Leap days occur every four years to synchronize our calendar with the actual time it takes for Earth to orbit the sun—365.2421 days to be exact. The difference may seem small, but a quarter of a day annual imbalance adds up so leap days exist to ‘correct’ the timing of this rotation. Financial markets experienced their own ‘correction’ this week, as the spread of the coronavirus ‘adjusted’ prolonged depressed levels of market volatility and heightened levels of complacency. The removal of overly bullish sentiment is healthy for the equity market, but the escalation of the virus presents a unique near-term downside risk catalyst for risk assets. The spread of the coronavirus is accompanied by a multitude of fears (e.g., human fatalities, contagion fears, slowing global growth), so we ‘leap at the opportunity’ to incorporate our thoughts on the virus into our investment views.
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