US stocks have tumbled by more than 3% on coronavirus fears. Stocks rebound overnight because that’s what they do. President Donald Trump called the virus “very well under control in our country.”
He added, “We’re very close to a vaccine.” The White House said, no, whoops, Trump meant a vaccine for Ebola, not coronavirus. People realized we already have an Ebola vaccine.
The Centers for Disease Control and Prevention said coronavirus is coming to America and “might be bad.” US stocks tumbled another 3%.
The end result is an inescapable sense that this thing is pretty far from “very well under control.” One huge problem for reassuring both markets and the general public is that Trump has spent his term stripping America’s pandemic-response apparatus for parts. He keeps trying to gouge the CDC’s budget, has defenestrated whole teams of experts, hasn’t bothered to name a coronavirus “czar” and may be seeking too little money for a response. Add to this his generally chaotic style of government, his special relationship with honesty and his lack of any other apparent motivation than self-help, and you have a recipe for what could be an epic botching of a pandemic response, writes Jonathan Bernstein.
Not that China’s Xi Jinping, at the epicenter of the outbreak, has been much better, writes Shuli Ren. He and local officials have issued a long series of confusing pronouncements and lurching policy flip-flops that have drained confidence in their handling of the situation.
Trump seems mainly motivated by a desire to make the stock market — his BFF until about 24 hours ago — forget this whole virus thing ever happened. But the disease is a one-two gut punch to the global economy. First, it shuts down travel, shopping and other activities as people are quarantined. Then, it disrupts supply chains in China and elsewhere, halting production. These webs of commerce are more fragile than you probably realize, writes Tyler Cowen, and can collapse with stunning speed.
Containing the disease, officially known as Covid-19, will probably take more aggressive measures than we’ve seen so far, writes Mark Buchanan. That’s good for human health, not so great for economic activity.
This presents a conundrum for the stock market, writes John Authers. An economic slowdown will push the lever for more cheap central-bank money, which markets crave. (And the Fed probably isn’t far from suggesting a rate cut, notes Bill Dudley.) But cheap money isn’t an effective treatment for the damage the virus will do.
And we don’t know just how far or deep that damage will go, writes Mohamed El-Erian. We don’t even know very much about the disease itself yet. Then there are the other dominoes waiting to fall, including shaky credits in China and elsewhere. For now, the confusion just keeps multiplying.
Sanders, Joe Biden and Michael Bloomberg (founder and majority owner of Bloomberg LP) — would be the oldest presidents ever from Day One, notes Justin Fox. Trump would break the record in 2024. Here’s the thing, though: It probably doesn’t matter as much as we think. Despite some issues — cardiac for Bloomberg and Sanders, dietary for Trump — all of these candidates should live a while longer.
For a company making giant machines that fly hundreds of miles an hour, Boeing Co. sure moves slowly. First, there was its lethargic response to the 737 Max problem. Now, it’s cleaning up its act a bit with a couple of board moves swapping tenure for expertise. That’s helpful, but still not the full overhaul Boeing needs, writes Brooke Sutherland. The same can be said of Boeing’s extra conditions for CEO David Calhoun to earn a special $7 million bonus. They’re fine, but it’s still not clear why he needs the bonus to basically do his job.
Bloomberg
