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Photo: Anthony Wallace/AFP via Getty Images

Worries are growing that the economic impact from the novel coronavirus outbreak will be worse than expected and that markets are being too complacent in factoring it in as a risk.

What's happening: The number of confirmed cases has already far outpaced expectations and even those reports are being viewed through a lens of suspicion that the Chinese government is underreporting the figures.

  • Yet, U.S. stock indexes have continued to hit all-time highs, bond spreads remain compressed, and even some Asian bourses have recouped losses that followed the initial coronavirus headlines.

Driving the news: Of the 364 companies that have held Q4 earnings calls, 138 cited the term “coronavirus” during the call, and about 25% of those included some impact from the coronavirus or modified guidance due to the virus, according to FactSet.

  • Apple was the latest, saying Monday it would not meet quarterly revenue expectations due to limited iPhone production and Chinese demand.

What they're saying: "This will eventually end badly. I have never in my career seen anything as crazy as what’s going on right now," Scott Minerd, global CIO of Guggenheim Investments, writes in a note. "The cognitive dissonance in the credit market is stunning."

He's not alone: "The ramp up in China will take much longer than many expect because of the need to prevent a secondary flare up in contagion," Diane Swonk, chief economist at Grant Thornton, said on Twitter.

The state of play: "By most estimates, if the Chinese extend the lunar new year by two weeks it would not meaningfully impact the global supply chain, but if it went beyond two weeks then we would start to see problems for materials and consumer goods outside of China," Minerd argues.

Between the lines: It's been about two weeks and things don't look great.

  • Hong Kong, already coping with the economic damage from its months-long protests, now is facing wide-ranging shortages of basic household and cooking supplies.
  • High-tech industrial parks in Chinese manufacturing hubs like Shenzhen have just reopened but are facing a "severe" worker shortage, as many are stuck in their hometowns and factories remain idle.

Details: Minerd predicts that the "impact of all this on corporate profits and free cash flow will be dramatic," warning that China's first quarter GDP could fall as low as -6% annualized in the first quarter and oil could drop to $25 a barrel.

The bottom line: "We are either moving into a completely new paradigm, or the speculative energy in the market is incredibly out of control," Minerd says.

  • "I think it is the latter. I have said before that we have entered the silly season, but I stand corrected. We are in the ludicrous season."

Go deeper: Apple will miss quarterly earnings estimates due to coronavirus

Go deeper

Rep. Sean Patrick Maloney elected chair of House Democrats' campaign arm

Rep. Sean Patrick Maloney. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

Rep. Sean Patrick Maloney (D-N.Y.) on Thursday was elected chair of the Democratic Congressional Campaign Committee for the 2022 cycle, narrowly defeating Rep. Tony Cardenas (D-Calif.) 119 to 107, Politico reports.

Why it matters: Maloney will be tasked with protecting House Democrats' slim majority in 2022 after they underperformed in November's election, losing seats in down-ballot races across the country.

1 hour ago - Health

Vaccine shipment companies targeted by cyberattacks, IBM says

Illustration: Sarah Grillo/Axios

A global phishing campaign has been trying to gain information from organizations working to ship coronavirus vaccines since September, IBM's cybersecurity arm said on Thursday.

Why it matters: Successfully distributing a COVID vaccine will already be challenging for the U.S. and other wealthy countries, especially to rural areas with less resources — while poorer countries are expected to have delayed access.

Fauci to meet with Biden transition for first time

Anthony Fauci. Photo: Win McNamee/Getty Images

The government's top infectious-disease expert Anthony Fauci will stay on at the National Institutes of Health and plans to meet virtually with President-elect Joe Biden's transition team for the first time Thursday to discuss the coronavirus response, he told CBS News.

Why it matters: Fauci, widely viewed as one of the country's most trusted voices on the coronavirus, said it will be the first "substantive" conversation between he and Biden's team. He said he has not yet spoken with Biden directly, but has connected several times with incoming White House Chief of Staff Ron Klain.

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