Fear has taken over financial markets as the coronavirus spreads.

Current prices for financial assets always reflect expectations for future conditions. Stock prices incorporate expectations for future profits and bond prices incorporate expectations for inflation. It appears both markets will open the week with expectations of the worse for the future. In the short run, valuations are driven by one of three emotions of investors. It is either fear, greed or apathy that dictate prices on a daily basis. We have experienced the environment of greed in the past year as stock prices soared. That has now reversed with fear dominating investor attitudes. The fear is that economic conditions will be impacted by the spread of the coronavirus .