Goldman Sachs ex-CEO Lloyd Blankfein predicts a 'quick recovery' for markets from coronavirus
- Former Goldman Sachs CEO Lloyd Blankfein expects global markets to rebound once the coronavirus threat fades.
- "Fear can take the market lower, but expect a quick recovery when the health threat recedes," he tweeted on Monday.
- Blankfein argued the US would bounce back thanks to its strong economy, well-capitalized banks, and its financial system not being overly leveraged.
- The Goldman chief predicted the US would avoid the systemic damage of the 2008 financial crisis.
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Lloyd Blankfein, the former CEO of Goldman Sachs, predicted on Monday that global markets will swiftly rebound from coronavirus.
The retired bank chief argued that equities, commodities, and other assets will bounce back once authorities get the outbreak under control. He predicted the US stood in particularly strong stead given its robust economy, its banks' substantial capital reserves, and the manageable level of debt in its financial system. He added that those factors will ensure the fallout isn't as severe as the financial crisis of 2008, which occurred while he was in charge of Goldman.
"Fear can take the market lower, but expect a quick recovery when the health threat recedes," Blankfein tweeted, shortening some words. "Especially in the US, the underlying economy is strong, banks well-capitalized, system not too leveraged. Unlike 2008, it will avoid systemic damage that could take years to work thru. Obviously, not ignoring tragic human toll..."
Blankfein's prediction is certainly bold, coming hours after coronavirus fears and the prospect of an oil-price war sent global stocks tumbling, oil prices plunging, and the entire US Treasury yield curve down below 1% for the first time.
Coronavirus - which causes a flu-like disease called COVID-19 - has infected at least 110,000 people across more than 100 countries. It has killed upwards of 3,800 people, the vast majority in China. The epidemic has disrupted global supply chains, interfered with businesses, and hammered consumer demand, leading the Organization of Economic Cooperation and Development to halve its global growth forecast for this year.
Blankfein told The New York Times last week that if coronavirus continues to spread, it could drive the business community to President Donald Trump. However, the outbreak could also make the president "look like an incompetent manager" if it worsens, he added.
