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Why haven't the markets reacted positively to this news?

ailideex 7y ago
You know, I read this, and then I read other things implying we will fix climate change from this crisis, and I wonder ... The markets has not reacted positively to this news because something possibly helping makes no difference. Actually making a difference to the situation makes a difference. Until the point where there clearly is something that makes a difference the outlook is really bleak.
- nikkwong 7y ago
  I suppose that may be the case. But let me play devil's advocate against it. Markets are supposed to price in values from expected future returns. Since this is "a cure", there should be positive sentiment for the future economic environment rather than the current negative sentiment. The paper says that people are being successfully treated with this medication. It sounds like a slam dunk and a definite end to all the uncertainty we're experiencing. It's somewhat akin to magically having a vaccine available today, no? A situation in which we'd expect markets to react positively. Maybe, this information has not disseminated widely enough in the media, and the markets are acting as a trailing, not leading, indicator.
  - nikkwong 7y ago
    After reading a bit more, maybe it's not such a panacea. Seems like it's standard of care, but may not help patients who have advanced symptoms; and, obviously, does not prevent infection. Therefore it may not stop us from imposing the preventative measures (quarantine, travel restrictions, the like) which are causing all the economic catastrophe. Still, seems like it would push a bit of a positive spin on things rather than allowing the economic free-fall we've witnessed.
cm2187 7y ago
Guessing why the markets do something is like reading the future in the guts of a chicken! But I think the market is reacting not to the virus, which by itself would have a limited economic impact (and if you think that it affects mostly the elderly, from a pure, cold economic point of view, would rather reduce the long term burden on healthcare, so would be a net economic benefit). I think the market instead reacts to the actions taken to contain the virus, which will likely severely supress the economic activity. Until there is any sign of these actions being reversed (and everything is pointing to the opposite, with France and the EU hinting at more restrictions yesterday), it is rational for the market to be bearish. Then as always there are other considerations, stocks were overly expensive, economic cycles, over leverage, etc.

You know, I read this, and then I read other things implying we will fix climate change from this crisis, and I wonder ... The markets has not reacted positively to this news because something possibly helping makes no difference. Actually making a difference to the situation makes a difference. Until the point where there clearly is something that makes a difference the outlook is really bleak.

nikkwong 7y ago
I suppose that may be the case. But let me play devil's advocate against it. Markets are supposed to price in values from expected future returns. Since this is "a cure", there should be positive sentiment for the future economic environment rather than the current negative sentiment. The paper says that people are being successfully treated with this medication. It sounds like a slam dunk and a definite end to all the uncertainty we're experiencing. It's somewhat akin to magically having a vaccine available today, no? A situation in which we'd expect markets to react positively. Maybe, this information has not disseminated widely enough in the media, and the markets are acting as a trailing, not leading, indicator.
- nikkwong 7y ago
  After reading a bit more, maybe it's not such a panacea. Seems like it's standard of care, but may not help patients who have advanced symptoms; and, obviously, does not prevent infection. Therefore it may not stop us from imposing the preventative measures (quarantine, travel restrictions, the like) which are causing all the economic catastrophe. Still, seems like it would push a bit of a positive spin on things rather than allowing the economic free-fall we've witnessed.

cm2187 7y ago

Guessing why the markets do something is like reading the future in the guts of a chicken! But I think the market is reacting not to the virus, which by itself would have a limited economic impact (and if you think that it affects mostly the elderly, from a pure, cold economic point of view, would rather reduce the long term burden on healthcare, so would be a net economic benefit). I think the market instead reacts to the actions taken to contain the virus, which will likely severely supress the economic activity. Until there is any sign of these actions being reversed (and everything is pointing to the opposite, with France and the EU hinting at more restrictions yesterday), it is rational for the market to be bearish. Then as always there are other considerations, stocks were overly expensive, economic cycles, over leverage, etc.