Wall street and the republican party has spent billions of hours and billions of dollars to promote the idea that stability was vital to business. OF course they meant tax cuts, - or so the right wing so understood.
Rarely being the adults in the room, business and republicans felt free not to listen to the other risks to this tax cut BIBLE .
World health, was always relegated to non-importance - and the risks of climate change and global pandemic long ignored because it would cut into profit is now on the doorstep - and ringing the bell.
Question is - will the "ridiculous right" finally listen, - or once more bury everyone's head in the sand...
10
Alternate headline: Wall Street is reacting in germ/xenophobic fashion to the unknown.
Surely reckless, oligarchy-supporting monetary and economic policy had nothing to do with any of this.
5
Something that the author does not mention is the likely increase in the federal deficit due to medical treatment costs and social services for people unable to work. We have been warned that our huge budget deficit makes us ill prepared for an emergency like this that requires even more spending. What I see more likely than interest rate cuts is a resumption of Fed purchases of treasuries, ie money printing. This time it may result in inflation, and a global inflation, since all countries will be dealing with this problem. Recent spikes in gold prices suggest that investors are aware of this possibility.
2
I have been waiting for an event to test Trump’s ability to lead. This is it
8
A "savant" in a WH said the market is great, just after 1000 point plunge.
Trump blasted as ‘pathological liar’ for claiming stock market is ‘starting to look very good’ after 1,000 point crash
https://nypost.com/2020/02/24/trump-says-coronavirus-is-under-control-stock-market-looks-very-good/
Trump says coronavirus is ‘under control,’ stock market looks ‘very good’
https://thehill.com/homenews/administration/484408-trump-asserts-coronavirus-under-control-as-stocks-plunge.
Adding to misinformation campaign and purging experts from CDC and other health organization, when the pandemic spreads.
We're at least a year away from vaccine...
Why are we stuck with this ignorant imbecile, is it something we deserve!
8
I hope that leg of pangolin was worth it.
3
But Central Bank easing would increase asset prices, and that is all that matters, especially in an election year.
2
2% of 7 billion. That’s the real number.
3
The market was overdue for a correction. Take a look at the Schiller cyclically adjusted P/E ratio. This demonstrates on the basis of fundamental value we haven't seen such exuberance since the great depression or the tech boom at the dawn of this century.
The market is prone to correct drastically on any bad news.
https://dqydj.com/shiller-pe-cape-ratio-calculator/
6
Personally, I will be closely monitoring the Nobel Prize awards in Physiology or Medicine, Literature and Peace and Economics over the next few years. I'm eager to find out which members of the donald j trump "presidential" administration (or in his "base") will win one of these prestigious awards for their success in mitigating the illness, suffering, death and economic catastrophe the COVID-2019 virus is causing worldwide. OPPORTUNITIES ABOUND ! Especially for stable geniuses. Now, we have but to sit tight and wait to see which one of these deserving people will be recognized for THEIR contributions to mankind during the bus accident that is now unfolding before our eyes.
5
Covid-19 is Trump's Katrina. I wonder if he will be throwing bottles of Purell instead of paper towels to his adorning fans?
14
@Jacquie No, no, no ! donald will be throwing out "ivanka trump Mountain Crafted liquid hand soap preservative complex. Made totally from plant sources. It starts with fragrances of apple with middle notes of Moroccan rose and peach blossom bottomed with amber, vanilla, patchouli and cedarwood."
I kid you not ! She apparently licensed a company to produce this under her name.
So much winning ! And so much selling !
8
@Iman Onymous - you forgot the subtle aftertaste of sheep dip...
2
This column speaks directly to a central premise of Andrew Yang's now suspended Presidential campaign - and I'm not talking about universal basic income. He made the point that the way we measure the vitality and robustness of a society are primarily economic measures that do a very poor job of reflecting overall societal equity or wealth in all its dimensions. The S&P 500, GDP, or employment rate are extremely limited in this way. He noted that they don't value the work of homemakers, or reflect life expectancy or disease rates, or the ability of a nation to provide opportunity or care for its people. Our policies are not geared toward minimizing the GINI index or mortality rates, but instead toward maximizing short-term shareholder value. We need to find a better way.
26
Another perfects storm, and not the last. Institutional asset managers,TV talking heads and corporate PR are the last to encourage investors to be realistic about stock prices. Stocks have not been driven by fundamentals for years, but simply by the fact that there is too much money chasing too few true investments, resulting in P/Es that no one should take seriously. Not to forget that the secondary stock market is not very efficient in normal times except within 10% of the momentary "greater fool" price - the price the marginal investor is willing to buy for - and corporate managements that believe productivity and regulatory gains go to profits and buybacks, not workers. Economists even seem to have lost their footing in explaining the movement of interest rates and debt.
I tracked coronavirus cases and deaths for the past 6 weeks and the ranges of possible mortality and transmission rates are indicating that world leaders and WHO have been far too complacent. The numbers with appropriate lagged calculations suggest to me that before yearend confirmed cases will rise tenfold and the mortality rate will be between 3% and 6%, at or above what any "expert" has said publicly.
6
Nobody knows why the stock market goes up or down on any particular day. We can figure out long-term trends and influencing factors, but to say, "The stock market did X today on news of Y," is to make a fundamental logical error. It's post-hoc ergo propter-hoc thinking. I have four questions which Irwin's theory cannot answer, because the theory is more of a hunch than actual analysis:
1. Why did European markets do better than American ones when the bad news was about how it's spread to Italy and could spread throughout the Schengen?
2. Why would portfolio managers have originally thought this would be a small blip when epidemiologists have been saying it's serious since day one? (Not surprising that economists aren't interested in other fields… The only fields they respect are ones that can be reframed as economics.)
3. Why are stocks dropping in anticipation of a devastating global pandemic when expert epidemiologists say it won't be that devastating? The current death rate is less than 4%.
4. Why are investors panicking now about an outbreak's affect on the US service industry when there is no outbreak here and there's no expectation of one?
The stock market dropped like that because sometimes it drops a lot. There's not a single piece of causal evidence to suggest otherwise, just speculation.
4
Somehow humans evolved, inhabited the entire world, birthed babies, developed social structures, and flourished before Wall St. even existed. We did it using socialism. Human socialism is hard wired into our genes through evolution, as we by necessity clung to one another to survive. We valued doing more good for one another without putting a price tag on everything or getting paid for every ounce of caring for each other we performed. If every caring act or work was somehow quantified, it would look like Sagarmatha (Mt. Everest) compared to Wall St.’s mole hill.
8
Assuming this virus will eventually be contained and "manageable" what will the reaction of CEO's be regarding putting all their eggs in one basket (e.g.) China/Asia?
CEO's have already gotten a taste of the tariff mess and now a health menace to boot. Will they diversify their supply chain enough to weather the next storm, which will certainly come at some point?
Will they ever come full circle and start to source from the USA again?
8
@Jonathan
Shareholders demand supply chains are built for efficiency and not robustness.
2
Various calculations put potential deaths in the millions. This is nothing compared to how many will perish from Trump’s policies if re-elected. If a recession elects a Democrat, it will have been worth it.
11
The market has been over bought for a long time. So, if the coronavirus kills 2 percent of everyone that gets infected it would only reduce the population of the planet by 160 million people. Sad, but not enough to save the planet from man induced climate change, global warming.
Relax. The virus might slow down the economy, but it will spring back. A major depression ahead? Maybe.
5
I believe a great idea for all the rich, namely the millionaires and billionaires instead of been so concerned about their loss of profit because of this deadly virus, should get together immediately and finance the immediate health care requirements in hospitals and fast track the search for a vaccine.
They do not seem to get, that this deadly virus does not discriminate between rich and poor people and if you have no tax payer funded health care system a countries ability to withstand mass infections is a disaster waiting to happen.
Every country in the world is now vulnerable to this epidemic, but the USA is very vulnerable because there is no health care for all.
11
@Koret These are thought's that I was throwing around a week or so ago. Canada may have to ban folks from the states from crossing our border. Poor people can't go to a doctor for being sick down there; it could get really messy down there. Bernie Sanders may come to late for them.
2
It's an airborne virus that can travel through high rise buildings and infect whole buildings through the air ventilation systems. As has happened in China a couple of weeks ago. This virus even though it might not kill you can knock out supply chain workers who have to self isolate and not be at work. That's where it can bring down whole economies if the World Health Organisation declares it a global pandemic. What would happen if the virus found its way to Wall Street Stock Exchange and all he stockbrokers got the virus. What say you?
8
Chinas work force has been in lock down as about half of all log exports to China, are just sitting on the wharf and not being processed as their are no workers to unload or whatever. Our government has to compensate the companies that export logs who have been affected by this virus and have to stop exporting because of the Chinese workforce having the virus or being in lockdown by the Chinese government.
It will probably affect all the stuff USA imports from China, as the USA is the biggest buyer of Chinese goods.
3
What's worse? Trump 20 or Covid 19? I think the answer is obvious.
9
As I write this (12:30 noon, Tuesday Feb 25, 2020) the DJIA is down about 1300 points since opening yesterday morning. This is unbridled hard-core capitalists' naked vote on donald trump's ability to lead the West to isolate the coronavirus and do the things necessary to stop it. They are finally expressing their opinion on the competence of our "president" and the Republican party. When push comes to shove, the 1% is, as it inevitably must, admit that our king has no clothes. And, the king is pretty ugly without them.
I guess they finally realize that everybody, even billionaires, have a stake in making sure that everybody has access to good medical care and investing in science and public health. Plagues spare nobody.
10
Kudlow yesterday: "you should seriously consider buying these dips"
Trump yesterday: "Stock Market starting to look very good to me"
Price/Sales ratio: near historical high
Total market cap/GDP ratio: near historical high
Price/Earnings ratio: near historical high
Go ahead: Buy The "Dip".
4
Isn’t it amazing that our economy also depends on the temperamental weakness of a bunch of scared investors worrying continually about their golden calf, and god’s wrath.
5
37 countries now have the Coronavirus and expanding.
Trump will not be able to control this beast.
6
For travelers it’s not just about the risk of getting sick. It’s the risk of getting stuck in a quarantine for weeks away from home because of somebody who may or may not be infected. Witness Diamond Princess and now hotel in Canary Islands
8
I've noticed three groups of comments on the web.
First are the "ITS A MAN MADE BIOWEAPON" brigade.
Second are the people doing their best to do their own analysis of the situation from what information is available.
Third..."It's just flu why is everyone panicking"...who took the mainstream media 'seasonal flu more deadly' nonsense, hook line and sinker....i'm looking at you NYT.
I'm part of the second group, and it was absolutely clear from the third week of January that this isn't the flu, worse than SARS and out of control. Clear from research papers from internationally respected organisations, nor some shady corner of the web.
The WHO has been awful. Even now, despite COVID19 meeting all the WHO's own criteria for a pandemic they're refusing to use the word.
I suspect an announcement later today that pandemic has too many negative connotations so it's now to be called a "International Virus Hug"
...and why...because we have to 'protect the markets'...
The markets are more important than my life and your life. Our health policies and reaction to a viral disease are being decided by the value of Pork Belly Futures...the cart is truly in-front of the horse.
11
Trump finally recognized the Coronavirus when the Dow declined 3.4% yesterday. Previously he said "It's under control & will go away when it gets warm outside". Seriously? SO FAR there are over 80,000 cases & over 2700 deaths from this virus & it's spread quickly in several countries like Italy, Iran, Korea etc. What countries will be next?? Now the USA is scrambling for billions of $ to get ready for the upcoming soon to be declared pandemic of this virus. USA has been so pre-occupied with Trump's idiotic behavior & the never ending US election campaigns & the endless US 'reality' shows that this real world health emergency didn't get the needed attention in USA.
13
So the lesson is for companies is to diversify their supply chain. Don't keep your eggs in one basket. Hey why not bring some manufacturing back to the US. What a novel idea.
7
Enforce international border control - bar all flights coming from China, bar entry of passengers that were in China in the past 1 month. That's the only way to control the spread of this disease while pharma is developing drugs for this coronavirus.
2
@Hendry-- unfortunately dozens of countries already have this virus so is the US to also ban visitors from all of those countries? Any future med. for this virus will take approx. a year to be developed then tested prior to approval. This virus will now quickly spread around the world EG: Italy recently went from 3 cases to over 300 & 3 days. Many other countries are behind in their reported #'s EG: Iran. It has a 2% to 3% mortality rate compared to the flu's 0.4% rate so tens of thousands around the world are in danger.
1
Dear NYT: here is the story I want to read about. Not about stocks. Not about China. Not about Tenerife. Or Italy or Iran.
I have a fear this virus is already in Ny and in NJ. If that is the case, what are hospitals reporting? Local doctors? Do they test patients who come in with flu symptoms? If so, at what point.
If I take my son in today with the persistent sore throat he has will they test him or pass since it’s respiratory? What symptoms should we be on the look out for?
What are local school boards in Ny, No and Ct planning should an outbreak happen? Will they close? Who will coordinate the response?
Can you write that story please? Your local readers and your national audience will thank you!
4
So earth gets a temporary rest from its most destructive species.
8
This is a misleading headline - should read “what The Coronavirus Has Done And Will Do.
2
I would like to second William Menke's comment below and thank the President for letting us know that everything is fine and that this will all just blow over.
Trump knows this because he has met with his science advisors and the leaders of the National Institutes of Health, who have assured him that the nation's investments in medical and other research have paid dividends for his presidency and the American people.
Nothing to see here. Nothing to worry about regarding the nation's health and well being. Nothing to worry about the President's reelection.
All is well in America and the world. Carry on.
2
Been a heck of a bull market hasn’t it?
Who else has noticed the massive disconnect between Main Street and Wall Street? Who else has noticed that since around 2010 every time something “bad” has happened in the world, yet stocks have rallied mightily?
7
Coronavirus hysteria has created excellent buying opportunities in equities. The over-reaction is also a good rehearsal for the Really Big Disease yet to come.
Really Big Disease © 1968 The Firesign Theatre
4
@Richard Schumacher - Beat The Reaper!! Good luck with that...
2
The "smart money," as is so often the case, is dumb yet again. Sorry, there's nothing Trump or Powell can do to save you from this virus, guys. Even if he's a Jewish atheist, God is clearly on Bernie's side. Unlike in Egypt, one plague should be quite enough to take down our Pharaoh this time.
4
One lemming heads for the cliff, they all do. Such is the nature nanosecond automated traders.
4
Appears this virus is an equal opportunity illness.
Even those folks in power, especially those who possess a superior level of stupidity, and are only looking out for themselves, are not immune.
How ironic.
3
I thought investors loved stability, now they are alarmed? I was alarmed in November 2016. Where is you leader, your bankruptcy expert, your stable genius. Attending and stoking fascist rallies after defunding all of our infectious disease institutions. Will this simple virus bring us to our senses, I doubt it. We forgot the financial crisis and recession of 2008 and are repeating the same idiotic fiscal mistakes . Maybe he should appoint Rick Perry with his degree in animal husbandry to lead us in prayer. The orange Nero will continue to blame Obama.
9
This is moving around the world. Accept reality. many will never even know they even have it. I am based in Shanghai and I am telling you all .. if the world tries to stop it they will fail and worse they will destroy the economy trying to do so. GET SICK go out and get it and accept that every man woman and child will get it. you cant stop it. Yes some will die and that is the part that noone likes but it is the inevitable. Fear the unexpected ? the unexpected ? you are foolish to hide from reality. Wait - here we go a prediction you read it here first: announcements by world governments "Not feeling well ? dont come to our overcrowded hospitals (with VIPS) stay at home, take it easy, drink chicken soup and if someone dies call 1-800-COVID19 and we will come by and pick up the body." anyone remember the monty python skit "bring out your dead" well COVID aint no black plague but there will be death and death will happen at home. Now - bring it on. No? still want to fight it ? then short all travel stocks, airline stocks, cruise ship stocks, luxury stocks. Careful now - you might get COVID at the Rangers Game ! hey honey do we really see Celine Dion in Vegas ? Do I really want to touch those poker chips? short everything accept online gaming and streaming videos. Panic ? I have seen panic first hand in China. We human love to panic in the face of the unknown
5
Wouldn't it be fitting if the world's most notorious germaphobe were brought down by a virus?
14
You can thank your government for importing this disease into America when it took all of the infected Americans off that cruise ship and brought them to the states. The major airlines stopped flying to China but the Government gives the virus a chartered plane. Total idiocy.
2
A house of cards... and the cards are getting sick.
@realdonaldtrump thinks "it will go away".
the perfect storm of huberous and stupidity.
3
This is only scary for those who are in it for the short term. Just like all the other viruses, this one will blow over and the dip is temporary. We just love to panic in America, and the news is in the panic business, because it gets the clicks. If anything, this is an opportunity to buy on the cheap.
2
There is an irony to this (that probably is lost on Wall Street and its amoral stock analysts). The rise of China as an almost single source supply for many goods came about because Wall Street basically told companies to send their production offshore so they could cut labor costs drastically, companies that didn't do so soon did because they couldn't compete with third world wages. So basically they set up a system where if a key cog failed, the whole system would fall apart. Among other things they had the assumption that China suddenly became an industrialized country that could handle any disruptions like this, they pointed to the modern infrastructure, all the cities being thrown up, the high speed trains, and said it is a modern country run by modern rulers.
And they are getting bitten by their own canard, underneath all the modernity they talked about is at its core a dictatorship where decisions are not based on logic or science, but rather on 'containing the truth' rather than containing the impact of the disease. China has a third world public health system that includes allowing unsafe and unsanitary practices that help lead to the outbreaks like this, and the whole shebang rests on shaky grounds.
At the very least, this is a testament to not having single source supply chains. In the world of Wall Street the systems that run them and the networks are redundant, with all kinds of backup plans, the world of manufacturing on the other hand is non redundant.
15
@music observer It's also a testament to the folly of basing those single source supply chains in countries that have governments that spend most of their money on their military but (apparently) very little on teaching their people about the inadvisability of eating bats.
8
@music observer
Forty years ago we called this political risk and - even without dictatorships or threat of pandemics - prudent governments and corporations diversified their imports and other inputs, outputs and other activities across multiple countries and regional geographies.
6
The virus will break out of containment sooner that later. Apparently the disease is not a deadly killer. Many people just suffer cold symptoms. But the disease will make many people very ill. The vast majority recover. All these then form an immunity to the virus. People who have serious medical conditions like COPD, active TB, heart disease and the like are vulnerable to very serious consequences. Hopefully the virus will soon run its course or a vaccine will be perfected. Ultimately though the world will have to get back to business.
2
@c harris
"Apparently the disease is not a deadly killer. "
Tell it to the 2600 (and rising) number of confirmed dead. That's right---you can't. They're dead. Tell it to their ghosts instead.
I suppose it is more important that the "world will have to get back to business" than it is to stop the contagion before it becomes a pandemic. Actually it isn't. Business can take a pause. Lives are at stake. Potentially a lot of lives.
2
Many comments here about the impact the virus will or will not have on the markets. But the problem is not just the virus; markets are overvalued and have been for a long time. The heralded Fed interest rate cuts push everyone to put their money into the stock market no matter what; the interest generated in savings accounts doesn't even keep pace with inflation.
9
@LB yes, the industrial recession is overlooked by those who are fixated with the stock market. Even China was decelerating before COVID 19 appeared in scene. Services are dependent on the industrial production too. That's next. Lastly financial markets go as they live off estimated future returns
3
Good and I hope for more shakeups. Bridal gown shortage because 80% of bridal gowns and prom dresses are made in China. That also explains why the apparel industry is in trouble with cheap fabrics and horrible clothes no one buys.
Unbelievable. I can remember when the United States had a thriving textile industry and many local accomplished seamstress. I even made many of my maternity outfits due to trouble finding outfits for my petite size. Thanks to sewing class in school and fabric shops in the neighborhood. Bring back textiles, manufacturing and teaching trades in high school. China was never a good viable or sustainable choice.
17
@Hellen My father worked in that "thriving textile industry", specifically lace manufacturing. These companies, which had decent wages and benefits, could not compete with the ones overseas. His last action before he retired (and he was lucky enough to do so instead of having the anxiety of finding a new job) was to oversee the loading of the machinery onto containers for eventual passage to China.
4
Here's a little contrarian thought:
Which countries are on lockdown? China, perhaps South Korea, part of Italy, Iran. Why did it spread as much as it did in the first two? Because people had mingled before even knowing how to pronounce coronavirus. I predict that the countries like the USA which did not have serious spread before awareness will not have serious spread after awareness and will not need shutdown.
I think the initial view that it would be a short term hit on the economy is still correct.
2
@Gerold Ashburry People are carrying the virus without showing symptoms, which is how five cases in Italy on Thursday became 150 three days later. The virus was spreading before people knew they were sick. And "patient one" in Italy didn't have any contact with anyone from China or another nation with prior infections. So he is not patient one, or zero, or likely anywhere close to that. We don't know the extent of the spread yet, but it's not a matter of having "virus awareness" to be safe. The people in Italy could know everything we do, and would never have thought it was there. Until after it was, and spreading, too. So complacency and wishful thinking aside, we need to prepare for the virus in real terms, not in wishful predictions.
10
Global pandemic. Market is down 1000. What to do? Play golf and cut interest rates!
This could be good. If they keep cutting rates to shore-up this wonderful Trump economy, eventually people will be paying me when I want to borrow money.
How could anything go wrong with that kind of economic engineering? Free money! And then some...
2
@Vidal Delgado
Kinda like free college, free healthcare, etc.
2
Anybody who thinks you can have major economic powers shutting down cities and their means of production without widespread economic consequences is kidding themselves. Add the anti-science mindset of the current DC leadership and I believe we are in a vulnerable economic and public health position.
25
The Black Death (bubonic plague) in 14th Century England caused a subsequent increase in living standards among survivors as they moved into the most desirable housing vacated by decedents. Occupants of housing with large floor space survived at a greater rate that occupants of dwellings with small floor space. In other words, the rich survived in greater numbers than the poor.
3
It’s so old it’s new!
4
It's going to take cooperation among all governments to mitigate this potential global disaster. I hope they are equal to the task for the sake of us all. Now is the time to rethink trade wars and vying for world domination, and turn our minds to the welfare of our neighbor as well as ourselves.
Let the United Nations agencies lead in this fight and enlist the best science from all countries. It seems we are all in this together judging from the performance of stock markets. Those who can contribute must do so, while those who believe in a higher Power will be praying.
2
@betty durso , quite a few will do both.
2
It's out and there is no way to stop it. The flu has a death rate of 0.1 %. So far, it looks like coronavirus has a death rate of around 2%, 20 times higher. If the virus spreads like the flu does, that's a lot dead people. If the flu kills 20,000 a year in the US (and we have vaccines for flu) then we are looking at 4 million deaths from this disease and we do not have a vaccine for it, if it goes full on. Globally, we are looking at a potential death rate of more than 100 million. That's a pandemic. In WWI, more US soldiers died from the flu outbreak of 1918 than combat, about 45,000.
The economic consequences of such a pandemic are huge. We world is already suffering from low growth caused by declining populations in the developed world and these horribly destructive trade wars. Throw a paralyzing pandemic on top of that, and we are looking at a serious global recession.
To top it off, the last time the world's economy blew up in 2008, we were experiencing a global real estate bubble and a stock market bubble. Those conditions exist today also.
9
@Bruce Rozenblit
No one really knows for sure what the mortality rate of Covid 19 may be because the numbers out of China are unreliable and not even particularly clear. So the ultimate damage the coronavirus may cause in terms of deaths, illnesses, etc., is (imho) still unknowable.
But you're correct in your last paragraph about the latent economic risks. And you could probably add another to those risks: too many businesses are highly leveraged - they have way too much debt and no way to pay it off if earnings go south even just a bit. That was not the case in 2008, at least not to this extent.
3
@Bruce Rozenblit
The death rate I have heard for the flu is like 1% or so, they quote 65,000 deaths annually in the US from the flu and 47,000,000 people getting it (give or take), it is not .1%.
1
@music observer
According to a recent article by CNBC (https://www.cnbc.com/2020/02/03/the-flu-has-already-killed-10000-across-us-as-world-frets-over-coronavirus.html), "...a mortality rate of 0.095% for the flu in the U.S., according to CDC estimates for the 2019-2020 flu season." I haven't had much luck yet tracking down a more official source, but that's fairly reliable in my opinion.
Also, even by the numbers you provided, 65,000 out of 47,000,000 is still 0.138%, which is pretty close to 0.1%, especially taking into account the imprecision of those numbers.
1
Understandably China takes pride in touting itself as a world power. They expend tremendous energy and money on dredging up underseas resources and creating offshore islands they claim as sovereign military bases. And building aircraft carriers, to name a few.
There is an adage that uncertainty roils the financial markets. Coronavirus is uncertainty on steroids.
Perhaps a moral world power could expend energy and money on regulating open air swine, poultry, beef and fish markets-and whatever other hanging creatures that are consumed- to prevent flu and other pandemic viruses that threaten the entire world population.
And the financial markets. And one would think most importantly, their economy.
Totalitarianism in its finest form.
2
The virus spreading exponentially. There are those who say that the number of infections doubles every week. So let's count ten weeks starting from one case. 2, 4, 8, 16, 32, 64, 128, 256, 512, 1024. The number of infections goes from 1 case to 1,000 cases in 10 weeks. Keep going. In 20 weeks you get a million cases, in 30 weeks you get a billion cases, and in 33 weeks you get the whole world. There are 7.7 billion people in the world and the death rate is about 2%. So 7.7 billion multiplied by 0.02 equals 154 million dead people. I am not being alarmist, I am just doing the math.
This fits with the Spanish flu in 1918. Historians say between 50 million and 100 million people died of the Spanish flu. The math say about 154 million people will die of the Covid 19 disease. Covid 19 is in the same pandemic category. I am not being alarmist, I am just doing the math.
Finally, there are those who say it will all be over in April when summer hits. Really. This coronavirus is not the flu it is related to the common cold. So you are saying that no one ever got a summer cold? I don't know about you but I have gotten a summer cold about once ever 5 years. This is not going away. I am not being alarmist, I am being a realist.
4
@Ed Cotterell
You are making a couple of bad assumptions with your math, and comparing outbreaks is never a good thing, and here is why:
1)With the Spanish flu, you leave out that the environment matters. The Spanish flu hit when the world was reeling from World War I, there was basically a famine in Europe and a lot of people were malnourished. Not to mention medicine didn't have the tools it does now to handle those in distress.
2)You are also assuming that the virus will continue on ad infinitum until it affects all 7.7 billion people on the planet, and that is not a good assumption either. For example, the flu in the US affects like 45 million people each year, which is like 8% of the population. The reason is that the corona virus, like the flu, will run its course before you get to 10% of the population likely (it will vary, of course). More importantly, a lot of people may be exposed and won't get sick from it, people do to immune system differences will likely fight it off (it is why some people seem to get sick from the flu every year, and others never do, despite facing the same exact environment).
3
Interesting article. It has been readily apparent for at least a month that there were increasing supply chain and mobility issues, but none of the articles seemed to put two and two together.
5
I'm not interested in buying stocks but if I was this would be a great time to invest in government approved face masks companies. I can't see the demand going away, anytime in the future, what with all the chemicals and biological warfare virus's around in the world today. Too many people; and too many chemicals being used in the world haphazardly. Nows a good time to open a factory in the USA that makes surgical face masks and sell them to the public via supermarkets.
1
This is going away sooner than the media would like us to think. Dow will continue to roll over 32,000 before the election. They will drop some if Bernie gets in and be flat over his term. If Trump gets back in, look for 42,000 by the end of his second term. This is all solid information from my fortune cookies...
2
Well, if they're not crazy about Coronavirus - just wait about 10 to 20 years to see how they feel about climate change. When people will tell the bosses they're staying home to try to find some food to feed their kids (think Africa, parts of Asia) rather than going to a mine or to an assembly line. Methinks that world production will be truly hampered then and Wall Street will freak. I guess that's what it will take to get the 1% to realize that climate affects us all.
3
This is the beginning of what is to come.
The simple fact is that we are all more vulnerable than we would ever want to admit.
You may have insurance but you will still die.
You may amass wealth but it is still impossible to protect from decline in value.
There is no effective treatment for a viral infection like CRVR.
This morning it was announced that Iran’s deputy health minister has been infected with the new coronavirus.
It will get much worse before it gets better.
5
I don't want to scare people more but Chinese doctors are reporting that people are becoming reinfected a second time and the second time is much worse, different survival outcomes. Thank god children appear to be almost immune. I think all bets are off until we have the vaccine.
5
Something that the author does not mention is the likely increase in the federal deficit due to medical treatment costs and social services for people unable to work. We have been warned that our huge budget deficit makes us ill prepared for an emergency like this that requires even more spending. What I see more likely than interest rate cuts is a resumption of Fed purchases of treasuries, ie money printing. This time it may result in inflation, and a global inflation, since all countries will be dealing with this problem. Recent spikes in gold prices suggest that investors are aware of this possibility.
2
@dj Inflation is not likely unless the greed heads want to crash the economy intentionally. The consumers, and that is all the US people are, are already maxed out on spending. If things inflate they will be forced to spend only on essentials, so you can say good bye to any frivolous spending. Correct me if I am wrong, but useless items that are frivolous spending are the most profitable and make up a larger part of what gets consumed. A large part of the economy
So, the wealthy are already squeezing as much out of the good serfs as they can. If prices go up, consumption has to decline. I am not saying they might not try inflation, I am just saying it won't work.
1
For now I'm gonna embrace the bad news. It's entertainment as George Carlin once said. A 10,000 point drop in the Dow anyone? Better yet, a week before election day!
If Democratic candidates were smart, and few of us will make that claim they'd be touting the impending drop in the markets every day and reminding everyone that our current government is LYING about the effects of the virus in this country. Raise your hand if you truly believe trump is even capable of being honest about...well, anything.
I have zero investments in stocks and have lived nearly my entire adult life in poverty so any drop in stocks is unlikely to move me to do much differently than anything I've done in the past 40 years.
Here's a helpful household hint. Stop eating like every meal is your last one. You really can survive without a daily dose of junk food.
1
I don't know why I'm surprised - but the main focus in the US of the corona virus is nearly 100% about the economic impact. Trump seems only concerned about his political messaging on the economy in an election year. There are zero statistics being shared on exactly what age group the most serious cases of this virus is affecting, or the symptoms, or information on the people who've recovered, I see none of that.
Very sad that it's always about the $$$
10
Chinese will work day and night to stabilize their economic but if economy of America sabotages then it will be horror situation and upheaval will plausible.
1
The irony is that a pandemic could save democracy in the US. The economy will be hurt, just when the election is nearing. The spread of the virus will occur just as Trump showcases his obsession with dismantling the ACA. Suddenly affrdbale and accessible heathcare is the issue that wins the election. The absolutely certain mishandling of the crisis, and Trump's reversion to name-calling and blame shifting will only bring more Republican losses in November.
8
Let’s face the facts – Coronavirus/COVID has become a worldwide pandemic.
All the signs are in place for a global economic downturn triggered by the Coronavirus pandemic. The Stock Market went down 3% yesterday. That’s the beginning, not the end.
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.
6
There’s already talk among the Wall Street crowd that “ Central Bankers” will step in and fix the problem should the Coronavirus tank the market: first of all treasuries are at an all time low with little ability to maneuver and the market is absurdly expensive because the “ Central Bankers” have once again driven the investing public into the welcoming arms of Wall Street stock peddlers and realtors by keeping rates artificially low for a decade. The central bank should be done away with and would be in a true free market, it is no more than a mouthpiece of bankers that is designed to pick winners or losers: which BTW the Wall Street crowd wins either way or have we all forgotten Lloyd Blankfein, (who has been doing a blitz in The Times as well as the Financial Times in an effort to redo his image) and Goldman Sachs CDO tranches which put the workds economy into a tailspin? Why were these cretins of finance not held accountable?
1
Can we be realistic here? What goes up always comes down for one reason or another. That's how the stock market works. It's still a good bet, but never put all your eggs in one basket. Nobody is going to come to your rescue, so you better look out for yourself and plan accordingly.
3
Wall Street’s ‘market experts’ could’ve gotten a jump on the Covid-19 developments if they had consulted actual experts in infectious disease epidemiology.
The supposed omniscience of these self appointed economic experts is really remarkable.
1
It's about time the markets woke up. I saw this wishful thinking in Chicago, a notable financial market, and many act like it would be contained in China. The rate it was spreading told me to brace myself for a jump of cases outside of China, and sure enough throw in a couple cruise ships and a religious cult gathering, and here we are.
It's time for the world to get real and realize everything needs to put into containing and slowing this virus down. Anyone going on about influenza, go away. The mortality rate is much higher than the flu, we have no vaccine, and if the coronavirus spread like the flu it would give us deaths in the millions. I will go and blame the US media for not focusing on this more.
Minus the New York Times which has done an amazing job, but TV media and other outlets won't take 10 mins away from the election or Weinstein. Both are important, but the latter is a case that can be summed up in 2 minutes, and the other is over analyzing every word to the point of turning you off. The virus meanwhile is causing havoc on the world, people are dying, the global economy is being impacted, and I can go on. This virus needs to contained, hope warmer weather slows it down, and figure out a vaccine or better treatment protocols that lowers the mortality rate.
5
A tad alarmist this article is. Not what I expect from the NYT. People invest in stocks because, for the most part, they provide a better returns than savings accounts, bonds, metals or stashing your cash under the mattress.
But there is risk involved! Any number of exogenous shocks can and will affect the equity markets. If you do not have the fortitude or the ability to withstand these events you should not be investing in equity of any kind.
I think Warren Buffet has explained this very well. Much better that I can.
2
Keep in mind our forward thinking president eliminated the Federal team responsible for dealing with pandemics and the like. In his infinite wisdom he saw no need. He is smarter than all the doctors and health experts combined. So where is he this week? Touring the Taj Mahal.
4
Time will tell if the Covid-19 virus pandemic will affect the global financial world. Our president promised to Indian businessmen in Delhi today that if he isn't elected in November there will be a crash the likes of which we've never seen before. Remember how long the Great Depression lasted? Trump promised that the Coronavirus will calm down when the weather turns warmer. Tell that to Australia.
1
But please, fellow Americans, keep repeating the mantra that investing in the stock market is not gambling.
2
@carr kleeb You don't measure the success of the market based on a week. In the long term, its the best investment opportunity out there.
4
The US is unprepared for the coronavirus. I flew to SF from Taipei last Thursday. Our plane landed along with four other planes from India, Singapore, and Australia. My wife and I stood in a densely packed line for one and a half hours to pass through customs. If the goal was to spread disease, the US CBP was extremely efficient.
14
With so many new sites of the virus popping up and seeming to explode with clause in just days, together with the effect on travel and vacationing, given that 1 or 2 infected individuals can seed the virus on a plane or in a vacation spot... it’s looking to me like this is going to be a long lasting crisis, affecting the ability to manufacture goods (due to supply chain problems), the movement of goods or people anywhere in the world, the effect on healthcare systems, which become overstretched rapidly, and the political effects, whether here or elsewhere or in terms of international relations.
At a time when the world is not as united as it was early in this century or late in the last one, it must confront multiple, ongoing crises, some of which take us into unknown territory - at least for a century, when there was another pandemic. And not a decade later, a terrible financial crash.
Realism is necessary. But in short supply in this White House, where Trump lurches from Delusions of Fantasy Excellence to frank Paranoia.
I’m 75. And I am running out of hope when it comes to this election, the ability of even this nation to deal with the virus if it’s all over, and the financial consequences, especially for those living on the edge.
17
@TheraP At 76, I am as concerned as you. I am particularly disturbed by Trump and his Administration's push to eliminate all differing voices from the Executive branch of the US government. The hollowing out of the Administration does not bode well, especially when confronted by a crisis like this one.
This reminds me of the subject of falls. As an expert in the field of balance and fall prevention, I have found that what is really necessary is to develop good physical behavior all the time. Because what usually happens for seniors is that something unexpected will occur at which the body has to react. If we are stiff and precariously balanced, the body often reacts by stumbling and falling. If we are more nimble because we routinely move around a little (5 minutes of movement per hour of sitting) all day long then the body reacts by adjusting and not falling. The same is true for governments.
7
I'm not that concerned about Wall Street. Granted, there probably aren't a lot of economists, portfolio managers or traders who are epidemiologists. However, the vast majority of these folks are intelligent, rational, and realistic. Facts matter!
I am concerned about our government's response to the coronavirus outbreak. The Trump administration is still completely unprepared for a disaster that could be around the corner. Who knew?
As I mentioned yesterday, it would be quite ironic if the pandemic’s most notable casualty is Trump’s “booming” economy created by his great “middle class” tax cuts.
I'm sure financial professionals will find plenty of buying opportunities in a declining market. It's what they do. As a long-term investor, yesterday's sell off is just an infrequent occurrence.
Naturally, the financial consequence could be serious as reality strikes again: lower growth and higher deficits. That means we’ll hear that we need another tax cut. I'm sure any proposal would disproportionately favor corporations and people with high incomes.
I'm equally confident that we'll hear that these tax cuts will pay for themselves.
16
I wonder how long it will take the Trump administration to use this outbreak for their political and personal advantage by cancelling primaries and/or the national election? I fear we’re about to see the true effects of our constitutional crisis in action.
36
@JLL ...and I fear that you are almost frighteningly perceptive.
1
Wall Street wants Trump reelected and has been gaming the casino with the help of the 1% who now have enough money to do just that.
The world economy has been slowing for 2 years now and Trump has us in Tariff Wars all over the place, again bad for the economy yet the Dow fails to reflect that. The answer is in the above paragraph.
And now the world markets are tanking and Wall Street will be trying its best to restore some luster for their chosen candidate. The same candidate who has eliminated crisis management for epidemics and left those posts vacant since 2018. Our enemy is from within now.
49
The very Stable Genius declares the warm weather will fix everything. What’s the problem?
NOVEMBER.
47
@Phyliss Dalmatian - Quite the opposite. I think that the warming of weather will exacerbate the situation as cold winter is a contricting agent.
1
@Phyliss Dalmatian
Ms. Dalmatian, my wife and I were just observing that this election will be a national IQ test.
3
This isn’t the last of these we’re going to see. As international travel expands and population density around air hubs increases repeat performances are inevitable.
By their very nature outbreaks of these novel viruses can’t be immediately recognized so they will spread. Hopefully the world will recognize the need for early and transparent communications. Holding back information benefits no one.
6
The only thing I don't understand about the attention to the coronavirus is why there isn't the same attention to the thousands of people who die every year from influenza. The deaths during this flu season in the us alone is about 17,000 I believe. I'm pretty sure that is what I read. We've had a couple hundred coronavirus deaths, and the world is locking down. The only answer I can come up with is that this is a new virus and therefore more frightening than the one we face every single year. I had two friends in the hospital for several days just about a month ago with the regular old influenza A, and one of them was in critical condition. But the statistics are barely mentioned.
12
@Annie Towne They are mentioned though, every year, when we are urged to get our flu shots.
About 0.05% of people who get influenza die from it or related conditions. That rate is approximately 2% for coronavirus. The reason more people die of the flu is that the flu has been completely disseminated around the world with well-established (and well-understood) vectors and reservoirs. Wait till we see what coronavirus is capable of.
27
@Laura Does that explain the market impact though? Why doesn't influenza impact the market every year?
1
@Annie Towne It's because this one, so far, has a higher case fatality rate than the common flu and also seems to spread much easier.
3
I pulled money out of the market at the beginning of the year because I thought we were due for a downturn. I pulled more out yesterday. I seldom pull money out after a market drop, but I am convinced that the coronavirus could have a significant effect on the economy, and (as others have mentioned) it could be the catalyst for the recession which is due. Cities have shut down in China, while factories have shut down in China and South Korea. It could be a matter of time before this happens in other countries. It has the potential for a big impact.
13
@Bruce
Market timing never works.
3
@Michael
It works if you know what you are doing, and it does not work if you don't know what you are doing. Buying low and selling high makes sense. I avoided taking more than a 30% loss when the housing bubble collapsed. I sold most of my stocks shortly before the bubble collapsed, and then I was able to buy more stocks at a large discount after the market bottomed out. Of course, it was fairly obvious at the time that the housing bubble was going to collapse, and that the housing bubble had been fueling the economy. I would not time the market except in the rare instances that it's very likely to work.
2
Also industrial production relies on global value chains (emphasis on production of value as opposed to its realization through sale) while service industry tends to rely on local labor and sales (and therefore more immune to paralysis like hospitals and clinics.) Japan was also in industrial recession last year which was unrelated to trade tariffs. The cause of this recession has been lower rates of return (different from the financial area which claims profits on future earnings). That analysis needs to be incorporated. Global value chains import value after all (not just products) and profits, the main reason of their existence.
4
We have to consider other factors regarding the caronavirus, which will in turn impact our economy.
I recently read in that our budget for 2020 cut NIH financing for research for these types of diseases of almost a few hundred million dollars, which could impact our research, unless that funding is restored.
Further, can this virus survive certain types of exports, such as foods, from other countries to other countries, including the US, which again could spread this virus to the US, which could also impact our economy in addition to our health?
11
I’ve been saying for weeks it’s bizarre how much Wall Street is shrugging off the Coronavirus. I’ve actually predicted this could lead to a worldwide recession that lasts all year and perhaps beyond.
25
@Chris M - You have to understand that there was a great of pressure exerted by the administration to dampen the shock and keep the market high while Trump and the country went through the impeachment process. Now we will pay the price of this gross manipulation.
1
A week or two ago I, like many, compared the coronasvirus to the flu and wondered what all the fuss was about. Then I started paying attention. It seems these two factors combined should raise our concern. First, the virus is highly contagious. We may be seeing only the beginning of a widespread outbreak. Secondly, we don't know much about about the new virus, incuding the fatality variables. Even if the fatality rate is similar to the flu, that really doesn't give me any comfort. And let's not causually imply that if it does not kill a couple of hundred thousand people [like the flu] we shouldn't be worried. Even if the risk is low, the consequences are high. Yes, Wall Street should be worried as it tends to get when visibility is low and risk is in the air.
20
Buy the dip.
10
The type of national leadership needed in a crisis such as this is one that provides accurate information to the public, implements reasoned strategies based on the best thinking of experts, and works cooperatively with other nations to address a global issue. Unfortunately, the current president of the United States goes 0 for 3 against these criteria, and the unfortunate result of this leadership strikeout may be not only a slowing of economic growth but also a loss of life greater than would be the case were we competently led.
How long did those who thought tax cuts cover a multitude of sins believe we could get away without being damaged by a president who lies habitually, disdains science and expertise, and believes that nations acting in their narrow self-interest will cause an invisible hand to magically benefit one and all?
49
@IMS, perhaps this is the century that the US will get the attitude adjustment that Europe and Japan received in the early 20th century.
1
Markets over-react on positive and negative news. Always have, always will. Smart investors buy when then panic reaches a peak and sell when euphoria soars. The new virus will have an impact, and one that is measurable. But it is not the end of the world as we now it.
10
@John Jabo --Yup, that's what 'smart' investors do. As long as they don't get this virus they don't care about those who do OR the enormous cost to world economies. But hey, they're 'smart' & think like the self proclaimed "very stable genius" & believe that warm weather will soon end this virus.
2
It’s unfortunate that our fearless leader won’t read this article or be able to comprehend that, like it or not, we live in a highly interconnected world. No medieval wall, no tariff, no quarantine, and no pandering to the masses that “all is well - buy stock,” change that reality. Trump has been vigorously attacking the CDC budget, as well as pandemic prevention programs, and has been running non-partisan scientists out of our key agencies. He criticized President Obama for his assertive approach to helping Africa contain the Ebola virus. Although he has just asked for $2.5 billion in emergency funding, will he ever figure out that pro-active common sense, well thought out policies, not reactive “emergency” responses, as are his pattern, are the smart thing to do.
26
@J. --NO, Trump will never figure that out. Soon he'll declare that he's an expert on viruses as he's already said about various other topics EG's: "I know more than our Generals" ; "Intelligence Dept's"; "Global weather scientists"; "environmentalists" ETC.
1
I still don’t understand why we are panicking for a virus that will probably turn out to be as lethal as the flu.
5
@John Steve --there is presently NO cure or containment shot for Coronavirus BUT there is for the annual flu viruses. IF everyone got the flu shot the deaths from flu would decline dramatically.
1
@John Steve
The current best estimates are that this strain is 20 to 30 times more lethal than the common flu. It's also looking to be more contagious. We also have no vaccine for it yet. That all adds up to quite likely causing many millions more deaths, bearing quite a few similarities to 1918. Also, people should really be a bit more concerned with the common flu to begin with.
Still, that's not to say we should "panic", but we should certainly start paying very close attention and planning accordingly.
2
Stocks were too hot for too long. Commodities are a better investment. China seems to be recovering slightly.
2
Only Hollywood could produce a better example of a vacuum of national leadership. Why would any rational person think that markets would stay calm in the midst of a potential national security crisis? A pandemic possibility is comparable to a national disaster, particularly when those charged with the protection of public health and safety are silent.
Obviously, our government-dysfunctional and bloated-has decided to do nothing. The consequences from such utter irresponsibility are frightening.
20
Remember, these are the same geniuses who call themselves "masters of the universe" and think that they are worth hundreds of billions. In reality, Wall Street analysts are behind the curve and common sense 100% of the time
11
Two things that concern me is that in the US, where there is now a government led by the nose by wall street, the acceptance of a 2% (or whatever) mortality rate fromCoronavirus will be acceptable when weighed against keeping the factories and economy functioning even if at a lesser rate. That coupled with a health care system where many, if not most, citizens will think twice before paying for a virus test could spell disaster.
13
There will be a price for not even being willing to understand science. These types of viruses will increase as global warming continues.
Perhaps for the first time, folks will realize a fat portfolio will not save you.
31
We could not be more ill prepared with the current president in office. I am not optimistic.
59
Despite all the hysteria, it is a cold virus and does considerably less harm than the yearly flu.
4
@Me Please take a minute to compare the infection rate of this virus versus the common flu. Thank you.
3
@Me okay let’s see you contract it and report back on how smooth sailing it all went. For starters enjoy your 14 day government and work mandated quarantine.
2
I’m surprised anyone is still left with this little knowledge of this situation.
5
If (when) this virus starts to affect the United States, think about the impact. Attendance at any big crowd events will come to a halt: sporting events, restaurants, Disney parks, entertainment venues (Las Vegas). Then this impacts all of the people who work at these places, as well as suppliers. Catastrophic.
27
Concerns about national security went out the window with the rush to cash in on globalization over the last 4 decades. Global supply chains are insecure, any disruption affects the economy. China’s economy can’t last in the long run anyway, robotics and a higher standard of living are slowly erasing the cost advantage of low wage workers. And China’s lockdown is forcing their economy into the pre-global lack of flexibility. Combined with Trump’s trade wars, China’s problems will accelerate as they are removed from supply chains.
11
@Gary China’s long-term strength lies in the creation and exploitation of intellectual property. It supports the scientific research and development that precedes commercial application, which the U.S. has neglected for decades. We haven’t quite reached the era of buying cheap U.S. knockoffs of Chinese products, and may not for some time, but we are definitely heading in that direction.
1
A nation of those who have difficulty raising $400 in an emergency will react less than favorably to a stock market that falls faster than it rises. I'm a seller on every rally.
9
Concern for markets, small businesses, corporations and global commerce are grabbing the headlines. No one is referencing the pharmaceutical industry and how it may directly affect individuals all over the world.
Two of my friends (who for decades worked in the research area of one of the very largest producers of our medications) have for years warned that shipping the production of our medications to China, India and other off shore sites could possibly come back with a major significant negative impact.
Where is this concern appearing?
64
@BP , yes. Last night a physician friend and I were talking about this. Like many people, I depend upon a drug cheap to make, exorbitant in price, necessary to my health and life. It’s at risk of shortage as supply chains break down. No way to stock up—the insurers won’t have it and I can’t afford it. In some quite developed nations, shortages have already come of diabetes and other meds, unrelated to this virus, one more measure of the lack of provision for public needs in a market-based world.
28
@jb California's governor has been talking about producing generics in the state. A very good idea. And not just from a cost standpoint.
14
Sorry, but it's all hype. People need to stop with the hysterical panic, already.
There have been 2,707 deaths from Coronavirus. Compare that to 200,000 deaths attributable to the flu every single year. I don't see airports, rail stations, schools, and stores closing due to the flu.
15
@Steve Acho
It's really not.
The flu is already all over the world. Humans have some immunity due to centuries of exposure. In many countries nearly half the population is vaccinated every flu season. Doctors and hospitals are set up to treat it. And it has a death rate of < 0.1% in the developed world.
(Even still, 291,000 and 646,000 per year die of seasonal flu globally).
Covid-19 is novel, no one has immunity, it's spreading quickly, and appears to be 20x deadlier.
If the rough estimates of a 2% death rate is maintained, then it could kill tens of million people.
People should not panic, but this is not 'business as usual.'
119
At last someone who can see through the hype, these stories have no context. It’s like a Monty Python movie - Bring-Out-The-Dead. The majority of the deaths are elderly and/or persons with comorbidities. In a country of 1.5 billion people the dead are not piling up in the streets. Officials know that running around in bio-suits and spraying streets with a fog machines is ineffective but it makes great press. Twenty years from now this will rank up there with the Swine Flu as a health story and Orson Wells’ World of the Worlds in hype.
6
@Steve Acho That is because most smart people get the flu vaccine. There is no vaccine for coronavirus at this time.
3
This is just another indicator that governments and corporations are woefully behind on their risk management processes, particularly as they relate to global commerce. The medical community has been talking for years about the risks of pandemics and yet the stock market clearly indicated investors didn't believe there were viable back up plans. The same will hold true when the worst of climate change begins to sink in, but there won't be any market rebound then. Scientists are not always correct but the world is in peril when it turns a blind eye to their forecasts.
68
I don't worry about the stock markets.
On the contrary to many investors mind, China is slowly waking up from the Coronavirus disruption. Once dormant factories and companies have started again with various level of production from 70% to 90% in the most major production areas. Full production is within reach very soon when the lock down areas relax its restrictions.
Maybe China's revival could pick up the slack of European's slow down. Chinese stock market is vibrant especially the tech companies and new IPO.
In addition, president Trump will never let the stock market performance to be his obstacle in his reelection. He is now enlisting the help from India. You can bet on that.
1
I love your optimism but I think you’re woefully unaware of what’s going to happen to this country when the pandemic breaks out here
Trump your beloved leader won’t be able to do anything and in fact he’s cut many of the important positions that would be dealing with the pandemic for instance the global world health star
2
@Usok - Sorry, but, as at Christmas, one seldom gets what one hopes for.
1
@Usok India is now hacking our elections for Trump too?
1
The stock market is moved by projections of investor behavior and predictions of willingness to buy or hold or sell. Not so much on corporate performance but as an impetus or hindrance to investor moods. Like cattle in a field, investors would prefer to stay quiet and graze on the profits of an economy geared to feed the market first, most, and always. The bailouts after the crash of ‘08 added a sense of real security there. But with governments having emptied treasuries for tax cuts and this new contagion that could bring (will bring?) global disruption to our integrated economies, that’s not so sure. The unicorns are falling now. Exuberance is dashed. If many investors pull back in such conditions, we could see a panic. A possibility that many are afraid even to whisper. Yet.
34
Yes, Wall Street is finally waking up to the potential harm of Covid 19. But President Trump is not. He's proposed a budget that slashes billions from public health programs, from the CDC, from WHO, and now is proposing that more billions be diverted from public health to deal with the coronavirus.
146
In business, spending less money to achieve the same goal is a sign of competence. In government, competence appears to only be measured by total spending.
Time to run parts of the government like a business and expect managers to spend money more wisey.
2
@James , that sounds like a distant echo of 1980. Been there, done that. Privatization has eaten up the place. Workers lost, services lost, accountability shredded. So maybe it’s time for people without profit-first mentalities, willing to serve this nation, to stop being targeted by greedy privatizers and corrupt politicians, and to get to work for the common good.
9
@James
Wait, I thought the Trumpests elected a businessman as president so he could run the executive branch of the USA's federal government the same way he (or his father) ran the family business. Why are so many positions unfilled and so many department and cabinet heads "acting" during a national security alert?
Should Trump be running the Tariff War by wisely creating the need for billions of dollars of "bail out" (welfare or corporate welfare) to farmers who lost their markets in China in 2019 and 2020? Wise use of money?
8
"Neither economists nor portfolio managers make particularly good epidemiologists."
Key point. Every disease outbreak is different, and one can't extrapolate from say, ebola or SARS and claim COVID-19 will follow the same path and get tamed.
In the past the CDC has leaped to the rescue, splicing genomes and producing vaccines or cures at lightening speed. COVID-19 has tested our national leaders as never before, who are coming up short, from China and Japan to Cambodia and the US.
This could be the first health crisis caused, and exacerbated, by leaders and overreliance on financial data not populist politics. Which is the nature of financial meltdowns in general--unexpected and thus unprepared for.
44
@ChristineMcM
We aren't coming up short at all. The reason our CDC isn't leaping to the rescue is that the disease is in China and China's CDC is leaping to the rescue. They expect a vaccine next year. China was cagey at first about letting our scientists in, but now we have joined an international team of experts.
This is not the first health crisis caused and exacerbated by leaders and over-reliance on financial data. That's actually how almost all health crises become crises, with rare exception.
Financial meltdowns are almost always anticipated by intelligent people, and those intelligent people are almost always ignored.
So… not only is the CDC leaping to the rescue, it's also not the first crisis caused by mismanagement, and economic downturns are rarely unexpected.
1
The U.S. equity markets are as overvalued as they have ever been. Close proximity to the peaks in 1929, 2000 and 2007 in any metric of comparison. Price is what you pay. Value is what you get. Markets are simply a barometer of supply and demand. What will you do when there are no buyers. History tells us that 99% of people will unload at any price. The virus is just a "push" over the precarious edge we know as euphoria. Central banks have already proven impotent in stimulating economies with low and even negative interest rates. A steep recession is in the near future. This time China cannot bail the world out with it's constant growth. Stocks will be cut in half in the next two years.
51
@USNA73
"Stocks will be cut in half in the next two years."
Another financial expert. Actually sir the price of equities is principally driven by earnings and earnings have held up pretty well. The market certainly isn't cheap at the moment but outside of nervousness about the effects of the coronavirus there is little evidence of an imminent market crash.
18
@John Indeed. More precisely, prices do not have anything more than psychology to support them at these levels. Several weeks ago, the S&P 500 price/revenue ratio clawed its way to the steepest extreme in U.S. history. Having done so, investors now require market valuations to maintain a “permanently high plateau” at this level in order for continued growth in GDP, revenues, and dividends to collectively produce S&P 500 total returns of even 5.6% annually. Essentially, we have been expanding P/E ratios. It is the "price" part that keeps going up. Not earnings.Understand this. The more glorious this bubble becomes in hindsight, the more dismal future investment returns become in foresight. The higher the price investors pay for a set of future cash flows, the lower the return they will enjoy over time. Investment is not independent of price. Whatever they’re doing, it’s not “investment.”
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@John , equity earnings are often geared for short-term gains, and it would be naive to think they depend on corporate earnings alone. There would be no Uber if so, not many other huge gambles of the kind. We might gasp at the idea that “There’s gambling going on here!” But investors look ahead, and yesterday’s profit is already gone.
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The Obama recovery started in 2010. It had a good run Our economy is overdue for a recession. Something usually triggers a downturn. Originally many thought Trump’s trade war would do it. Now some argue it’s the disruption to world economy caused by China’s lockdown, and that of other affected countries because of the coronavirus. The truth is no one knows we’re in a recession until it’s occurring, and only then is the cause identified.
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@Demosthenes … If it helps knock off trump's vile regime, a recession might be worth it. Some things are more important than money.
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How much of Monday’s sell off was due to coronavirus risk and how much due to Sanders’ strong show in the Nevada and democratic primary track this weekend? Wall Street didn’t just wake up to coronavirus - it’s been a known risk for weeks now. There’s also an argument that central banks now have further cover to keep rates lower while further fiscal stimulus will actually support the markets as inventories are eventually replenished once supply chain back running. Sweeping, rhetorical comments are simplistic and miss the larger point - that socialism in the heart of capitalism (America) is a risk to the global economy.
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@Arblot Sanders is not the socialist of 1947 Britain. As far as I know he is not advocating public ownership of everything, nor a centrally planned economy. He is only recommending what other advanced economies already have, that is universal health care coverage, in this case run by the government, that is, like the system in Canada, and other benefits for the family. It is the Trump administration which is acting in an anti capitalistic fashion, deciding which industries to protect for example.
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I doubt sanders was the reason for the sell off. If he is the nominee, trump will be re-elected by a wide margin. I won’t vote for either of them, as won’t many other independents.
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@Arblot You appear to have missed the fact that Sanders' democratic socialism is virtually identical to what's in place in western Europe, in Canada, and Japan and Korea.
What's that? Effective, single-payer universal healthcare, which delivers far better health outcomes at a fraction of the price of our immoral health system. It's free college tuition, just like we had before Reagan came in and slashed top marginal tax rates, eliminating fiscal support for university education. It's paid family medical leave, just like that which every family in every developed country on the planet enjoys, including Canada.
Sanders is advocating for policies that make the quality of life everywhere else vastly superior to that in America. And that's what we need in the heart of the American economy.
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Whether or not the coronavirus - in and of itself - is enough to crater the financial markets, there is always the possibility that corona will be this year's Lehman Brothers - the card that brings down the house of cards.
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@thebigmancat this is an excellent observation I agree and I wonder then who trump and his cronies will blame?
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Over the past few years, Wall Street has been a bit slow in realizing quite a few things; but I digress! The default of subprime mortgages and "esoteric" derivatives triggered the 2008/09 financial debacle that in turn dragged the economy down. I was in the investment business at the time and while there were those who expressed concern, (it didn't take a rocket scientist to connect some of the dots) but absolutely no one predicted the magnitude or timing of what eventually happened; a "black swan event." Hard to know if the Coronavirus is a similar type of trigger for a major economic downturn and market decline. Or, maybe it all goes away. Obviously, that is the conundrum.
"The black swan theory or theory of black swan events is a metaphor that describes an event that comes as a surprise, has a major effect, and is often inappropriately rationalized after the fact with the benefit of hindsight." Source: Wikipedia
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Was the subprime collapse really a classic ‘black swan’ event? Everyone knew then that the concept that ‘real estate never goes down’ was a total farce; yet, people chose to listen to their real estate brokers and defy common sense and believe that depreciating assets like bricks, countertops and garden hoses created value, and the Fed was even raising rates through 2007 believing the hype. Today, rates are far, far lower, and many smaller cap, industrial cyclicals already trade at very low multiples, unlike the large cap tech firms. If the fed keeps rates low, or even uses coronavirus as an excuse to cut further, you could see a rotation into value. Add China stimulus and it could be a game change from growth to value.
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@Jenna , even ordinary folks knew a massive scam was underway, seeing the land clear cut and a world of McMansions sprout from sea to sea. We talked about where they’d get an insane number of people to buy them, how the banks must be somehow getting paid up front, and what would happen when they massively eventually foreclosed. As Arblot says, not rocket science. Fraud. But investors were riding the wave and didn’t want to jump off till the last minute. They’re looking for the moment the tide turns, all the time. Will closed factories or empty inventories in real life scare investors out? Will disruptions to global supply chains do it? Start the rush to the door? We’ll see. It will happen fast if it does.
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I was annoyed last week that the store hadn't restocked something I was out of. Then I thought maybe they can't... but no, they probably just didn't.
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I am hardly an economist, with my wife running our business and making investments (I am the same age as our president). However, reading this newspaper, it became clear to me that the stock market was about to fall, and I sold retirement stock last week and the week before. So, mea culpa if I started this slide...
On the bright side, Trump said yesterday that all was well...
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Market timing rarely works out. Maybe your savings can produce sufficient cash flow from non-equities, but it sounds like you were taking more market risk than you were comfortable with.
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This raises a good point. People who attempt to time the market based on events like the Corona virus or other disruptions are fools for investors. In general they will hurt their own portfolios, but if enough of them try, they can also help destabilize the entire market.
If you are properly invested for your situation, whether it's higher risk/higher growth for younger people, or for lower risk/income production for older people, the sensible strategy is to stay the course.
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@William Menke
Yes, panic combined with media-fueled hysteria tends to fuel sell offs, even small ones.
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