Pouring Oil on Troubled Waters

Pouring Oil on Troubled Waters

As if the coronavirus crisis wasn't enough of a challenge for the financial markets, the decision by Saudi Arabia to cut oil prices, and threaten to expand production adds another deflationary force in the global economy.. Brent oil prices have fallen close to $14 to $31 and mark the most significant fall in oil prices since 1991.. The virus puts political regimes under pressure to breaking point.. We expect the coronavirus issue to continue to weigh on markets with likely further downside in equities and credit markets.. Much will depend on how Europe and the United States handle the crisis - the omens don't look good.. As markets have started to begin to panic, Economists are finally starting to put more realistic numbers on the damage to the global economy.. The OECD last week lowered its global GDP forecasts by half a percentage point to just 2.4% the lowest rate since the world financial crisis.. Markets are at a critical juncture, and investors need to proceed, from with great caution.. Equity and credit markets were priced for goldilocks by the end of January this year.. Through either rate cuts or quantitative easing or both, it has been possible to backstop