Covid-19

[thinknotleft]

The movement of the "defensives" in the last 10days or so, seems to suggest some sort of contagion on-going OR certain money moving away. People are actually selling what they can sell, ie the defensives. This certainly brings me back to some of the contagion that we experienced back in GFC2008. It does remains to be seen how far this sort of "contagion" can go but the old adage "in a crisis, all correlations go to one" come true again.

There seems to be capitulation in the markets in the last 2-3 days. Capitulation is usually seen in market crashes like GFC 2008.

Was thinking that it could be due to funds selling out to raise cash urgently for various reasons (to cover their margin, to mend their losses elsewhere etc). And traders shorting the market further. 

Heard an online podcast that it is surprising that we have not seen any funds going down yet. I was thinking that yes, we have not heard any hedge funds going down. But we have seen Italy nationalising their airline. There are also news reports that some airlines will go bust without bailout.