Coronavirus will send US GDP down a startling 13%: Deutsche Bank predicts

[dBSPL]

Add another jaw-dropping call to those circling Wall Street as fuel for the bears dominating the current bear market in risk assets (the other one being U.S. Treasury Secretary Steven Mnuchin looking for a 20% unemployment rate sans a coronavirus fiscal relief plan).

Deutsche Bank’s global economics team is out with a note Wednesday calling for U.S. GDP to crash 13% on an annualized basis in the second quarter. To put that into perspective, Deutsche Bank notes the rate of decline would be more than one and a half times the sharpest contraction during the 2008-2009 financial crisis (an 8.4% annualized plunge in the fourth quarter of 2008). Looked at another way, a 13% drop in U.S. GDP — spurred by the coronavirus outbreak causing businesses to grind to a halt as people quarantine and travel is restricted —would mark the sharpest contraction in the post-World War period.

“The U.S. economy is currently undergoing a truly unprecedented shock that is likely to continue for some time with the spread of the virus set to accelerate further in the coming weeks,” the Deutsche Bank team writes.

Trader Gregory Rowe works on the floor of the New York Stock Exchange. (AP Photo/Richard Drew, File)


On a positive note — because society could use one right now — Deutsche Bank envisions second half GDP growth accelerating to nearly 5%. For the full year, GDP growth is seen contracting by 1%.

To be sure, investors will have a tall order on their hands in coming weeks.

New macroeconomic data from around the globe could be shocking and mirror the tone of Deutsche Bank’s GDP call. But that must be stacked up alongside an S&P 500 that is well in bear market and stock multiples on many high quality companies not being this cheap in more than a decade. And keep in mind, the global economy will likely return to growth later this year as fiscal and monetary policies run their course along with the coronavirus.

So the million dollar question is whether to buy stocks into the spate of dreadful economic news or wait for the definitive all clear sigh. Judging by the S&P 500 futures hitting limit down yet again today, investors are nowhere near ready to back up the truck on stocks.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

https://finance.yahoo.com/news/coro...ling-13-deutsche-bank-predicts-104934074.html

 

[kaykay]

No country will face it alone. Everyone will suffer.

 

[Juggernaut_Flat_Plane_V8]

Shubh Shubh Bolo----> you donot go down to minus 13 percent without a few million starvation deaths along the way.....Phacck it...Kuch Bhi....Now Deutsche Bank is just spreading panic!! Do remember around three hundred years back, an enterprising Jew from Deutsche Bank's hometown broke out to make one of the greatest empires in the world, in similar uncertain times...

 

[F-22Raptor]

People do realize this will destroy the ENTIRE global economy right? No one is escaping this.

 

[SD 10]

People do realize this will destroy the ENTIRE global economy right? No one is escaping this.

but then you are the same person calling for chinese economy to suffer because of corona virus. hypocrite!

 

[dBSPL]

Shubh Shubh Bolo----> you donot go down to minus 13 percent without a few million starvation deaths along the way.....Phacck it...Kuch Bhi....Now Deutsche Bank is just spreading panic!! Do remember around three hundred years back, an enterprising Jew from Deutsche Bank's hometown broke out to make one of the greatest empires in the world, in similar uncertain times...

Deutsche Bank's EU region estimate is ( - ) 24%. In other words, a much worse scenario is foreseen than the USA. As you know, there is a full blood bath in the markets. This situation cannot be maintained. Frankly, I don't think this news has any panic value. There must be a glimmer of hope in the markets.

 

[F-22Raptor]

but then you are the same person calling for chinese economy to suffer because of corona virus. hypocrite!

Ive clearly stated before this is effecting the ENTIRE global economy including China. I post those Chinese articles, so the PDF Chinese Brigade understands this is a global event and no one is escaping this.

 

[dBSPL]

There is another subject I have been lazy to write for a long time. Everyone talks about Italy's coronavirus struggle. But there is something another we forgot. Before this epidemic started, the Italian economy was on the edge of the cliff and and goverment had reach principal agreement with the EU on a huge financial package. In short, even if this outbreak not happaned, most probably Italians would pay very heavy prices. Now, the real economy has largely stopped in Italy. Italy will probably lose decades. However, the fact that the situation becomes more complicated with the epidemic will threaten the entire EU zone.