Worse than recession

In its latest repricing of the economy, the market sees the now-expected global recession caused by the coronavirus outbreak morphing into an economic depression unlike any the world has seen in generations, Axios Markets editor Dion Rabouin writes.

• Bankers and tradersare looking to sell everything that isn’t nailed down to boost cash positions and hunker down for the worst.

In a research note yesterday called “The Day the Earth Stood Still,” JPMorgan lowered its expectations for global GDP to contract for two consecutive quarters to -1.1% for the year, including a Q2 contraction of -14% in the U.S. and -22% in the euro zone.

• “There is no longer doubt that the longest global expansion on record will end this quarter,” the JPMorgan note says.
• Deutsche Bank economistsforesee a “severe global recession occurring in the first half of 2020 … quarterly declines in GDP growth we anticipate substantially exceed anything previously recorded going back to at least World War II.”
• Both banks noted their forecasts are based on governments putting in place massive, yet-to-be-passed fiscal stimulus programs and fairly swift containment of the outbreak.
• “It is easy to imagine a still worse outcome,” DB analysts, led by head of economics research Peter Hooper and seven chief economists, wrote.

The most dire warning came from Pershing Square Capital Management CEO Bill Ackman, who went on CNBC to beg President Trump to shut down the U.S. economy for 30 days and put the country in a nationwide lockdown.

• “Until a vaccineis manufactured, distributed and injected we will go through a Depression-era period in the country,” Ackman said. “America will end as we know it unless we take this option.”

Πηγή: axios.com