{"id":164511,"date":"2020-02-06T09:30:00","date_gmt":"2020-02-06T14:30:00","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=164511"},"modified":"2020-02-06T07:46:23","modified_gmt":"2020-02-06T12:46:23","slug":"coronavirus-markets-rally-is-it-growing-bubble-or-knee-jerk-reaction","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/02\/coronavirus-markets-rally-is-it-growing-bubble-or-knee-jerk-reaction\/","title":{"rendered":"Coronavirus: Markets rally – is it growing bubble or knee-jerk reaction?"},"content":{"rendered":"
February 6, 2020<\/div>
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By George Prior<\/strong><\/p>\n

Global financial markets are shrugging off uncertainty regarding the serious and ongoing international issue of the coronavirus outbreak \u2013 but beware of a bubble, warns the CEO of one of the world\u2019s largest independent financial advisory organizations.<\/p>\n

The warning from the chief executive and founder of deVere Group, Nigel Green, comes as U.S. stocks closed on Wednesday at record highs, and as the FTSE 100 and European stocks staged a comeback after taking their cues from Asian markets.<\/p>\n

The markets\u2019 reaction is in response to claims by China that they are progressing towards a coronavirus vaccine and to the plans by the country\u2019s central bank to support the vulnerable economy by pumping in liquidity.<\/p>\n

Mr Green says: \u201cA serious and ongoing issue, such as coronavirus, and the major uncertainty it causes, would typically send global financial markets in to a tailspin.<\/p>\n

\u201cWhilst the coronavirus remains the number one threat to financial markets currently, they seem to be buoyed on Chinese state media reports of a breakthrough in attempts to find a cure to the current strain.<\/p>

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\u201cHowever, these claims have been largely dismissed by the World Health Organization, confirmed cases and the death toll are rising, and countries across the world are ramping up precautions and preparations for coronavirus.\u201d<\/p>\n

He continues: \u201cWith this in mind, the question is posed: Is this a simple knee-jerk reaction from the market on some positive news? Or is there a classic bubble situation developing in some financial markets?<\/p>\n

\u201cIt would seem investors are showing signs of displacement- when they become enamored with a new invention, technology or, in this case, a cure \u2013 which can lead to a boom and euphoria, when asset prices skyrocket. These are all stages of a classic bubble situation.\u201d<\/p>\n

Mr Green adds: \u201cInvestors should monitor the situation carefully.\u00a0 The true economic fallout of the coronavirus outbreak will not be known for some time.<\/p>\n

\u201cHowever, we do know that it is going to have a serious, negative and far-reaching impact on China\u2019s economy, which is already severely burdened by the prolonged trade dispute with the U.S.<\/p>\n

\u201cOf course, this multifaceted, downside trajectory of the world\u2019s second-largest economy can be expected to have adverse knock-on effects for the fragile and largely interdependent global economy. Indeed, it could stall it.\u201d<\/p>\n

The deVere CEO concludes: \u201cKnee-jerk reaction or growing bubble? Time will tell.<\/p>\n

\u201cBut despite the alleged progress on coronavirus and despite the stimulus announced by China\u2019s central bank, China\u2019s already fragile economy, and the flimsy phase-one U.S.-trade deal could create the perfect storm to trigger a significant economic global slowdown.<\/p>\n

\u201cThis would suggest that investors should now take steps to mitigate risks to their wealth.\u201d<\/p>\n

About:<\/strong><\/p>\n

deVere Group is one of the world\u2019s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.\u00a0 It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement<\/p>\n

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By George Prior Global financial markets are shrugging off uncertainty regarding the serious and ongoing international issue of the coronavirus outbreak \u2013 but beware of a bubble, warns the CEO of one of the world\u2019s largest independent financial advisory organizations. The warning from the chief executive and founder of deVere Group, Nigel Green, comes as […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-164511","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164511","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=164511"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164511\/revisions"}],"predecessor-version":[{"id":164512,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164511\/revisions\/164512"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=164511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=164511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=164511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}