‘Coronavirus’ is Biggest Risk for Markets: Meghan Shue

Coronavirus is the biggest risk for markets, as warned but Wilmington Trust’s Meghan Shue believes that the epidemic is a huge wildcard for Wall Street.

 

She said that if the infectious disease keeps spreading, then the stocks are in real trouble.

The firm’s head of investment strategy told on Monday that, “Coronavirus outbreak remains one of the biggest risks to market at this point,”

“I don’t think we know enough to know whether we are out of the woods as of yet.”

 

US stocks kicked off the week in the record territory, for the S&P 500 and tech-heavy Nasdaq in spite of the fears of coronavirus. Dow surged 174 points by closing on Monday’s trading within a hair of its record high.

 

Shue has $113 billion in assets under the management, expects the elevated market volatility until the number of coronavirus cases peak. She finds historically that the market doesn’t bottom until similar outbreaks reach a top.

She said,

“On the international front, we are watching coronavirus very carefully,”

“U.S. economy is certainly more insulated from impact of any international slowdown, but not necessarily the S&P 500 but the economy as a whole.”

 

Shue also sees that the two key things to consider in this scene that how much the virus spreads outside China, and the impact on supply chains.

 

She further added that,

“From what we’ve been hearing, the larger technology companies and semiconductor companies have been able to manage this so far. But we’re getting new information daily,”

“So, everything I am saying is with a healthy dose of humility, that we still don’t know everything and there is to know about its global impact that this disease will have.”

 

In spite of her concern, Shue is still overweight on the US stocks. And the base case is that the coronavirus outbreak will plateau this quarter, and she thinks that the global economy will quickly rebound.

 

As Wilmington Trust’s Meghan Shue expects  some further volatility, some more choppiness,but over the next 12 months, but she adds that they are still optimistic on equities.