FAST FIVE: The Uncertainty In China Is Kryptonite To Global Markets
The Uncertainty In China Is Kryptonite To Global Markets Authored by Charles Hugh Smith via OfTwoMinds blog, Few seem alive to the potentially consequential financial risks arising from uncertainties evolving in China.
One thing we know rather definitively is that markets don't like uncertainty: uncertainty is Kryptonite to markets.
Should authorities respond to exploding Covid caseloads with heavy-handed lockdowns, that will trigger production and shipping consequences for global trade.
If restrictions are relaxed, the healthcare consequences are also uncertain, as China lacks the facilities such as ICU beds in sufficient quantities to deal with a contagious virus spreading in a populace with very little immunity.
Indeed, from the point of view of asymmetric risks, the entire point of a market is to provide opportunities to limit risk by selling and/or hedging. The cost of waiting around is also asymmetric: only first-movers get high prices for at-risk assets and low prices for hedges.