Why Coronavirus is a Black Swan Event

As I’m obsessed about the global economic impact of the virus, I’m going to list some curated notes here that pertain to Covid-19’s impact on the global economy and stock market. This will provide a historical reference point for further researchers, analysts and economics enthusiasts.

This section will be updated on a regular basis. So you can bookmark this article. Coverage began on Feb 23, 2020.

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Mar 2–05:09 pm: OECD downgrades 2020 GDP growth

In the Interim Economic Assessment, the OECD said global GDP growth is projected to drop to 2.4 percent in 2020 from an already weak 2.9 percent in 2019. The forecast for 2021 was trimmed to 3.3 percent from 3.6 percent.

The novel Coronavirus presents the world economy with its greatest danger since the global financial crisis in 2008, according to the Organisation for Economic Cooperation and Development (OECD).

Mar 1–10:38 pm: China’s PMI Woes Worse than Anticipated

The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) showed China’s factory activity contracted in February, coming in at a record low of 40.3. Analysts polled by Reuters had expected the Caixin/Markit PMI to come in at 45.7.

Mar 1–6:18 pm: WTI breaks below $45 a barrel

Oil futures extended their steep losses, with the U.S. West Texas Intermediate crude falling below $45 a barrel, as fears of the coronavirus outbreak and what it could mean for crude demand continue to batter prices.

Mar 1–5:10 pm — Can the Stock Market Recover from Black Swan Correction Week?

The Dow and S&P 500 each dropped 12% and 11% for the week, respectively, marking their worst weekly performance since the financial crisis. Wall Street’s historic shake-up came as worries grew over the coronavirus’ impact on the global economy and corporate profits.

Mar 1–4:42 pm — A Zero growth Recovery?

Ed Hyman, a widely followed economist on Wall Street, said the coronavirus outbreak could end up causing a recession in the U.S. and slashed his U.S. GDP forecast to zero growth in the second and third quarters of this year

Mar 1–4:06 pm: Shockingly bad China economic data

China’s official Purchasing Managers’ Index (PMI), a gauge for its manufacturing sector, plunged to a record low of just 35.7 in February from 50.0 in January, the National Bureau of Statistics said on Saturday. Any reading below 50 signals a contraction.

Feb 25- 8:32 pm: Stock Market plunges most in 4 years due to Coronavirus fears.

Coronavirus wipes out $1.7 trillion in US stock market value in two days. The S&P 500 lost an estimated $1.737 trillion in value in two days, according to S&P Dow Jones Indices’ Senior Index Analyst Howard Silverblatt.

Feb 24- 2:15 pm: Coronavirus plunge wipes more than $250 billion from Big Tech stocks

Apple, Facebook, Amazon, Microsoft and Google-parent Alphabet collectively lost more than $250 billion in value as part of a broader market plunge.

Feb 24–1:02 pm: Wall Street Dow Jones 3% correction Occurs on Global Virus S

Stocks fell sharply on Monday, with Dow Jones Industrial Average losses reaching as much as 1,000 points at midday. The number of coronavirus cases outside China surged, stoking fears of a prolonged global economic slowdown from the virus spreading. This marks one of the single biggest one day drops in the last 3 years.

12:05 pm: Goldman cuts US first-quarter GDP forecast

Goldman Sachs lowered its U.S. growth outlook for the first quarter as the domestic economy takes a hit from the global outbreak. The bank slashed its U.S. GDP growth forecast to just 1.2% from 1.4%, seeing a more severe drag from the epidemic.

11:36 am: White House planning to ask Congress for emergency funds to fight coronavirus spread

The White House is planning to ask Congress to approve an emergency spending package to help the Trump administration battle the spread of the coronavirus.

Feb 23–7:49 pm: China’s Factory Return Very Gradual but Beijing is Still in Lock-down mode

On Feb. 20, daily coal consumption of six major power plants was 42.5% less than the same period last year, according to Japanese bank Nomura, which has been tracking such metrics daily.

So far this year, pollution levels have been between 20% and 25% lower compared to the same period last year, according to Tapas Strickland of National Australia Bank (NAB).

High frequency data such as pollution levels and traffic congestion gauges in Beijing do not at this stage corroborate the upbeat official message of Beijing.

Feb 23–3:03 pm: Air New Zealand cuts 2020 outlook

Air New Zealand cut its 2020 outlook, as the impact from the coronavirus and subsequent capacity reductions appear set to offset benefits from lower jet fuel prices, Reuters reported. The airline said the negative impact to earnings was between $22.2 million and $47.4 million, Reuters said.

Feb 23–12:25 pm: Mnuchin: Central bankers will look at options for responding to virus

Treasury Secretary Steven Mnuchin, speaking after a meeting of G20 financial leaders, told reporters that central bankers will look at options for responding to the virus as needed. “I’m not going to comment on monetary policy, but obviously central bankers will look at various different options as this has an impact on the economy,” he said.

Kristalina Georgieva, managing director of the International Monetary Fund (IMF), said at the G-20 summit on Saturday that the virus will likely shave 0.1 percentage points off global growth in 2020.

Feb 23–9:45 am: IMF chief sees negative economic impact from virus, even if outbreak contained

The coronavirus that originated in China will have a negative impact on the global economy even if it is rapidly contained, and it would be prudent to prepare for more significant consequences, the head of the IMF said. International Monetary Fund Managing Director Kristalina Georgieva, in a statement issued after a meeting of finance officials from the world’s 20 largest economies, called for coordinated action to contain the human and economic impact of the virus.

Feb 23–6:07 am: China’s Xi says coronavirus situation is still “serious and complex”

China is the epicenter of the new coronavirus, with 76,936 cases and 2,442 deaths on the mainland as of Feb. 22 (According to Chinese official numbers). Many businesses and schools remain shut, with economists predicting an economic growth slowdown for the country of 1.4 billion. SMEs in particular are at dire risk for going bankrupt.