Monday, Bloody Monday.
Markets started the new week in turmoil as the spread of the coronavirus in South Korea and Italy over the weekend rattled investors, and stoked worries that the economic fallout from the epidemic could be far worse than anticipated.
In South Korea, where cases surged to more than 760 as of Sunday, equities plunged nearly 4%, as policymakers convened to consider measures aimed at containing the spread and cushioning the blow to an economy that was waylaid last year by the trade war.
It was the
I see that Borrelli is taking his queues from the Iraqi Minister of Information https://www.youtube.com/watch?v=CXl1GkWWGmA
Escalators and elevators, and such. Ho hum.
Eh, don’t see a black swan yet. I expected a 40-50 SPX drop on the Bernie news alone. Since the market is ridiculously overbought, this virus scare is as good a reason as any to sell.
But the buy the dip crowd is the majority by natural selection. Anyone who had any good sense, or was not a slavish worshipper of Fed policy was forced from the markets long ago. Possibly another down day or two, but we’ll see a strong bounce as the world flees to the relative safety of the US.
It will take a long long time for the market to change its character. Expect the Fed to start cooing with dovish hints any day soon. This will work until it doesn’t.
Tough to imagine an all-clear signal in a couple, three days. The coronavirus situation is reinforcing the protectionist impulses of the Trump administration, and others (e.g, Italy) likely to follow in its footsteps. Immigration is down 11 percent, thanks to Trump admin policies. Global economy is slowing, and will slow more over the coming weeks. Velocity of money in the U.S., already low, will slow even further. We’ll see a sub 2% GDP print in 1Q20 (thanks, Obama!), with the economy likely to be in full-blown recession by summer. Not good for Trump’s reelection prospects. Expect to see him and Republican allies pull out all stops to ensure/steal/hijack the election. Doesn’t strike me as a business-as-usual buy-the-dips situation.
The economy and the stock market decoupled a long time ago. One down day and they’re already begging for a rate cut. It’s pretty clear to me that the Fed only follows market expectation surveys. Ask yourself the question – “Will the market be begging for more rate cuts and QE?”. If the answer is yes, then you can expect the Fed to follow orders.
Since the stock market is being kept afloat by cheap money allowing massive share buy backs, the only way to accelerate that process is to make money even cheaper. Half of what you see today is Bernie hysteria coupled with the fact if Trump botches the coronavirus response, he’ might lose the election.
https://www.bloomberg.com/opinion/articles/2020-02-24/coronavirus-gives-the-federal-reserve-reason-to-cut-rates-now?srnd=premium
JNK holding up – hmm, shouldn’t.