The news regarding the omicron variant has shaken the global markets and policy makers all around the world over the last two weeks. Travel restrictions are back and so are covid measures and mandates in several parts of the world, including here in the UK. The markets have taken a hit. Dow Jones is down about 5% from its peak of over 36500 in November and Nifty 50 is down 7-8% from its high of 18600. However, amongst all this panic JP Morgan’s top strategist Marko Kolanovic has recommended buying the dip and went out to say how omicron could mark the end of the pandemic. He suggests that “Omicron could be a catalyst for steepening the yield curve, rotation from growth to value, sell off in Covid and lockdown beneficiaries and rally in the reopening theme.” This is primary because early indications show the variant is very transmissible but less severe. This fits in well with historical patterns of pandemics and omicron could transform a deadly pandemic into something like a seasonal flu, marking its end. On the other hand, Goldman Sachs has cut the forecast for the US economy saying that the omicron strain would exert a drag on growth. Who is right? What your thoughts on this? Are you buying dip, or staying away? Email us at [email protected] or reach out to us on our Instagram page @wetalkfin.
