Tag: coronavirus panic

Coronavirus panic – the Media is to Blame

Cable news channels have been running talk about the coronavirus continuously. This is the best example of “yellow journalism.” It was William Randolph Hearst who propelled America into the Spanish American War.

Blind panic has definitely taken control Southern California. Costco warehouses have had a run on their water and toilet paper supplies. My local store had no bottles water, no toilet paper and no paper towels. NONE! It was not just my local outlet. News media reported that Costco’s stores throughout the Los Angeles area were experiencing the same phenomena.

There is no doubt that corona virus is a frightening disease but Americans are becoming paranoid. As of the latest information the national deaths from this disease is 17. Of course every life matters but the numbers are too small to call this situation anything more than a serious problem.

The sky is not falling. Reasonable precautions will probably contain this disease. There is no doubt that Donald Trump has added to the confusion. Trump calling the governor of Washington State a snake, accusing the World Health Organization of dispensing inaccurate facts about the outbreak, and suggesting that those with the disease could be safe going to work only adds to the chaos.

What is needed today is a calming voice.  Too bad the president has not taken on the assignment. Neither of the leading Democratic candidates have not taken on the opportunity for one reason. They don’t want to help the president. They want him to drown in the panic.

The Fed hits the coronavirus panic button and makes things worse

The politics of mismanagement should be the headline of the day. Donald Trump does not understand how markets function but is living in fear that the United States is heading into a recession as we approach an election. Fed chair Jerome Powell seems more inclined to do Trump’s bidding then do the right thing. The right thing is do nothing. I’ve not sold any of my stocks. Panic just results in losses. I believe the country will survive. It’s Trump who is in a panic!

The stock market’s reaction to the coronavirus is big news. Dow Jones Industrial Average had largest point decline in the history of the index! The S&P 500 had dropped more than 11% from Monday through Friday, which made for its biggest weekly decline since the 2008 financial crash.

Last week’s showing was indeed rare. The final week of February 2020 rates as the third- worst Monday-through-Friday by performance by the S&P 500 since 1976.

So the Fed reacting to what it believes will be a harsh condemnation by President Trump slashed interested rates by a half of a percentage point.

But the market seemed to understand that there is the expectation of a recession and that concern has resulted in another 800 point drop in the Dow Jones Industrial Average. A drop of more than 3%.

If this drop in the stock market is a signal for a coming recession the answer to support the economy will have to be federal stimulus like infrastructure projects and perhaps a temporary reduction in payroll taxes.  I doubt the Democrats will do either before the election.  After all they will see a recession as an opportunity to win both the presidency and the senate.