That was the week that was (also called TWTWTW, a 1960s TV show) – and what a week it was! The coronavirus has now caused 638 deaths (at the time of writing), and Hong Kong has imposed a 14-day quarantine on people arriving from China. What the economic impact will be on China and the world economy is of course an open question at this point in time. The Sars epidemic is estimated to have shaved a relatively meagre 0.1 percentage points off global GDP, and in that light we would discourage investors from over-reacting. Estimates regarding China’s GDP are for up to 2 percentage points off Q1 GDP compared to Q4, year-on-year (YoY), from 6% to 4%. Our Q4 2019 GDP forecast for China is, however, a rather modest 5.7% YoY, impacted also by the trade tensions with the US.

50% of S&P 500 companies have now released their 2019 Q4 results, with 70% beating analyst EPS estimate, which translate into an expected Q4 S&P 500 yoy growth just above zero for the time being. It is worth mentioning that 38% of companies that have already reported have mentioned concerns about the coronavirus on their Q1 earnings.

On 4 February, Tesla's market capitalisation was worth more than GM, Ford, and Daimler combined. Closing at USD 887, Tesla’s share price has doubled year to date and quadrupled since June 2019. The company is now worth more than USD 150 billion, representing around 50% more than Volkswagen AG and is the second carmaker globally by market cap, behind Toyota.

In Iowa’s Democratic Party caucus, a systems failure meant a delay in results, however, Pete Buttigieg was declared the winner narrowly beating Bernie Sanders on Thursday evening. This is quite a result by the former given the predominantly white state with many older voters in rural areas.

On Tuesday, President Trump’s State of the Union address avoided mention of the impeachment trial which acquitted the president on Wednesday.

Prior to that, on Monday, the Administration floated the idea of imposing tariffs on countries where the US deems their currencies to be undervalued. The newly brexited UK also dived head first into a trade debacle with the EU, raising market fears that a deal might not be reached by the end of the year.

Robust US jobs data released on Friday is helping push treasury yields higher. However, countering this is significant doubt arising from a rather muddied outlook for the global economy.

All of that created some notable swings in the financial markets which nevertheless now have shrugged off most of the risk aversion.