Panic in the markets leads to sharp price declines in all the leading indices, oil lost 10% and the fear index (VIX) jumped more than 50%.
Wall Street investors and traders are locking in the worst “Black Friday” since 1931, all that remains is to think about how to redistribute the economy cards and put things in order for the upcoming trading week.
What caused the sharp goal drops and what was all the fuss about? Symptom of uncertainty.
Like humans, the financial markets hate uncertainty, and a resurgence of the corona plague with a new variant called “Omicron” is creating great panic. The variant caught Europe unprepared and it can be understood that the citizens of the world have begun to write in their heads a pessimistic scenario about the ineffectiveness of the vaccine, while others try to maintain cautious optimism and say the worst is behind us, i.e. the vaccine is effective and excessive panic.
So is March 20 back in an upgraded version? The answer is no!
One needs to refresh the memory and understand that there is a huge gap between how the market got a new virus and alarming mortality data
In March 2020, the world arrived in a hysteria, (perhaps justified) characterized by the closing of the sky, the entry into closures, the cancellation of all gatherings and the dramatic damage to the economy, something we had not known before.
Today, the world feels more mature and experienced in the face of the epidemic, the ability to adapt to social changes such as imposing restrictions, working from home, distance shopping, wearing a mask and this even before we talked about having vaccines for the virus (which may be valid for the new Lorent). For any scenario for the simple reason, it is not related to the difference in the protein structure of the virus. So in the bottom line, there is nothing to compare the situation today to the situation in March 2020.
The variant “The Omicron” is reminiscent of the discovery of the Delta virus that dominates the world today and at the beginning of its path was called the “Indian variant”, and the world learned to live alongside it.
Is the panic justified?
Here, too, it is important to make order, and it is said “there is no wise man as one with experience.”
The Delta virus was discovered as early as November 2020 (a year ago) and on March 21 became widespread, on June 21 managed to spread and rule the entire world. Even then they said it was much more contagious, which turned out to be true, and some said the vaccine was ineffective, which eventually turned out to be incorrect.
In retrospect it can be said that the biggest difference between March 2020 and today is that then it took the world a year to make decisions, while this time, after several hundred verified in the world, many countries responded quickly and closed the airspace easily, at least until more information.
That is, beyond the fact that most of the world is vaccinated, the ability of all of us to cope with an increase in morbidity, there are drugs on the way, and the world responded quickly, one can learn that the rapid response will improve the world in relation to the delta eruption Cause for concern too much)
Temporary decline or trend?
Even after the markets’ panic on Friday, almost all indices are trading close to (very) high, in fact the markets are ripe for natural correction and the “Omirokon” trigger variant is an opportunity to get some air out and shake up the “stupid” money that has recently entered the market.
Therefore, it is likely that a correction of a few percent can continue until the fog of uncertainty passes, and therefore, there is room to be vigilant and take advantage of the declines if these continue to improve positions especially for those who have recently reduced risk and waited for this very moment.
.