“There are decades where nothing happens, and there are weeks where decades happen.”
– Vladimir Lenin
Poetically, today’s market volatility (a proverbial day where a decade is happening) is heavily a result of actions from Russia, Lenin’s motherland. After Russia rejected an oil production cut plan from OPEC late last week, Saudi Arabia launched a full-on “price war,” cutting prices for a barrel of oil by $6-$8 over the weekend. With production ramping up at the exact moment that demand is drying up due to coronavirus fears, the oil market has gone into a tailspin, collapsing by over 20% so far today to trade down nearly 50% on the year to date.
Combined with this weekend’s dour headlines around the spread of coronavirus, the massive move in oil has thrown global markets into sheer panic:
- Major European indices are trading down 5-7%, with US index futures flirting with limit down at -5%.
- Global bond yields are collapsing in a huge “flight to safety” bid. The…