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A few weeks ago, most of us had never heard of a “coronavirus”—much less “2019-nCoV,” the precise term for the seventh known strain of coronavirus, which first appeared in humans late last year in Wuhan, China. Now, barely a month since it was first reported, the new virus has seized the attention of the world. It has infected thousands of people, disrupted the lives of hundreds of millions, and become a major market driver. And the outbreak appears to be accelerating.

At Bridgewater, we have been describing an impending paradigm shift in economies and markets as the forces that drove the environment over the last decade have reached their limits. Co-CIO Greg Jensen and Jason Rogers from our research team examine how the shock of the coronavirus has accelerated a shift that we expected would unfold much more gradually over time.

As we begin a new year, we wanted to step back and take stock of how unusually fast the global economy has changed over the past 15 years or so. Where growth is occurring and where wealth is held have moved so radically that relying on past market experiences to determine what is important to the global economy is particularly dangerous. The following Observations illustrates those gradual shifts in economic power that have compounded into a transformed economic world.

In Peak Profit Margins? A US Perspective, we discussed the secular rise in US profit margins and our view that many of the forces that have driven those margin increases should not be extrapolated forward. Without that consistent expansion of margins, US equities would be 40% lower than they are today. Margins have been rising for 25 years, and when we look at market pricing, it appears to us that the market is extrapolating further margin gains.

The market’s largest hedge funds have kept gender diversity in the spotlight as investors increasingly ask more questions about personnel statistics and efforts to recruit and retain talent. For the second year in a row, FundFire surveyed the largest hedge funds by assets under management as tallied by Preqin, with managers such as Bridgewater Associates, Baupost Group and Man Group outlining their diversity initiatives.