Many companies are yet to report their first quarter 2020 earnings.
What will be the effect of the coronavirus disease COVID-19 on company earnings globally?
I estimate in the first quarter of 2020 the earnings of major companies in USA, Europe and Asia will fall around 40% compared year on year to the first quarter of 2019.
This, as a rule of thumb, basically means the stock market capitalizations of both large and small companies in USA, Europe and Asia have to fall around 40% to reflect their true intrinsic value. Yes, the central bank of the USA the Federal Reserve and the central banks of Europe, Japan and China are embarking on quantitative easing measures like printing money and cutting rates to bolster the economy and thus supporting stocks. But unless central banks embark on directly buying stocks massively, central banks would not be able to stop the coming fall of stock market prices globally.
In my opinion, to reflect their real intrinsic values the major US, European and Asian stock market indices have to fall by 30% to 40% from current levels. So the stock market capitalizations of major companies in USA, Europe and Asia can fall by circa 30% from current levels,
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Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
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Respectfully yours,
Petar Posledovich
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