Investors Should Prepare for a Coronavirus-Induced ‘Vicious Spiral’ More Than Twice as Bad as the Financial Crisis, Says J.P. Morgan

The current shock originated in the consumer sector, which accounts for 70% of GDP

by Chris Matthews
Market Watch

There is a widespread view on Wall Street that the stock market hit its lowest level of the bear market last month, and that a combination of an ebbing of the coronavirus in late spring and unprecedented fiscal and monetary stimulus will set the stage for a sharp rebound in corporate profits later this year.

On Monday, the Dow Jones Industrial Average, the S&P 500 index and the Nasdaq Composite Index were each rallying more than 4% on these hopes.

However, Mislav Matejka, head of global equity strategy at J.P. Morgan warned investors in a Monday research note that there is a significant chance the global economy experiences “a vicious spiral, which is typical of recessions, between weak final demand, weaker labor markets, falling profits, weak credits markets and low oil prices.”

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