread of the new coronavirus. Now plants are slowly coming back online, prodded by President Xi Jinping and other top Chinese leaders who worry that an extended shutdown will jeopardize the government’s lofty development targets for 2020. Economists are tracking energy consumption, poring over pollution charts, and studying data on traffic movements to discern how quickly the world’s second-largest economy can get back to business. Bloomberg Economics has estimated that the economy was operating at as much as 80% of normal capacity as of March 6. Millions of migrant workers who were left stranded by restrictions on travel imposed after the start of…

1 min.
what i’m telling investors

It’s human nature to live and react in the here and now. The challenge is complicated by the fact that the solution to most of people’s fears is to do nothing. It feels like an unsatisfying thing to tell people. People rarely remember that not everything they have is in the stock market. I’ll say, “You’re looking at what the Dow is doing, but you’re not only invested in the Dow. You have holdings in bonds and international equities. And you have cash—remember how we put that aside in a money market fund?” This is a double whammy, because it’s not only a market downturn but it’s also a health scare. It’s different than having a trade war. The stress level is higher because there are legitimate health concerns.…