Investors Taking Shortest Route Out of Markets on Virus News: Economist

Channel: Bloomberg Markets and Finance
Published: 01/27/2020

Description
Jan.27 -- Peter Dixon, global equities economist at Commerzbank, examines market reaction to the spread of the deadly coronavirus. He speaks on "Bloomberg Surveillance."



Transcript
Peter, how do you adapt and adjust to virology yeah with great difficulty, as i think you can see from the market pricing i mean. Basically, we don't know very much. We know there's a problem, we don't have virile engineers or what the spread will be. Nor do we know, obviously what the long-term implications will be, or even a short-term implications for the chinese economy. So i think that, given ...
all of that markets are simply saying, look, we've had a great run. It probably is a good time to take some risk off the table. Texan profit we'll sit this one out and we'll come back potentially at some point in in the future. The trouble is, we don't know how long we're going to be out of the market, for we don't know how far the market will fall before things turn around. So it's a it's a it's an exceptionally difficult time and i think investors are simply just taken their the shortest route, which is out peter down two or three percent. Maybe we'll be down four or five percent. Who knows that's, not even a correction. Have we become completely immune to understanding and studying corrections or heaven forbid, a tangible bear market? Yes, i think that's a very good question.

Actually i mean how many times have we have? I sat in this chair over the years and said you know, markets look to be able priced and markets still continue to rise. Yeah. I think it's a very good point. You know we we have forgotten. Perhaps we've forgotten the fundamentals, but that's perhaps because the fundamentals aren't what they were. I mean we're living in a market which has been given life support by central bank liquidity for many many years, and there are no sounds of that. Turning around and as so long as you know, central banks remain in the game, absent any significant shocks such as this one, which turns into something you know much worse. There'S no real reason to expect equities to completely fall off a cliff.


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