Why the Stock Market Isn’t Too Worried About Coronavirus

The US economy is not sound and the virus will be the perfect cover to hide that simple fact. It will be the excuse used and oh, my all those commentators that told you jump in now will not only tell you to jump out, but will go on about how the economy has had cracks for so very long and now they are exposed. Read those same brains will be on the bandwagon prior to every crash and then when it happens will shout how they knew all along. America is the land of the con man and fraudster from the economy to religion and so on. Hey, want to buy some Beanie Babies I have a basement full. Great investment. Jim Trautman

Feb 24 This story got dated fast.

The stock market wasn't too worried about the coronavirus four days ago. Nothing to worry about says Neil Irwin soothingly. "Wall Street, in the end, mostly ignored it." "This buoyant mood in the stock market has continued even as economic forecasters have downgraded their projections for global growth in 2020 and warned that in less likely but more grim scenarios, the world economy could face a major hit as commerce sputters in affected regions." I am betting dollars to donuts the soothing words will continue so the gullible will leave their monies invested while the savvy join the gold rush. What goes up always comes down no matter how much hot air your pump into the balloon.

It's called the FED put; the belief the FED will bail out Wall Street if the market crashes, credit freezes or the economy turns sharply lower. Judging from past experience, the Street is right about this but as financial firms say in their disclosure; 'past performance is not indicative of future results'. The Coronavirus has significantly more potential for economic harm than currently quantified because we know China will not be forthcoming now..or in the future. What we also know is the FED is gunning the equities markets with significant short term liquidity; nearly zero interest for short term money which is then fed into machine learning algos that buy, buy, buy. The current low-participation rally is ripe for a 10% sell-off but cheap money will drive more buying, trapping short interests until they give up...and drive the market higher. This is no market for retail investors.

Obviously an article written on 2/20 is contradicted by the facts 4 days later. The market as a phenomenon of surface cannot ever reveal the inner causes of crises. Now everyone will blame the virus when stagnation was already evident in 2019 figures of industrial production. That’s a better indicator and closer to the essence

The jury is still out Neil. While you may be right in the long run, the Dow industry futures as of Feb. 24 morning are down 800 plus points as I write this post on the fears of the virus spreading after Italy announced a major surge.

It will take a COVID-19 outbreak in a major heartland city to crash the market. Pick one at random - say Kansas City or Memphis. Both are hampered by their surrounding areas split between several states, like many major metros, which will confuse official actions. Both are critical transportation hubs - every FedEx air package goes through Memphis, and K.C. is a major agricultural products shipping hub. Locking one of these cities down will ripple across the U.S. economy. It just happened in Milan, Italy. No reason it couldn't happen in Kansas City, Memphis, or elsewhere. Then the stock market goes kaboom.

I am starting(two weeks ago) dumping equities and buying bond funds. The market will be adversely affected by the virus very dramatically and quickly starting in early March. The only upside is Trump will lose his cool and the election.

The Republican goal is to make super easy money, leaving no room to correct for upcoming issues. Let Trump lose, then use the Senate to ensure any Democrat who is president will not be able to correct for any downturn caused by climate disaster, or coronavirus or financial fraud. Force a significant downturn. Blame it all on Democrats. Retake the House and Senate and Presidency based on their forced destruction of so-called "Democrat economy". Finish the job of destroying the US Government's ability to respond quickly and intelligently to future challenges. Why do a few very wealthy people wish to inflict huge damage on the US economy? Possible answer: they are focused on a fossil fuel based economy and income streams, and wish to postpone a reckoning as long as possible. Any actual, knowledged and fact based government and administration would be forced respond to the near-existential threat of climate change. Republican leadership is determined to destroy this ability. Anyone else have a better theory that is consistent with observed facts and behaviors?

There are lots of things that Wall Street is not taking seriously, not just Covid-19. Have you heard about climate change and the inexorable flooding of all coastal cities? How about the multi-million climate refugees? Of course, that will not occur this quarter. Its effect will happen in a couple of years so why worry.

I am starting(two weeks ago) dumping equities and buying bond funds. The market will be adversely affected by the virus very dramatically and quickly starting in early March. The only upside is Trump will lose his cool and the election.

Everyday I watch the wall street carnival barkers on shows like (squawk box) addressing positive data which often comes from their companies which make an outlandish living from the markets. If Mohamed El-Erain from Allianz (Chief Economic Advisor) and (formally CEO PIMCO) talks about this being the first time supply from manufacturers is unable to meet demand because factories are closed by quarantine , he is gently shrugged off by Joe. As the Convid-2019 virus grows world wide, and it will, our human society as known today will come to a halt. The inter related economies of the world will then be tested like no other time. Medical fear over central bank monetary maneuvering, banks will fail.

The two biggest fallacies about monetary policy are 1) the Fed is out of room, and 2) lower interest rates don't matter. This article is based on 30-year old views of finance. Read Bernanke's blog. The bond market isn't right and the stock market wrong. They both rationally reflect the view that damage from the virus will be significant but not catastophic and that central banks can keep the impact from being too great. Could that view be wrong? Sure. But how many times over the last half decade has the Times warned its readers of risks in equities? How many times has it been right? As far as investment advice goes, the Times is a good newspaper.

While the individuals investing in the stock market may be quite sharp, the stock market has shown itself to be unbelievably stupid in the past 20 years. Apparently, it is willing to provide funding to almost any proposal, no matter how far-fetched. Enron? Washington Mutual? Valeant? Theranos? Virgin Galactic? You bet, they're all in 100% until the inevitable bust. Back in the 80s, I noticed that the price of oil futures used to jump when it was especially cold in New York, where Wall Street is located. Cold temperatures in other parts of the country did not have much of an effect. That's the stock market for you!

As long as interest rate on my mortgage or credit cards do not decrease, what goes on in the world of millionaires does not interest me. I am now purchasing only essential goods and I am sure that others are doing the same. Our financial system circulates among an elite few. I am an outlier in the scheme of things and I am sure that others are with me.

People don't appreciate the fact that two factors affect growth: monetary policy (Fed interest rate and other decisions) and fiscal policy (government spending and deficits). Fiscal policy is powerfully stimulative now with trillion dollar deficits, and yet growth is sluggish at best. So not only is there little maneuvering room on the monetary side, but there is little or none on the fiscal side as well. Why doesn't anyone talk about this?

The US manufacturing sector is in recession despite the drinkers of the markets: https://www.washingtonpost.com/business/2020/01/17/us-manufacturing-was-mild-recession-during-2019-sore-spot-economy/ Add to this the recession in Japan and the already rapidly deceleration in China. The corona virus would only be a catalyst to an already deteriorating situation in the real economy (not in the fictitious one)

The stock market really should worry about coronavirus. My wife and I have canceled a Baltic cruise for this June because: 1. Most cruise lines reserve the right to alter or curtail the schedule and itinerary without refunds; and cancel-for-any reason insurance will be about half the cost of the cruise. 2. We are both over 70 and thus at higher risk of becoming seriously ill or even dying from COVID-19 if we catch it. 3. In the best of times cruise ships are floating Petri dishes that easily spread noroviruses; note the current COVID-19 transmissions on the Diamond Princess and Holland America Westerdam. 4. While our cruise ports are in countries that now have fewer than 25 cases, the coronavirus could become a pandemic affecting thousands in many countries, including those on our itinerary. Our nightmare scenario is that we or other passengers contract the disease aboard or in port. Do we want to be treated or quarantined on the ship or in Latvia or Estonia or Russia or Finland or Denmark? No way. For us the medical/financial risks are just too great, so for 2020 we are planning to limit our travel to US destinations we can reach easily by car or short flights. Over time we will evaluate the coronavirus situation and see how cruise lines and foreign countries are coping. There’s always next year. My comments are not medical advice, which readers should seek from their doctors. For travel advice, talk to your travel agent, carrier and insurance agent.

Wow, some real nutty investor comments in here. Speaking of the real world, I am at a large fortune 500 manufacturing company with business worldwide. I can say that from my view, things are not good at all. The combination of chinese tariffs and now coronavirus has given us nothing but layoffs, to the tune of say 10% in the last year or so. Now we are looking at more due to the virus. Pay increases have been frozen. Travel to asia is being zeroed out for now. So this talk of a disconnect between reality and the market is a very real thing. But again there is the question of what else folks can do with their money. I have my own zany theories. A) We are simply witnessing the growing retirement savings of the millennials, who absolutely know they must save at all costs. And the market is their only option. I'm no expert, but it seems like this happened in the 80's too when the boomers started getting real jobs. If this is a millennial effect, it might keep going for longer... until they lose their jobs. B) I can't help but think that if Russia is manipulating elections, etc... what is to stop trump's cronies and Putin (who by some estimates is actually the wealthiest man in the world, all in offshore accts) from keeping the market cranking thru the election? Think of the money they can make. It's not even a bad bet for them. They pump up the market. Trump wins, which enthuses all the chumps to invest heavily. And then the cronies rotate their money back out of the market.

The market is making the simple view that this was an un-analyzable, one-off event whose impact has to be ignored because it is not going to be recur year after year and it will be resolved soon. Some, or all, of these assumptions might prove to be wrong but that is where the market is currently. If the outbreak last longer, the market might give it greater attention - witness the slight weakness every time it looks like the outbreak is spreading to other countries. Otherwise, the market view is - we've lost a quarter, maybe two but things will revert back to normal, say by summer.

This article overlooks the industrial recession in Asia (except the decelerating China) and the decrease in last quarter of 2019 in the US. Not very promising signs. Monetarist policies have limits determined in the last instance by productive capital (and this area is not strong, although its financial counterpart seems disconnected from it)

So, there are 300 million school age children in China not attending class. Chinese auto sales in the first 16 days of February were down 95% YOY. Death toll and number of cases in China are likely much above what is reported. There are growing coronavirus clusters in South Korea, Italy and Iran. Anyone who has travelled to Southeast Asia has doubts about the capabilities of governments to report accurately and stop the spread (Singapore excepted). Has a pandemic started? Probably. Prepare for a global recession. Pray for those in the path of this monster.

We’re technically in the early days of a secular bull market...it’s got a long way to go. Also, the economy is not the stock market.

The new bubble is foreign investment in US stocks. The rest of the world fears what is coming and putting capital into US assets because we have the big army. It is the rats fleeing the sinking ship, except that the sinking ship is the rest of the world. It may be irrational fear, or they may just see what is coming. This is a bubble, because there will be no insulating the market from reality using the force of our military. The corona virus for whatever reason is being used to instill irrational fear into people everywhere. There is absolutely no evidence that the corona virus is any more severe than a normal influenza. My guess is that the governments, all governments, need a distraction from their real actions. The real illness taking over the world is right wing fascists and their hatreds. This is also a bubble since they are punch down people with no real skills to govern, so they will always punish and that will stunt the economies For their part the people seem to want to be abused. It has something to do with their cults. They will certainly get what they want.

The reason the stock market keeps going like the Energizer bunny is “TINA”. That stand for “there is no alternative.” There is no other place to put your money. A recession will come. The only question is when.

Iran's health ministry today announced finding cases of COVID-19 in large cities across Iran. That is another indicator along with onward community spread in S Korea and Japan that containment is failing. Meanwhile case numbers from China are unreliable and reopened factories are about to report new cases that will prolong their economic slowdown.

If things are not back to normal by the end of March, it will get interesting.

The stock market doesn't care because the virus is primarily killing old people and people with weak immune systems. In the sociopathic view of analysts, these are not productive participants in the economy. If anything, they may view it as an accidental benefit to China's economy once it blows through. I realize that this view is particularly harsh, but I have heard it too many times to ignore.

Asking for as friend madly investing: how much of the price of stocks is due to the fed cranking down interest rates since 1996 and a firehouse of cash into the system around the world, and how much to actual value? maybe the the value of the lemonade stand goes up when all the kids have open-limit credit cards? When that fed-string don't push no more, we're gonna revisit SPX-666 (that devilish bottom), and scrape the 400's.

Why? Because there are already more workers than jobs.

The assumption is that the Fed and government will always adopt policies that prevent the sharemarket from falling. The reason is that the sharemarket now influences the wider economy. When it drops incomes drop and spending drops, so keep the bubble going and don't think about what will happen when the bubble inevitably ends.

America is borrowing a trillion dollars a year to fund rich folk and growth that is well below the 50 year average. It will not end well.

The stock market may not be worried about the coronavirus, (perhaps they should) but it should be worried about what is going on in the so-called trump "administration". Since 11/06/16, the U.S. government has completely switched to an oligarchy/dictatorship (and not a benevolent one at that!) that has managed to destroy hope here and abroad. trump has denigrated and stomped upon NATO and allies around the world thereby weakening ours and the world's security and stability. Furthermore, his repeal of anything with Obama's name on it is insane and so detrimental to the domestic economy. All of this, combined with the shredding of the Constitution and sickening vitriol spewed from trump's mouth has created a very dangerous situation in this country and verified by most knowledgeable and intelligent people

I find it interesting how we keep hearing how great the US economy. I love it funny all those Deep State people don't believe anything is going on. Well are some simple facts for them and the business/economics page. If the employment numbers go up next month here is a clue the books are cooked. Manufacturing has fallen through floor, Boeing has sold a total of 4 planes in three months. GE is at zero money made since with tariffs and the problem with the Boeing Max they are going to Airbus. By the way Airbus that also owns Bombardiers aircraft can't keep up with orders. Lets see Americans are in debt to the tune of $14 trillion and climbing, credit card debt is $930 billion, the job report from March 2018 to 2019 was amended to show that 514,000 less jobs were created a loss on average of 40,000 a month, cars being repossessed at record numbers, credit card non payment min. at record numbers, farm debt is at $425 billion and looking for another dare I say the word socialist bailout, farm prices down, oil down and natural gas wells being capped because the price is so low. Stock market has been failing. But back to the rigged job numbers wages increases are not existent, and what type of jobs are created most are low wage, so two jobs equals one. Subcontractors to Boeing have been laying off thousands of workers, and manufacturing also, mines have closed at record numbers and Caterpillar sales were crashing are now gone with the virus. No economy is great. Jim Trautman

The collective wisdom still considers major events from a territorial perspective. COVID-9 is shaking deeply-held beliefs in China and its vicinity; but is merely an incident with insufficient impact to trigger a debate let alone a prompt action, as the dozen comments posted in NYTtimes since five hours attest. The level of American dissatisfaction with the status quo is growing, but wouldn't hit the inflection point as COVID-9 remains largely off-shore and local stocks mitigate supply-chain disruption. Investors, mesmerized by recent market gains fuel the demand and drive up prices and pro-investment hashtags, adding to a speculation and possibly a bubble. Collective wisdom is at odds with reality. Except for a tiny minority and nervous buyers who opt out before the storm, investors are oblivious to calls for restraint. Even AI algorithm do not possess the complexity-reduction power to act with foresight. The speculative adventure may culminate in a painful crash frequently triggered by a tidal wave of surprise events. An overriding issue tag crops up à la #metoo. Established perceptions and beliefs are questioned within the sector or society at large. The quasi-stationary equilibrium turns fragile. Issue champions emerge to block or steer the fence-sitters’ migration. Only then, the stakeholders’ dynamics tips the issue potency towards a critical mass, i.e. the minimum number of powerful players necessary to break resistance to change, a milestone in issue incubation.

All the signs are in place for a global economic downturn triggered by the Coronavirus pandemic. Meanwhile the Stock Market is near record highs. It’s time to sell the Market short. The crash may not happen this month, but it will come soon. Such a crash will have major political implications. The high Stock Market seems to be Trump’s primary indicator of economic success.

The reason the US stock market is so far little affected and likely to stay that way for a little longer I think is due to investors fleeing to the US market seeking safety.

Wall Street is fueled by 2 things: 1) money, massive amounts of money, looking for a place to invest in liquid assets. 2) algorithmic warfare influencing markets - best AI wins.

The US economy is structurally sound. The stock market realizes this. That's why the coronavirus has not produced a panic selloff.

China is doing everything to contain the spread of Corona virus. The USA and other countries are doing all they can to stop importing the Chinese corona virus COVID-19. The mortality rate so far is holding around 2% and mostly among those with weaker than normal immune system. Hospital construction for quarantine and treatment is in full swing in China with China pouring in billions. Knowing thy nano sized deadly enemy for the past few weeks has made the world stronger in combating this viral menace. I think this coronavirus will be wiped out from the face of the earth before memorial day, if all the proper precautions are followed and prompt on demand expert medical care is delivered to patients. There is nothing to fear but fear itself said FDR and that is a good reason why the stock market isn't worried at all about the contagion of COVID-19. Not a single American has died thus far of this viral infection, although handful have been infected not sufficient numbers of infected Americans to result in deaths. So from a Virologist's point of view, there is nothing to worry especially when several Americans who did not take the seasonal flu vaccine have died of flu this season Other deadly viruses like HIV, HCV, HPV, Zoster viruses are around causing problems. Yes some businesses have slowed globally not just in China but because of Chinese quarantine. Chinese suppliers are unable to supply goods but businesses like Google, Morgan Stanley, Costco etc are doing just fine.

This stock market is like a kindergarten class on a sugar high. And any parents out there know how that usually ends.

The resistance (not merely failure) of equity markets to factor in the pending pandemic into growth assessments may end up being like the shoeshine boy who gave stock tips to Joseph Kennedy Sr. in 1929 - a signal of equity markets on helium, and a sign to move to defensive positions.

True re your headline. The coronavirus is a temporary major problem that will blow over sooner or later like SARS, MERS etc. Having an insane Trump trade war, record national, student, consumer, credit card debt is what we should be worried about. The economy will implode re the above. The only question is when and how bad.

Trump has bankrupted every company he's ever owned. What's the plan when he does the same to the US? Asking for a friend.

Yes, Wall Street is ignoring the possible devastation from a coronovirus epidemic. Wall Street is deathly afraid, however, of Bernie Sanders, whom The Times reports is, "an avowed socialist whose plans include disemboweling the private health care system and cracking down on lending and other banking activities..he's considered the only candidate less desirable than the widely loathed Senator Elizabeth Warren." Wall Street doesn't worry that tens of thousands might die from an epidemic; Wall Street worries that their profits might drop if universal not-for-profit healthcare is implemented, saving Americans $650 billion and preventing 68,000 deaths annually. Wall Street's obscene obsession with profits, not people, should be the real focus of The Upshot.