Guggenheim’s Minerd Sees 10%-20% Chance of Global Depression
Guggenheim’s Minerd Sees 10%-20% Chance of Global Depression
(Bloomberg) -- The chances of a global depression are growing as the coronavirus spreads and forces economic contraction, according to Scott Minerd, chief investment officer of Guggenheim Partners.
“This thing could spiral into something akin to a global depression,” Minerd said in a Bloomberg Television interview on Monday. “That risk is not remote at this point. I would say we have at least a 10% or 20% chance of that.”
Minerd has warned for weeks that markets and the broader economy face shocks from the spreading coronavirus. Stocks plunged, credit spreads widened and volatility soared Monday following the Federal Reserve’s surprise announcement Sunday that it was cutting its benchmark rate to essentially zero.
Recessions in the U.S., Europe and Asia are near certainties amid travel bans, quarantines and other measures to reduce the spread of the virus, Minerd said. He spoke before President Donald Trump urged Americans to avoid travel and gathering in groups of more than 10 people.
Other comments by Minerd included:
- Spreads on sovereign debt in Asia and Europe have risen to massive levels that are “extremely disturbing” for countries including Italy, Indonesia, Singapore and the Philippines.
- It’s possible the S&P 500 Index could fall more than 50% below its peak.
- For bonds, it’s possible to “layer in” purchases to take advantage of lower prices, but too soon to jump in with both feet.
To contact the reporter on this story: John Gittelsohn in Los Angeles at johngitt@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Josh Friedman, Melissa Karsh
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