With over 56,000 coronavirus cases in New York, privileged New Yorkers with secondary homes are fleeing the City with massive effect on vacation home communities: the population of Southampton has gone from 60,000 a few weeks ago to 100,000 and rental prices in Hudson Valley rocketed from $4,000 to $18,000 per month—posing a threat to small-town hospitals that are ill-equipped to handle caring for high numbers of coronavirus patients.
In wealthy New England island communities like Nantucket, Martha’s Vineyard and Block Island that are heavy with secondary homes and short on hospital infrastructure, officials are going so far as to cancel all hotel, Airbnb and VRBO reservations while stationing state troopers and the National Guard to maintain flow on islands and, in the case of Rhode Island, instating 14 day mandatory quarantine on all people traveling to stay in the state from New York, New Jersey or Connecticut.
As outrage has grown at the privileged fleeing the city while middle and working classes remain confined in New York City apartments, there’s been social media clapback at ostentatious displays of wealth in isolation: Geffen Records and Dreamworks Billionaire David Geffen ultimately deleted his Instagram of his $570 million megayacht captioned: “Sunset last night..isolated in the Grenadines avoiding the virus. I’m hoping everybody is staying safe” after it sparked outrage on social media.
New York City’s poorer boroughs are hit hardest by coronavirus: Brooklyn and Queens, where median income is $56,015 and $64,987, respectively, remain the epicenter of COVID-19, compared to Manhattan with average income of $82,459, which has been less permeated by the virus and is home to many of Manhattan’s wealthiest enclaves—and those most likely to have residents with second homes elsewhere.
On Saturday, President Trump said he was considering quarantining parts of New York, New Jersey and Connecticut, then, backed down and issued a domestic travel advisory for the tristate area that discourages residents of these states from non-essential domestic travel after “very intensive discussions” at the White House on Saturday night, said Dr. Anthony Fauci on CNN today: “The better way to do this would be an advisory as opposed to a very strict quarantine, and the President agreed.”
“Due to our very limited health care infrastructure, please do not visit us now,” reads a travel advisory from Lake Superior’s Cook County in Michigan, exemplifying vacation towns’ plea to travelers and second home owners across the country to stay away.
Background: Coronavirus cases in the United States have skyrocketed to 124,000, with deaths doubling from 1,000 to 2,046 in two days. Since those with COVID-19 can be asymptomatic for days, their presence in remote communities may be deadly, as they can spread the virus and wreak havoc on rural hospitals. The clash between wealthy and poor, also creates state-versus-state hostility, as federal support is limited and essential to states overcoming coronavirus.
I’m the assistant editor for Under 30. Previously, I directed marketing at a mobile app startup. I’ve also worked at The New York Times and New York Observer. I attended the University of Pennsylvania where I studied English and creative writing
(Bloomberg) — The stomach-turning ride on global financial markets took a dramatic turn Monday, with U.S. stocks plunging the most since 1987 after President Donald Trump warned the economic disruption from the virus could last into summer.
The S&P 500 sank 12%, extending losses as Trump said the economy could fall into a recessoin. Equities opened sharply lower after central bank stimulus around the world failed to mollify investors worried about the damage the coronavirus is inflicting on economies.
The negative superlatives for American stocks are piling up. The S&P wiped out its gain in 2019 and is now down almost 30% from its all-time high. The Dow Jones Industrial Average lost almost 13%, falling 3,000 points to close at at two-year low. The Russell 2000 had its worst day on record, losing more than 14%.
“This is different. The thing that is scarier about it is you’ve never been in a scenario where you shut down the entire economy,” said Steve Chiavarone, a portfolio manager with Federated Investors. “You get a sense in your stomach that we don’t know how to price this and that markets could fall more.”
While the Fed cut rates toward zero and stepped up bond buying, investors continued to clamor for a massive spending package to offset the pain from closures of schools, restaurants, cinemas and sporting events. Companies around the world have scaled back activity to accommodate government demands to limit social interaction.
Here are some of Monday’s key moves across major assets:
All 11 groups in the S&P 500 fell, with eight of them down at least 10%.
The Dow Jones Industrial Average’s tumble from its record reached 30%.
Brent crude dipped below $30 a barrel for the first time since 2016.
Treasury yields retreated across the curve with moves most pronounced on the short end.
Shares tumbled in Asia and Europe, where the continent is now reporting more new virus cases each day than China did at its peak as more countries lock down.
The yen surged, the Swiss franc rallied and the dollar fluctuated.
Gold failed again to capitalize on the rush to havens and reversed an earlier gain to tumble.
Bonds declined across most of Europe, where a measure of market stress hit levels not seen since the 2011-2012 euro crisis.
The Fed and other central banks have dramatically stepped up efforts to stabilize capital markets and liquidity, yet the moves have so far failed to boost sentiment or improve the rapidly deteriorating global economic outlook. An International Monetary Fund pledge to mobilize its $1 trillion lending capacity also had little impact in markets.
The problem is, bad news keeps stacking up. The New York Fed’s regional gauge of factory activity plunged. Ryanair Holdings Plc said Monday it will ground most of its European aircraft while a consultant said the pandemic will bankrupt most airlines worldwide before June unless governments and the industry step in. Nike Inc. and Apple Inc. announced mass store closings.
“In normal circumstances, a large policy response like this would put a floor under risk assets and support a recovery,” Jason Daw, a strategist at Societe Generale SA in Singapore, wrote in a note. “However, the size of the growth shock is becoming exponential and markets are rightfully questioning what else monetary policy can do and discounting its effectiveness in mitigating coronavirus-induced downside risks.”
The yen rebounded from Friday’s plunge after the Fed and five counterparts said they would deploy foreign-exchange swap lines. Australian equities fell almost 10%, the most since 1992, even after the Reserve Bank of Australia said it stood ready to buy bonds for the first time — an announcement that sent yields tumbling. New Zealand’s currency slumped after an emergency rate cut by the country’s central bank.
Meanwhile, China reported Monday that output and retail sales tumbled in the past two months.
These are the main moves in markets:
The S&P 500 fell 11.98% as of 4 p.m. in New York.
The Dow Jones Industrial Average plunged 12.93%
The Stoxx Europe 600 Index lost 4.9%, paring a drop that reached 10%.
The MSCI Emerging Market Index declined 6.3%.
The MSCI Asia Pacific Index decreased 3.7%.
The Bloomberg Dollar Spot Index rose 0.2%.
The euro gained 0.5% to $1.1162.
The Japanese yen strengthened 1.8% to 105.94 per dollar.
The yield on two-year Treasuries sank 14 basis points to 0.35%.
The yield on 10-year Treasuries declined 22 basis points to 0.73%.
The yield on 30-year Treasuries declined 22 basis points to 1.31%.
Germany’s 10-year yield climbed seven basis points to -0.47%.
West Texas Intermediate crude fell 9.2% to $29.05 a barrel.
Gold weakened 4.3% to $1,463.30 an ounce.
Iron ore sank 2.5% to $86.10 per metric ton.
—With assistance from Claire Ballentine, Elena Popina and Elizabeth Stanton.
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On Wednesday night, Trump finally took the coronavirus COVID-19 seriously. He banned all travel to EU countries for 30 days.
The disease may seem benign to some. Around 95% or more of the people who get it will survive and symptoms are generally mild and far from scary. But what is scary is how fast it spreads. And there are too many unknowns about the disease to find comfort in the fact that less than 1,000 people have it.
China went from 1,000 patients to 80,000 in a matter of roughly six weeks, mostly all of it in a self contained, quarantined state called Hubei.
Italy went from around 20 cases two and half weeks ago to over 12,000. It is now the Hubei of the Western world.
Travel bans on China helped mitigate spread from travelers coming to the U.S. from there. All early cases last month were from China travelers. They have since healed.
The U.S. was caught flat footed by Europe, cruises, and European business travelers at major conferences. The U.S. is now playing catch-up in the mitigation phase.
Trump reiterated what the World Health Organization said this week, calling the coronavirus a global pandemic.
We are probably one sick politician, or one more circuit-breaker on the Dow away from declaring a national emergency, forcing the NYSE to close.
“When people don’t want to go out to crowded events you start to wonder if fear begets more fear. We are seeing a lot of that now,” says Patrick Healey, founder and president of Caliber Financial Partners in Jersey City, N.J. “Until you see fewer cases in Europe, I’d be worried. The threat of spread is greater there than it was in China,” he says, citing France, Spain, Germany and the U.K.’s slow response to the crisis.
Cutting The Tail
Italy was about two weeks too late, but at least they are doing something to save Europe. They shut themselves off. This is literally a “stop the world I want to get off” moment. Italy took the China approach. They put themselves on lockdown.
The U.S. has two fairly solid case studies with how to respond to COVID-19. One is the China path of lockdowns and forced quarantining, coupled with massive stimulus.
The other model is South Korea’s massive free testing and treatment, which also corralled the disease and kept infection rates low. Mortality rates are even lower at just under 1%.
A hybrid model of both seems to be best: lockdown clusters of the virus. Test like crazy.
China is healing. It’s already got its stimulus plan lined up.
“The China approach has worked. It’s been a draconian clampdown and takes away quarterly growth,” says Philipp Carlsson-Szlezak, chief economist for Boston Consulting Group in New York. “The high frequency data in China, the proxies for movement for goods and people, all of those see a nice pick up. And the infection rate curve of new cases in South Korea has bent downward. Just hope we don’t see any worsening outbreaks.”
By slowing the spread of the virus, which includes potential spreaders who came from high risk countries like Italy, China, South Korea and Iran, buys healthcare officials time. It keeps hospitals from being overwhelmed, which is what is happening now in Italy as cases rise, Italy still seems to be fine with ICU bed capacity at hospitals.
A nearly three month lockdown of Hubei, the epicenter province, means Hubei now officially has fewer infections than Italy. The number of new patients in China’s “ground zero” has slowed to double digits, instead of thousands three to four weeks ago.
Eventually, South Korea may also be forced to implement a version of the lockdown model to stop the spread of infection after someone working in a call center tested positive for the disease.
Without any firm facts on transmission, the risk of spreading the disease without showing signs of it are high.
As a result, China has maintained strict control of peoples movements in major cities. The South Korea testing model is harder for China due to its massive, urban population, which is why it is so important to keep those cities fairly inoculated.
From on the ground accounts in Beijing, that inoculation requires school closures, no movies, no malls, no non-essential businesses open and most bank branches closed.
Businesses close at 6pm to get sprayed with disinfectant. Street fumigation takes place regularly. Building sterilization takes place several times a day.
Italy is doing exactly this now. Spraying public spaces, primarily.
In China, face masks must always be worn or else you can’t ride in taxis, take public transportation, or enter any business. Temperature readings are mandatory upon entering an office building. People with slight temps get sent straight to quarantine, according to sources there.
Entire neighborhoods are blocked off to non-residents, with security personnel patrolling to check for proof of residence.
Apartments housing someone with the coronavirus are forced into quarantine. No one can leave.
Beijing has under 200 cases today. Shanghai has under 30, according to Johns Hopkins University data.
“We just can’t impose a China style quarantine, but corporations can impose a work from home policy. You can cut off work travel and that is already happening,” says Brendan Ahern, CIO of KraneShares, who is working from home on Thursday. “Corporations here are acting pretty quickly.”
NBA has canceled its entire season. The NHL put the rest of its season on hold. Major League Baseball is thinking of postponing opening day. The BNP Paribas Tennis Open was canceled, scheduled for this week in Indian Wells. Coachella, the outdoor indie rock event, was postponed. Broadway has postponed shows for a month. Private colleges are sending kids home for the semester. Princess Cruises isn’t setting a course for adventure for the next 60 days.
If the U.S. is dragged reluctantly into a South Korea/China lockdown model, it would usher in a further drop in economic activity. Mega stimulus will be only thing keeping it alive.
It is unclear if Republicans and Democrats can work together on this, as some may see a destroyed economy as a way to finally get rid of Trump in 2021.
“You’ll have the market constantly repricing and mispring,” says Nancy Perez, a portfolio manager at wealth management firm Boston Private in Miami. “Both political parties will have to take this on. No party wants to be blamed for not doing something.”
To offset the drag, fiscal stimulus is necessary to make sure companies can meet payroll and rollover debts, preferably at no interest directly from the Fed.
Disaster relief legislation from Congress can draw on the unlimited checkbook of the Fed to help keep individual, corporate, and even municipal bankruptcies from soaring.
“I’m looking at dozens of companies in the S&P 500 right now that can literally go bankrupt if the government doesn’t act together on this,” CNBC star Jim Cramer said on Squawk Box this morning. “The government should not be collecting any cash right now.”
Quarantining a city like New York would represent a significant tax on all business activity. Administration talk of a payroll tax cut is not enough. Bold tax cuts and deferments would be best. For Cramer, a tax holiday for six months or longer is even better.
In the first 8 days of the month, China has:
Required banks to provide a grace period for the virus-hit small and medium sized enterprises (SME) immediately upon application in repaying the principal and interest of their outstanding loans until June 30.
Waived penalty interest
Banks are providing special loan quotas for firms in Hubei, and lowering the financing costs for SMEs.
The Politburo called for accelerating the investment on “new infrastructure”, including 5G networks and data centers
Beijing waived social security taxes for SMEs for five months retroactive to February 1.
Phases Of A Pandemic
According to the Center for Disease Control’s “Pandemic Influenza Plan,” updated in 2017, there are four distinct pandemic stages in terms of caseloads — initiation, acceleration, deceleration and preparation for the next wave.
Europe and the U.S. are now in the acceleration stage.
Hubei is in the deceleration phase, but this comes following two months of lockdown.
Self-protective quarantine, lockdowns of outbreak clusters and testing are the best precautionary approach to pandemic outbreaks, writes Nassim Nicholas Taleb, famous “black swan” forecaster and author of the book Skin in the Game.
Taleb and colleagues from New York University and the New England Complex Systems Institute wrote in a note published recently that cutting mobility in the early stages of an outbreak, especially when little is known about the pathogen, are essential.
“It will cost something to reduce mobility in the short term, but to fail do so will eventually cost everything,” they wrote.
Earlier this week, a shutdown announcement posted outside a hospital in Hubei province’s capital city of Wuhan, touted the treatment of more than 1,700 patients since February 2 without a single fatality.
“If a general return to work occurs this week and new infections do not spike, Chinese markets could quickly be on the mend,” thinks Vladimir Signorelli, head of Bretton Woods Research in Long Valley, New Jersey.
Indeed, they are doing better than the U.S. The S&P 500 is down 23.2%. The CSI-300 Index in Shanghai is down 8.3%.
Should new cases balloon out in Shanghai and Beijing, it would be a huge blow to containment efforts and worsen the global economic outlook. Investors would then calculate similar re-occurring outbreaks in Europe and then in the U.S. once they get cleared of the one they are dealing with now, possibly taking them well into the summer.
“We may have a couple quarters of negative growth and a technical recession because of demand destruction,” says Perez. “Prepare for the volatility.”
Says BCG’s Carlsson-Szlezak, “If we are still dealing with this until the summer, with China-style quarantine measures in effect in places like New York, it will have a massive impact on the economy,” he says. “How massive? We don’t know.”
I’ve spent 20 years as a reporter for the best in the business, including as a Brazil-based staffer for WSJ. Since 2011, I focus on business and investing in the big emerging markets exclusively for Forbes. My work has appeared in The Boston Globe, The Nation, Salon and USA Today. Occasional BBC guest. Former holder of the FINRA Series 7 and 66. Doesn’t follow the herd.
The Dow fell more than 12% in total last week. Peter Kraus, chairman and CEO of Aperture Investors, and Liz Young, director of market strategy at BNY Mellon Investment Management, join “Squawk Box” to discuss the week ahead in the markets as investors brace for more turbulence.
Australia’s economy will record its first recession since 1991 as the hit from China’s virus-induced slowdown is amplified by slumping confidence and domestic disruptions from the outbreak intensifying Down Under, according to Bloomberg Economics’s James McIntyre.
Gross domestic product will fall 0.4 percentage point in the first three months of the year and 0.3 percentage point in the second quarter, ending a 28-1/2-year stretch of economic growth, he said in a report Monday.
“Isolations and domestic disruptions to contain the spread of the virus will have a mounting economic impact, which is likely to result in a further GDP contraction in 2Q and potentially beyond,” McIntyre said. “Stimulus, both fiscal and monetary, will help to reduce the damage, but is unlikely to be enough to offset the impacts.”
GDP will expand by just 0.4% in 2020, he forecasts, some 1.5 percentage points below his pre-coronavirus estimate.
The Reserve Bank cut interest rates last week and money markets are pricing in a further reduction in April, which would bring it to the estimated lower bound of 0.25% and open the door to unconventional policy. The government is finalizing a fiscal “boost” that could amount to A$10 billion ($6.6 billion) to support firms struggling with cash flow and help them keep on employees.
McIntyre predicts large budget deficits ahead as the automatic stabilizers — increased welfare payments and reduced tax collection — begin to take hold. That’s on top of the fiscal stimulus needed to boost demand and confidence.
Alan Oster, chief economist at National Australia Bank Ltd., expects the RBA will deploy unconventional policy as early as May, after reducing the cash rate to its estimated lower bound of 0.25% in April.
He sees the preferred option as yield-curve control — setting a target level for government bond yields at a specific duration — with the aim of flattening the yield curve and lowering the cost of debt funding.
An all-out price war between the world’s biggest oil producers is adding to the prospect of a recession as the coronavirus wreaks havoc across the world. Panic reigned in currency markets Monday as orders from traders and algorithmic machines snowballed.
That saw the Australian dollar plunge almost 5% in less than 20 minutes, the biggest one-day decline since 2008. Australia’s benchmark S&P/ASX 200 stock index slumped 7.3%.
The Treasury and RBA estimate the impact on tourism and education from China’s shutdown and other virus fallout will cut 0.5 percentage point from GDP in the first quarter. That doesn’t include supply chain disruptions and is in addition to a 0.2 point cut from wildfires over summer.
The Economic Impact of the Wuhan Coronavirus Outbreak
China’s economy is grinding to a halt as the government scrambles to stop the spread of the deadly Wuhan coronavirus, fueling fears that efforts to contain the outbreak will have worldwide economic consequences.
Bill Evans, chief economist at Westpac Banking Corp., revised his economic growth forecasts Monday and predicts contractions in the first and second quarters of 0.3% respectively, before a sharp rebound in the second half.
McIntyre said the comparison with the 2003 SARS epidemic is problematic because of the massive increase of China’s importance to both the Australian and global economies. He notes that in the Australian Dollar Trade-Weighted Index of the exchange rate, the weighting of the renminbi rose to 30%, higher than any other currency in the 36-year history of the gauge.
The channels through which the reduction in domestic activity transmits during a pandemic were laid out in a 2006 Treasury paper whose author is Steven Kennedy, the current secretary to the Australian Treasury. That analysis saw the economy contracting 5% in the first year.
Transmission of the virus in Australia is now occurring, meaning disruptions and shutdowns of aged-care facilities, child-care centers and schools. Health authorities anticipate several months of disruptions from the virus.
The economy will bounce back, McIntyre said, noting that fourth-quarter GDP released last week showed several segments turning around, including housing and mining investment. China is also set to stimulate its economy, which traditionally benefits Australia.
Property prices Down Under have surged since late last year when the RBA resumed easing.
“How Australia’s housing market weathers the virus outbreak will be a key area of interest given the earlier downturn in construction activity,” he said. “Australia’s resources sector also stands well placed to benefit from a resumption of activity in China’s construction sector and stimulus measures.”
Topline: Global stocks plunged after crude oil posted its biggest fall since the 1991 Gulf War after Saudi Arabia launched a price war with Russia.
Japan’s Nikkei index fell more than 5% on Monday, while stocks in Hong Kong and mainland China were also down as panicked investors in Asia flocked to safe-haven assets like government bonds and the Japanese yen.
European stocks followed suit, with London’s FTSE 100 index down almost 8% on Monday morning, France’s CAC 40 more than 7% and Germany’s DAX 6%.
The pan-European Euro Stoxx 50, measuring the Continent’s 50 largest companies, plunged more than 6% on Monday morning, its worst performance in more than a year.
U.S. futures were sharply down, with S&P 500 futures down more than 5%.
Oil prices plummeted with the benchmark Brent crude down to $33.20 a barrel, while West Texas Intermediate fell 31%, to $28.32 a barrel on Sunday.
The steep drop was triggered after Saudi Arabia announced it would raise production after OPEC’s deal with Russia to supply collapsed on Friday.
Big number: Some $90 billion ($140 billion AUD) was wiped off Australia’s markets on Monday, with the benchmark ASX falling more than 7%—its worst performance since the global financial crash.
What to watch for: Oil prices could drop to a low of $20 a barrel, Goldman Sachs analysts warned on Sunday, if the coronavirus continues to spread and the oil price war intensifies.
Key background: Global markets have posted some of their steepest falls since the 2008-2011 financial crisis with panicked moves from investors spooked by the potential impact of the coronavirus on the global economy, and an oil price war. The Federal Reserve’s emergency rate on March 3, 2020, provided a momentary confidence boost for the markets, which now will look for coordinated action from the G7 club of advanced economies to underpin the global economy.
Tangent: Some 110,000 people globally have been infected with Covid-19 to date, but as of Monday the number of new cases in China, where the pneumonia-like virus was detected, appear to be falling, while cases around the world continue to prompt strict quarantine measures, particularly in Italy, now the largest cluster of Covid-19-related deaths outside China.
I am a breaking news reporter for Forbes in London, covering Europe and the U.S. Previously I was a news reporter for HuffPost UK, the Press Association and a night reporter at the Guardian. I studied Social Anthropology at the London School of Economics, where I was a writer and editor for one of the university’s global affairs magazines, the London Globalist. That led me to Goldsmiths, University of London, where I completed my M.A. in Journalism. Got a story? Get in touch at email@example.com, or follow me on Twitter @bissieness. I look forward to hearing from you.
The economic consequences of the coronavirus epidemic have sparked a conflict among major oil-producing nations. Last week, oil producers were unable to agree on a reduction in production volumes, resulting in a price war between OPEC and Russia. That has sent oil prices plummeting. The price of oil collapsed by 31.5 percent at the start of trading, the lowest price since January 1991. As a reaction, stock markets fell sharply this Monday: In Tokyo, the Nikkei Index lost more than 5 percent, while the Hang Seng in Hong Kong fell almost 4 percent. Australia’s ASX Index fell particularly hard with a minus of 7.3 percent and in Germany, the DAX tumbled almost 8 percent at the start of trading. The picture around the Gulf is even more dramatic – markets have shed up to around 10% there. Subscribe: https://www.youtube.com/user/deutsche… For more news go to: http://www.dw.com/en/ Follow DW on social media: ►Facebook: https://www.facebook.com/deutschewell… ►Twitter: https://twitter.com/dwnews ►Instagram: https://www.instagram.com/dw_stories/ Für Videos in deutscher Sprache besuchen Sie: https://www.youtube.com/channel/deuts…#Coronavirus#StockMarket#Economy
Topline: The U.S. stock market has officially plunged into correction territory—at the fastest rate ever recorded, suffering its worst losses since the 2008 financial crisis this week amid ongoing panic over the spreading coronavirus and its impact on the global economy.
This week alone, the Dow Jones industrial average fell a total of 14%, the S&P 500 by 13% and the Nasdaq Composite by 12.3%.
The Dow plummeted nearly 1,200 points on Thursday—its biggest one-day drop ever, thanks to the coronavirus, which has now spread to at least 49 countries in a matter of weeks. Those losses continued on Friday, though the drop was somewhat less severe: The Dow fell 1.4%, while the S&P 500 sank 0.8%.
In a statement to reassure anxious investors, the Federal Reserve said on Friday that it was monitoring the “evolving risks to economic activity” posed by the coronavirus and further pledged to “act as appropriate” to keep the U.S. economy stable.
Some experts are skeptical any action from the central bank can stem market fallout from the coronavirus; Mohamed El-Erian, chief economic advisor for Allianz, told CNBC on Thursday that “markets will start freezing up even if the Fed cuts rates, which I think they will.”
National Economic Council director Larry Kudlow on Tuesday told CNBC that the virus is unlikely to become a full-fledged economic crisis, and described this week’s sell-off as a good buying opportunity. That same day, however, the CDC warned that the American public should brace for major disruptions from the coronavirus.
Among the stocks that have been hard hit this week are Apple (which is now flirting with bear market territory after falling 20% off its record highs) and American Airlines, which fell more than 25% this week.
Tangent: Hundreds of companies, from Apple and Nike to Starbucks and Microsoft, have issued warnings that the coronavirus will impact financial results for the first quarter and beyond. In a note on Wednesday, investment banking giant Goldman Sachs revised down its estimate for U.S. corporate earnings in 2020, forecasting 0% earnings growth for 2020 as a result of the outbreak.
Chief critic: “Markets are much too negative on the coronavirus. . . . The market was too expensive earlier in the year, but the coronavirus panic is overdone,” says Vital Knowledge founder Adam Crisfaulli. He points out that though the economic and corporate earnings fallout from the coronavirus will be severe, economic activity in China is normalizing, and that should help the bulk of the fallout remain confined to the first quarter.
Crucial quotes: “The global stock sell-off is showing no signs of slowing down,” says Edward Moya, senior market analyst at Oanda. He predicts the major indexes could “easily” enter bear market territory, though “expectations are still pretty high that the market will eventually snap back.”
“It has been a brutal week,” says Mark Freeman, chief investment officer at Socorro Asset Management. He expects a further sell-off next week, as investors wait to see how the situation evolves and how the Fed will respond, but says that “it is too early for the Covid-19 crisis to have a material impact on [U.S. economic] data.”
“This week reminded many investors of 2008, which isn’t a happy memory,” says Ryan Detrick, senior market strategist for LPL Financial. “Nonetheless, remember that the overall economic backdrop is still healthy in the U.S., but when fear grips, that doesn’t matter.”
“The impact to the economy will be severe, but not enough to create a recession (e.g., two consecutive quarters of negative growth),” says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. “It is the uncertainty that is most difficult to price in, so people are selling in the advance of concrete information.”
Crucial statistic: The benchmark U.S. ten-year Treasury yield hit a new bottom on Friday, falling below 1.12%.
Key background: Stock market losses accelerated after the CDC confirmed the first case of “community transmission” of the coronavirus in Sacramento, California. Globally, more than 83,700 people have been infected as of Friday, with more than 2,800 dead. Earlier this week, Italy, South Korea and Iran emerged as new coronavirus hot spots outside of China, causing further concern that the outbreak will spread to other major economies. The World Health Organization said on Friday that the virus now poses a “very high” risk at a global level.
I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at firstname.lastname@example.org
Of course, it comes as no surprise that most people who walk into my therapy office are experiencing psychological distress in one form or another. But, the vast majority of those individuals are also experiencing financial distress.
It’s no coincidence. Research shows financial issues and mental health problems often go hand-in-hand.
One study found that individuals with depression and anxiety were three times more likely to be in debt. Other studies have even found a link between debt and suicide.
A slight decline in mental health (long before you’d meet the criteria for a diagnosable mental illness) can be linked to increased financial stress. And increased stress can lead to poorer mental health.
Think of psychological well-being as a continuum. On one end of the spectrum is mental health. On the other end is mental illness.
You fall somewhere on the spectrum–and it’s likely to change slightly from day to day depending on a variety of factors, such as your physical health, sleep quality, nutrition, exercise level, stress, and overall mood.
If your mental health stays in a poor state for a length of time–or it just continues declining–you’re at increased risk for financial problems as well. Here’s how poorer mental health can take a toll on your financial situation:
1. Life Feels Out of Control
When you feel as though you’re losing control over your mood and your thoughts, you’ll likely begin to feel as though life is out of control too–especially your financial life.
You may even lose hope about a brighter future. And who wants to save for a big purchase or put money away for retirement when life feels as though it’s spinning out of control. You might feel like the one thing you can control is your ability to buy something right now.
2. You’re More Likely to Avoid Problems
It takes a lot of concentration and fortitude to tackle a tall stack of bills or to call the credit card company to address your late payment.
And of course, sitting down to create a budget creates high anxiety and it’s often painful to face the facts. It’s much more tempting to avoid those sorts of problems when you aren’t feeling your best.
3. You Get Desperate for Temporary Relief
When you’re in pain, you’ll do almost anything to get out of it–even if it’s going to hurt you more in the long-term. It’s one of the reasons the term “retail therapy” was invented.
Buying something right now, whether it’s a new pair of shoes or a car you can’t afford, will give you momentary pleasure. But, there’s a good chance it will create more financial distress in the long-term.
4. Self-Esteem Plummets
Quite often, the worse you feel, the worse you feel about yourself. And that can lead many people to try and overcompensate.
Low self-esteem can cause someone to buy expensive clothing, a name brand watch, or even a luxury car in an attempt to project an image of success.
5. Energy Levels Decrease
A decline in mental health often means poorer quality sleep, increased feelings of fatigue, and more trouble staying on task.
All of those things make it much more difficult to think about paying off debt–let alone take action. And it’s hard to create a plan for the bigger overall picture when you aren’t in the right state of mind.
6. Unhealed Wounds May Come Back to Haunt You
When you’re feeling down, your brain will recall all the other times when you felt similar feelings–and those just might be the lowest points in your life. Quite often, emotional wounds that never healed get re-opened as your mental health declines.
And for many people, that leads to changes in financial habits. A father who was teased for not having nice things as a kid may overspend on his children to prevent them from experiencing the same pain. Or, an individual who has never felt good enough might take out a bigger loan than she can afford in an attempt to get the attention she craves.
7. It’s Tough to Think Clearly
It can be hard to think about your grocery list, let alone your financial future when your mental health is on the decline. Making decisions, planning ahead, and organizing your financial situation may feel like an uphill battle that you’re unequipped to fight.
How to Improve Your Mental Health
Fortunately, there are steps you can take to improve your mental health–which can also improve your financial health.
Taking care of your body with adequate sleep, exercise and nutrition, socializing with supportive people, engaging in leisure activities (even when you don’t feel like it) and setting aside time to take care of your needs (like managing your budget) can help improve your psychological well-being.
If you’re struggling to build mental strength, get professional help. You might start by talking to your doctor to rule out physical health issues that might be behind your symptoms (like a thyroid problem). Then, you might try talking to a therapist who can help you identify concrete strategies for feeling better fast.
People with financial issues are more likely to suffer from mental health problems. The opposite can be said as well – People with mental health problems are three times as likely to be in debt. Guy Shone from Explain The Market says, “One in four are likely to suffer from mental health problems this year. And this is largely associated with financial issues.” In this segment, Shone explains how we could break the vicious cycle of financial issues and mental health problems. Shone talks about ‘Money and Mental Health’, a private body that puts problems faced by individuals in front of industries and attempts to break the vicious cycle. Tip TV Finance is a daily finance show based in Belgravia, London. Tip TV Finance prides itself on being able to attract the very highest quality guests on the show to talk markets, economics, trading and investing, keeping our audience informed via insightful and actionable infotainment. The Tip TV Daily Finance Show covers all asset classes ranging from currencies (forex), equities, bonds, commodities, futures and options. Guests share their high conviction market opportunities, covering fundamental, technical, inter-market and quantitative analysis, with the aim of demystifying financial markets for viewers at home. See More At: http://www.tiptv.co.uk Twitter: @OfficialTipTV Facebook: https://www.facebook.com/officialtiptv
U.S. equity futures edged higher, potentially lifting Wall Street to fresh record peaks again this week, as investors await the first of six major tech sector earnings reports later today that could make-or-break the recent stock market rally. Here are five things you need to know before the start of trading on Wednesday July 17.
1. Netlfix and FAANG
Netflix (NFLX – Get Report) , the first of the six major tech companies — along with Microsoft (MSFT – Get Report) — in the so-called FAANG complex of stocks will report second quarter earnings after the close trading today, with analysts likely keying on it outlook for online streaming subscriber additions in a suddenly competitive market.
Netflix itself is forecasting online subscriber growth of 5 million for the three months ending in June, a figure that would boost its worldwide total to just under 155 million, but the near-term loss of hits such as ‘Friends’ and ‘The Office’ could take its toll on growth rates in the coming months, as will the addition of rival streaming services from Disney DIS, Apple AAPL, and Comcast (CMCSA – Get Report) .
Microsoft will follow with its earnings report Thursday, while Facebook (FB – Get Report) , Amazon (AMZN – Get Report) , Google parent Alphabet (GOOGL – Get Report) and Apple will all update investors will quarter reports over the next two weeks.
The FAANG stock earnings — which comprise nearly a fifth of the S&P 500’s $26 trillion market cap –are expected to be a crucial test for Wall Street as benchmark test fresh record highs, thanks in part to hopes of deeper monetary support from the Federal Reserve, even as broader corporate profits suggest slowing growth in the months ahead as the U.S.-China trade war takes its toll on American businesses.
Bank of America (BAC – Get Report) will publish second quarter earnings Wednesday, with Morgan Stanley (MS – Get Report) rounding out the sector’s biggest players with three months results on Thursday, as investors digest a mixed bag of readings of the health of the country’s lenders amid a slowing — but solid — domestic economy and the likelihood of even lower interest rates.
Tuesday’s trio of big bank earnings — JPMorgan (JPM – Get Report) , Goldman Sachs (GS – Get Report) and Wells Fargo (WFC – Get Report) — all managed to top Wall Street forecasts for top and bottom line growth, but each signaled concern that Fed rate cuts would likely make near-term profits even more difficult to achieve.
Investors today will be looking at one of the sector’s key measurements — net interest margin — for signs of weakness in not only Bank of America, but also smaller rivals such as U.S. Bancorp (USB – Get Report) , PNC Financial (PNC – Get Report) and BNY Mellon (BK – Get Report) .
3. Bitcoin Bashed
Bitcoin prices tumbled well below $10,000 in overnight trading Wednesday as lawmakers on Capitol Hill grilled big tech executives and hounded social media giant Facebook FB over its plans to launch a its new ‘Libra’ digital currency next year.
Facebook’s unveiling of Libra earlier this month helped bitcoin rise past $14,000 amid a renewed rally in cryptocurrency markets linked to the hope that wider use of various digital coins would allow for faster adoption of bitcoins in everyday transactions.
However, with regulators and central bankers around the world expressing doubts — or outright hostility — to Facebook’s Libra ambitions, and President Donald Trump suggesting cryptocurrencies are “based on thin air”, bitcoin prices have fallen more than $5,000 from their early July peak.
“I know we have to earn people’s trust for a very long period of time,” Facebook’s David Marcus told lawmakers Tuesday. “We know we need to take the time to get this right.”
Marcus will appear before the Senate Banking Committee later today.
4. Oil’s Well?
U.S. oil prices bounced higher in early trading following data late Tuesday from the American Petroleum Institute which showed domestic crude inventories fell by 1.4 million barrels in the week ending July 12. If confirmed later today by the Energy Information Administration, the declines will stretch to a fifth consecutive week, the longest in at least 18 months.
Prices were further pressured by the slow return of production capacity in the Gulf of Mexico, where more than half of the area’s output, or around 1.1 million barrels per day, remains offline in the wake of storm Barry, which hammered the Louisiana coast this past weekend.
WTI futures contracts for August delivery, which typically dictate the direction of U.S. gas prices, were marked 29 cents higher in early New York trading at $57.91 per barrel.
5. Apollo Holo
The Smithsonian National Air and Space Museum will celebrate the 50th anniversary of the Apollo 11 moon landing mission with a with a life-size projection of the Saturn V rocket on the Washington Monument in a three-day tribute to astronauts Neil Armstrong, Buzz Aldrin and Michael Collins.
“The Washington Monument is a symbol of our collective national achievements and what we can and will achieve in the future. It took 400,000 people from across the 50 states to make Apollo a reality,” said Ellen Stofan, the Air and Space Museum director. “This program celebrates them, and we hope it inspires generations too young to have experienced Apollo firsthand to define their own moonshot.”
A 17-minute program outside the Smithsonian Castle, slated for July 19 and 20 will also recreate the Apollo 11 mission’s launch following Congressional approval for the displays earlier this year.
“I don’t feel this time is different. If we have another financial crisis, there isn’t even a plan A. We’re still coming out of the last financial crisis,” Kenneth Rogoff. Are the overheated markets headed towards another financial crisis? Dimensions to be addressed: – Concerns over leverage and liquidity – Implications of passive investing – Transforming financial services business models · Michael Corbat, Chief Executive Officer, Citigroup, Citi, USA · Fang Xinghai, Vice-Chairman, China Securities Regulatory Commission, People’s Republic of China · Anne Richards, Chief Executive, M&G Investments, United Kingdom; Young Global Leader · Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics, Harvard University, USA · David M. Rubenstein, Co-Founder and Co-Executive Chairman, Carlyle Group, USA · Jes Staley, Group Chief Executive Officer, Barclays, United Kingdom Moderated by · Tom Keene, Editor-at-Large, Bloomberg Television & Radio, USA http://www.weforum.org/
In December 2007, Larry Kudlow, then a talking head for the business network CNBC, proclaimed, “There’s no recession coming. It’s not going to happen.” That same month, the economy plunged into the worst economic downturn since the Great Depression. This week, Larry Kudlow, now the director of the National Economic Council, stood on the White House lawn and struck a familiar note: “I’m reading some of the weirdest stuff [about] how a recession is right around the corner. Nonsense,” he said. “Recession is so far in the distance, I can’t see it……….
Everyone wants to know how to create the elusive “recession-proof” portfolio. In 2008, I was asked to write a column on the topic, and since millions of us were still reeling from losing everything, the title I suggested was, On Monday I was Ready to Retire, Now It’s Tuesday. Catchy, yes, but when people woke up to find $10.2 trillion in wealth had been wiped out from the American economy, they wanted answers. More importantly, they wanted to take back some semblance of control over their financial lives and find a way to protect themselves from “next time,” which had quickly become their new worst fear……………