Saudi Arabia kicked off an Oil price war in retaliation for Russia not supporting further production cuts. Oil dropped to nearly $27/barrel before settling around $31. This is the hardest drop in Oil since the commodity collapse of Feb 2016. (see chart)
The S&P 500 broke below its 2 year moving average and so far is finding backing near 2018/19 support levels at ~2450. This was also support during the May 2019 selloff caused by the initial Chinese Trade Deal Renege.
The VIX has spiked to volatility levels not seen since Oct 2008.
I have no idea where the bottom will be. The hysteria will likely get worse because the death toll hasn’t even reach 4,000 out of a global population of over 7 billion. At the risk of being heartless, and stating the obvious, I won’t point out the long term positive economic benefits caused by a “thinning of the herd” tragedy. If you’ve read beyond the headlines, cryptically hidden at the bottom of articles you might have seen a statement like this one referencing Italy’s COVID-19 death toll:
“National Health Institute chief Silvio Brusaferro said the average age of patients who have died was over 81. They were prevalently male and more than 80 per cent had more than two underlying health conditions.”
It would be crass to point out (so I won’t) that COVID-19 might actually pull Italy out of its demographic death spiral, preventing it from the otherwise inevitable pension/healthcare bankruptcy. [This of course, is crazy talk.]
What I will point out, is that during the dark days of the 2016 Oil crash (and all the other crashes that preceded it)…the market not only recovered, but bounced back with a vengeance.
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