As news hits that more than 162 countries have reported cases of coronavirus, with death rates spiking in European countries and many cities, even countries, on total lockdown, central banks have proved the bears can growl.
The US Federal Reserve, disconcerted by unprecedented daily drops across the S&P 500 and the Dow Jones Industrial index, effectively cut its benchmark to zero. The benchmark US interest rate is now in a range of 0 to 0.25 per cent, down from a range of 1 to 1.25 per cent.
The Fed also announced a mammoth $700bn (£575bn) quantitative easing programme to shore up the economy at this time.
Meanwhile, a raft of emergency funding (created mostly by borrowing) has been offered to the UK by chancellor Rishi Sunak, who came into the role just a few weeks before the Budget – and before coronavirus became widespread across the globe.
While there is no change in the scale of QE, the Bank of England announced it will be introducing a new Term Funding Scheme with additional incentives for small businesses, which will provide an extra £100bn of funding. The bank also said it would cut the countercyclical capital buffer rate to zero, which could potentially release £190bn of lending to businesses.
Then the Bank of Japan moved to ease monetary policy by pledging to buy risky assets such as exchange-traded funds at double the current pace, joining global central banks in combating the widening economic fallout from Covid-19.
Japan's central bank also announced the creation of a new loan programme to extend one-year, zero-rate loans to financial institutions in an effort to boost lending to companies hit by the virus outbreak.
Whether these three bears' efforts, and others that will follow suit, will be enough for the airline industry – for whom a low oil price of $31.41 per barrel for Brent Crude (as at the time of writing) might not be enough to defend them against huge earnings losses – is another consideration.
No wonder many investors in large-cap passive funds are now wishing they had paid the extra for active management that could have avoided some of the high portfolio losses that tracker funds have exhibited the past week, although for many houses it's business as usual.
A black swan event is pretty rare, but as far as these birds go, we had two in the past 14 days, with Russia and Saudi-Arabia announcing an oil war, which, as mentioned, has resulted in the biggest drop in oil prices since the 1991 Gulf War.
