Skip to main content
//empty //empty
Coronavirus information
Coronavirus information
The Zero Canada Project provides resources to help you manage your health, your finances and your family life as Canada reopens.
Visit the hub

The Atlantic report “The official Coronavirus numbers are wrong and everyone knows it” more or less charged the U.S. health system with incompetence. The story noted that fewer than 500 Americans had been tested for the virus when South Korean officials were testing 10,000 people daily.

Author Alexis Madrigal wrote, “Now that the U.S. appears to be ramping up testing, the number of cases will grow quickly. Public-health officials are currently cautioning people not to worry as that happens, but it will be hard to disambiguate what proportion of the ballooning number of cases is the result of more testing and what proportion is from the actual spread of the virus.”

The coronavirus is definitely spreading south of the border but because of the lack of testing, no one really knows where or how quickly.

Story continues below advertisement

Human psychology dictates that these types of information vacuums will often be filled with horror stories, and this tendency extends to asset markets.

Cataclysmic projections are everywhere in financial media. As an example, the usually levelheaded Mohamed El Erian, chief economic advisor at Allianz, is concerned about another financial crisis.

Specifically, Mr. El Erian’s fear centers around the ocean of investment grade corporate debt that “that hangs over the high-yield market like a Damocles sword.” A coronavirus inspired global economic slump could result in numerous corporate debt issues being downgraded from investment grade to junk status. This in turn would force portfolio managers to sell them into an illiquid market.

Jim Bianco, president and CEO of Bianco Research, envisions a different kind of investor nightmare. For Mr. Bianco, the equity market sell-off after Tuesday’s surprise rate cut by the Federal Reserve signals “a secular shift in thinking.”

Mr. Bianco worries that the coronavirus has so disrupted global supply chains that a process of de-globalization is set to begin. This potential trend, which would involve moving manufacturing operations from developing countries to cities closer to their home markets, would result in inflation pressures that would end the bull market.

In this scenario, he believes the price to earnings multiple for the S&P 500 will drop from current levels near 20 times, to between 12 and 15 times. This re-rating would see the market drop further by 20 to 30 per cent.

It’s the information vacuum – the inability to predict the course of the epidemic – that makes these dreary forecasts sound more plausible.

Story continues below advertisement

There are good reasons to read credible bearish forecasts. Investors can track the spread on BBB-rated corporate bonds, for instance, and if it widens quickly Mr. El Erian’s worries become more palpable, and may require portfolio de-risking.

Investors should remember however that even if we are more susceptible to negative outlooks in the current environment, the optimistic forecasts are just as likely to be accurate when no one knows what’s going

-- Scott Barlow, Globe and Mail market strategist

This is the Globe Investor newsletter, published three times each week. If someone has forwarded this e-mail newsletter to you or you’re reading this on the web, you can sign up for the newsletter and others on our newsletter signup page.

Stocks to ponder

Harvest US Investment Grade Bond Plus ETF. It’s easy to understand why we’re seeing the launch of more fixed-income funds. One that recently came to my attention is of special interest to investors looking for a bond ETF that offers a decent yield and, as a bonus, has a socially-responsible mandate. Gordon Pape takes a look.

Story continues below advertisement

The Rundown

Coronavirus fears fuel massive surge in ETF trading

As the shock of a potential pandemic ripples through the global financial system, investors are flocking to exchange-traded funds to move unprecedented sums of money. Last week alone, when U.S. stock indexes had their worst week since the global financial crisis, ETFs on American exchanges traded a record US$1.4-trillion, more than quadrupling the weekly average. Tim Shufelt looks at the trend.

Income-seekers, this stock market correction’s for you

Income investors with cash on hand are big winners in a stock market decline like we’re seeing right now. Rob Carrick looks at four stocks to keep an eye on as falling markets drive their dividend yields higher.

Timing the stock market simply does not work

Story continues below advertisement

The turmoil in the stock market over the past week was triggered by the coronavirus and the fears of a pandemic. The impact on people’s health, the economy or the stock market – at least in the short run – is unknown. Fear of the unknown is a common trait and it is compounded by the challenge that many investors believe that they can time the market – get out now and get back in when the markets start to recover, writes Sam Sivarajan.

Others (for subscribers)

Wednesday’s analyst upgrades and downgrades

Wednesday’s Insider Report: Chairman invests over $2-million in this safe-haven play

Tuesday’s analyst upgrades and downgrades

Tuesday’s Insider Report: Company leaders top up their positions in these 3 dividend stocks

Story continues below advertisement

Is this the end of value investing or the beginning of a golden period for value stocks?

What the U.S. bond market is saying about investors’ hopes

Others (for everyone)

Top U.S. stockpicker Michael Baron bets on research, not nerves

Monday’s sharp rebound may not be sign that market volatility has ended: experts

Is it a currency? A commodity? Bitcoin has an identity crisis

Story continues below advertisement

Globe Advisor

Are you a financial advisor? Register for Globe Advisor (www.globeadvisor.com) for free daily and weekly newsletters, in-depth industry coverage and analysis, and access to ProStation - a powerful tool to help you manage your clients’’ portfolios.

Ask Globe Investor

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.

What’s up in the days ahead

Click here to see the Globe Investor earnings and economic news calendar.

More Globe Investor coverage

For more Globe Investor stories, follow us on Twitter @globeinvestor

Click here share your view of our newsletter and give us your suggestions.

You may also be interested in our Market Update or Carrick on Money newsletters. Explore them on our newsletter signup page.

Compiled by Globe Investor Staff

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies