I was given a recap of a call that Goldman Sachs held with its top investors regarding the economic impact of the Coronavirus. Here are my eight takeaways:
- Due to the Coronavirus disrupting Chinese manufacturing, they calculate that it will take up to six months for the supply chain to get back to normal.
- There is no organic problem with the financial system itself, so this is nothing like the underlying causes of the Great Recession in 2008.
- GDP in the United States will be down 2% this year. This is the lowest it has been in thirty years.
- The virus is primarily found in countries with colder climates (between 30 and 50 degrees latitude). As a result, it appears that it should slack off when the weather warms up.
- The stock market will recover in the second half of the year, but the S&P 500 will be down fifteen to 20%.
- 50% of Americans and 70% of Germans will come down with Coronavirus. This is due to the ease with which it moves from one individual to another.
- The virus is expected to peak over the course of the next eight weeks.
- Finally, they make the point that the impact of the pandemic is primarily psychological when it comes to the economy. Viruses have always been with us, so this is nothing new.