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Analysis: "The risk of global recession has increased"

2020-02-28T20:30:37.263Z

The worst week on stock exchanges around the world since the financial crisis of 2008. The same concern that prompted some people to start bunking water and face masks now leads investors to flee the stock market to what is perceived as safe.



Here in California, tourists have fled San Francisco's Chinatown, authorities have close to 8,400 people under surveillance after flying domestic flights and a first case of contagion where the source cannot be traced. Companies in the United States are urged, just as in Europe, to review their teleconferencing opportunities. Service trips and amusement trips are canceled.

Don't just depend on the virus

So let me be clear; The stock market race worldwide is not about economies around the world being paralyzed due to the number of sick people in the corona virus. Right now it is a matter of concern that the actions taken by individuals and companies to limit the disease also lead to people and companies isolating themselves, and thus it can start to cripple the economic activity in the world.

You have neither the desire nor the opportunity to buy a new kitchen, a home or a car if you do not get or do not want to go outside your home. And closed workplaces and factories around the world can result in fewer things being manufactured. Concerns about the infection and the restriction of the spread of infection can then be found not only in China's economy but also in other countries' economic growth figures.

The risk has increased

Menstrual concerns in the United States are not just due to the corona virus. The valuations on the stock exchange have long been seen as high based on the results made by the companies. And for some investors, the concern over the corona virus's impact on the world economy is a sign that it's time to hedge profits and sell. Independent candidate Bernie Sanders' win in the Democratic primary in Nevada may also have lowered the stock market mood here somewhat, as he can be seen as hostile to business.

There are many economists who are now reassessing their analyzes of global growth. Leads quietly in factories in China, and concerns about the global economy lead to a small short-term correction or one to a deeper global recession. The risks of the latter have increased, but yet no one knows how the corona virus affects the companies' ability to do business and our willingness to let life go on as usual. Because that is what ultimately shows whether those who now press the stock exchange's sales button are right.

Source: svt

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