Wilmington Trust’s Meghan Shue warns investors will see two grim quarters of losses — not just one…. Goldman: Financial distress will continue to increase, leading to higher defaults and downgrades.

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Brace for Coronavirus Fallout to Take Stocks to New Lows

Wilmington Trust’s Meghan Shue warns investors will see two grim quarters of losses — not just one.

The firm’s head of investment strategy believes market losses will continue to pile up amid negative coronavirus data and headlines.

“GDP in the second quarter could be anywhere from negative 15% to negative 30%. That is a huge range which just speaks to the uncertainty facing investors at the moment,” the CNBC contributor told CNBC’s “Trading Nation” on Wednesday. “If this is something we can get our arms around in the next 90 days or so, we’re more likely to see the market bottoming in the second quarter.”

Stocks got crushed again Wednesday on fears the pandemic will close the economy longer than expected. Yet, Shue questions whether Wall Street is accurately weighing the risks.

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Worst Yet to Come For Junk Debt as Defaults Loom, Goldman Says

(Bloomberg) — The worst is likely yet to come for high-yield bonds as more defaults loom, according to Goldman Sachs Group Inc.

Such debt faces numerous headwinds, analyst Lotfi Karoui wrote in a note dated April 1. That’s even as the Federal Reserve’s unprecedented steps to pump liquidity into a financial system reeling from the coronavirus pandemic mean investment-grade bond spreads have likely already peaked, according to Karoui.

“Despite the strength of the policy support, the cyclical challenges for corporate borrowers remain substantial,” he said. “As has been the case in past downturns, financial distress will continue to increase, leading to higher defaults and downgrades.”

 

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