In our January 8th 2020 commentary,
“Of Bubbles and Gum”
, we reviewed credit market conditions in the wake of the assasination of Iranian General Suleimani. Could this be the exogenous factor that sparks a Middle East war, and triggers a recession? Or will it fade quickly like so many other candidates?
We concluded with the following observation:
“Whether the Fed can continue mainlining enough liquidity all year to overcome any exogenous risks – bubbles or stickier stuff – remains to be seen.”
Little did we know, and as happens with these things, no one predicted, that
risk had already surfaced four weeks earlier. Not from mortgages, oil, high-tech, or leveraged loans, but a lethal virus originating in a seafood market in Wuhan, China...