According to the United Nations, Covid-19 has cost the global economy $50 billion in just exports in February alone. A recent Bloomberg estimate sees the cumulative damage to the entire global economy coming in at around $2.7 trillion.
we’ve experienced one of the most severe stock market crashes in modern times. Indeed, the current sell-of has been one of the sharpest declines in history since 1929.
GOODS
Last month Chinese manufacturing activity dropped to all-time lows. This is certain to affect the nations that China imports intermediate goods from and exports intermediate goods to.
Intermediate goods are goods that are used in the production of other finished products and can range from hard and soft commodities such as metals and soy beans, through to plastics used in manufacturing and active pharmaceutical ingredients (APIs) used in the production of drugs, all the way to finished car engines and LED screens.
According to the World Bank, China imports the greatest amount of its intermediate goods from South Korea, Japan, the United States and “other” Asian states. Additionally, it exports its greatest volume of intermediate goods to the United States, Vietnam, South Korea and India. The coronavirus is already affecting these deeply intertwined trade relationships and is almost certain to have a far-reaching influence on entire supply chains and final markets of a plethora of finished goods.
We’re also seeing the first signs of nations hunkering down to protect their own best interests. India’s restriction of pharmaceutical exports is a perfect example of this.
CRUDE OIL
We’ve now seen historic drops in both the stock and energy markets in the past weeks. It was widely expected that the coronavirus would cause a big shock to global oil markets.
It will potentially have immense consequences hurting many areas of the global petroleum industry but there are also likely to be far broader geopolitical effects. For one, this could be the event that breaks US shale oil. It’s widely known that US shale firms are highly over-leveraged and unable to maintain profitability at oil prices below $40 per barrel. We could be looking at the end of this recent period of American energy self-sufficiency, which is problematic to say the least. The interconnections and possible implications are seemingly endless.
S&P500
The S&P dropped 30% in less than 3 weeks. Recently we have seen what looks like a pronounced correction, with its biggest weekly gain since 1974 as the Federal Reserve delivered another wave of stimulus to cushion the economic impact from the Covid-19 pandemic, but we could be witnessing the beginning of something worse yet.
BITCOIN
However, blockchain may still have a chance to flourish during these times of crisis.
The recent COVID-19 outbreak is an event at risk of a so-called “black swan” tail because it is an anomalous value. it is necessary to recognize the ability of Bitcoin (BTC) to hedge the risk of the stock market, in fact, some economists and researchers refer to Bitcoin as “digital gold” and exposed to tail-risk only within the cryptocurrency markets, but it is not exposed to tail-risk compared to other asset markets, such as equity markets or gold.
Thinking positive of blockchain to Turn Crisis into Opportunity!
