SUMMARY. Below, courtesy of CNBC, is a measure of the fear index or VIX. Simply put it measures volatility and level of downside "insurance" investors are taking to protect losses. As you can see we have match levels not seen since the last financial crisis where it peaked in December 2008. While the S&P 500 fell an additional 10% from that level a month after, it then bottomed and began its bull run. Whether the same thing will occur this time around time will tell, but what it does say is fear is at unprecedented levels. Today's record point drop had mainly to do with the Presidents comment on length of virus which "may last till August". Market's knee jerk reaction was to sell, but the comment, we believe meant the effects or cases will linger. However, not implying when they will peak, which some hope will be within next 8 weeks as do we.
INVESTMENT IMPACT. We continue to view the virus as blip on growth not the end of it. We remained focused on growth resuming in 2H20 vs the near term economic slow down as markets remain headline driven focused mainly on virus cases/death growth outside China. As a reminder the window before China's cases peaked was 8 weeks from when cases first accelerated thus we will likely see negative news flow for at least the next month on this front. As mentioned before, drug trial results will begin to get reported over next couple of weeks which may alleviate fears. In fact, as reported today a US drug company has entered into human clinical trials for a vaccine which should last for next 45 days. These generally take 12-18 months before approval, but given the national emergency we suspect that maybe considerably shorter. The administration has indicated potentially a vaccine maybe available by next flu season or 9-12 months away.
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