Coronavirus stock market crash reminds this top strategist of 'a rolling financial crisis'

Brian Sozzi
·Executive Editor
Updated 3 min read
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The coronavirus bulldozer is rolling through global financial markets and when it runs out of gas is anyone’s guess.

“In terms of this being a rolling financial crisis, I think you could say that in the sense you have a rolling epidemic that’s causing a series of rolling contractions in economies and that’s creating credit stress. So there is a domino effect to this,” said JPMorgan Chase head of cross asset strategy John Normand on Yahoo Finance’s The First Trade. “The closest sign of a bottom would be if equity markets went down another 10% from where they are now. That means markets are pricing in a recession.”

Normand believes coronavirus infection rates need to slow substantially to signal to investors a market bottom has formed or is taking shape.

Up until then, Monday’s market action may be the new short-term norm for traders and investors. That’s especially so in light of the pipe-bomb Saudi Arabia tossed in global markets.

Oil prices cratered more than 20% on Monday following Saudi Arabia’s surprising decision over the weekend to slash prices. At one point Sunday evening, crude oil futures were down about 40%. An already jittery stock market was thrown into a tizzy.

A trader reacts during the opening bell at the New York Stock Exchange (NYSE) on February 28, 2020 at Wall Street in New York City. - Losses on Wall Street deepened following a bruising open, as global markets were poised to conclude their worst week since 2008 with another rout. (Photo by Johannes EISELE / AFP) (Photo by JOHANNES EISELE/AFP via Getty Images)

The Dow Jones Industrial Average crashed more than 1,910 points in early Monday afternoon trading, triggering the circuit breakers twice. At no point in Monday’s session have stocks staged any form of sustainable rally — sources have told Yahoo Finance we are witnessing the start of an investor panic.

In other words, the long sought after climax selling in the markets is not yet in sight.

“Time is going to help. That is unfortunately a tough thing for people to hear when markets are panicking, but we will get through this,” said CJ Lawrence portfolio strategist Terry Gardner.

Added Normand, “I think you are going to have another few months of turbulence even if you are going to avoid a recession.”

Comforting, not at all.

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.

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