Stocktake: Coronavirus – bad for stocks but good for Bernie Sanders?

Billionaire bond manager Jeffrey Gundlach reckons commentators are overstating the coronavirus role in last week's sell-off, saying markets are also "digesting" the fact that Bernie Sanders will likely be the Democrats' presidential nominee. Gundlach's take is debatable – global markets were overwhelmingly focused on the coronavirus last week. Still, markets may focus on Sanders sooner rather than later.

Markets don't like Sanders's agenda but appear to assume he will be defeated by Donald Trump in November. That smacks of complacency. Trump has taken the credit for an improving economy and rising stock markets, but the coronavirus means investors have suddenly started worrying about a bear market and global recession.

As Bloomberg's John Authers notes, if there is a major coronavirus outbreak, "expect the stock market to dive further, and the president's chances to fall with it".

‘Fake news’

Trump appears keenly aware of this – too aware. Not only did he resume his stock market cheerleading last week, he blamed market falls on “fake news” outlets trying to make the coronavirus “look as bad as possible” and reportedly believes investors were spooked by warnings from the Centers for Disease Control and Prevention (CDC).

Stocktake: Buckle up for volatile markets

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Stocktake: Coronavirus begins to cause trouble for stocks

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Investors cut China GDP expectations to lowest level in four years over coronavirus

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Of course, focusing on the markets rather than the public health threat will not impress voters if the coronavirus ends up becoming an election issue. Political and economic uncertainty is rising; expect analysts to start paying more attention to Sanders’s political fortunes.