The coronavirus continues to evolve…now it is apparently two separate strains.
The markets continue to discover and adapt. Mostly, what they are discovering is that companies are worth less…and bonds more…than they were a few weeks ago.
The authorities continue to react, resist, and panic. They might not be able to do anything to stop the virus…but they might be able to get stock prices up!
And people get along as best they can. The wealthy retreat to their country houses…and work online. The rest continue to show up.
Bloomberg asked cart vendor Mohammed Abdrabou in Manhattan what would happen if the stockbrokers, clerks, and accountants stopped coming to the office.
‘I would get no business,’ he said. ‘That would be very bad. I have a wife, kids, rent.’
By accident more than design, we’re working remotely from Nicaragua. And yesterday, our ‘better half’ arrived from the U.S.
‘I’m glad you were able to get here,’ we greeted her. She had been helping with a new grandson in Baltimore. With flights being canceled and travel bans reconsidered, we were beginning to wonder if she’d be able to get here at all.
Later, we enjoyed a romantic dinner together, overlooking the ocean.
‘I hope you didn’t bring the virus with you.’
‘Well, if I did, at least we’d die together.’
‘I think I’d prefer to live apart.’
‘But maybe only one of us would survive…that would be sad, wouldn’t it? I’d be all alone.’
‘How do you know you’d be the survivor?’
‘I don’t know; I’m just feeling lucky.’
‘Well, I just hope it’s you who lives, dear…You’re such a big help to the grandchildren.’
‘How sweet of you to say so.’
‘Do you have a burial plot picked out?’
‘A burial plot? That’s the last thing I need.’
‘Exactly. I was just thinking ahead. But I guess we should treat each day as though it were the last. Sooner or later, something’s going to get us. ‘
‘Yeah…I think I’ll take up smoking. The coronavirus kills you in two weeks. Smoking takes 30 years…’
System compromised by coronavirus
As we saw last week, the real problem is that the virus lays bare the fragilities in the financial system.
Over the past 10 years, the feds discouraged savings, pushed up asset prices, and weirded out the whole economy with fake interest rates and fake money. Now, with its immune system severely compromised, the economy is afraid to go out in public.
On Friday, it looked like the stock market was headed for another big down day, with a loss in the Dow of another 1,000 points. Then Boston Fed President Eric Rosengren came out with this:
We should allow the central bank to purchase a broader range of securities or assets. Such a policy, however, would require a change in the Federal Reserve Act.
This was enough to keep the gamblers in the casino a while longer. The Dow finished the day down only 256.
And Saturday morning, The Wall Street Journal published an even dopier idea:
Congress should send you $1,000 — and another $500 for each of your children — as soon as possible.
Given the mounting economic risks posed by the spread of the novel coronavirus, Congress should act swiftly but thoughtfully to pass fiscal stimulus. This would be in addition to continuing to provide ample funding for medical research, testing, prevention, and treatment.
The stimulus’s total cost would be about $350 billion, but could be larger or smaller depending on how the economic situation unfolds. Congress should design it to be accelerated, big, comprehensive and dynamic.
The feds aren’t backing off. They’re doubling down on their mistakes.
But the virus isn’t backing off, either. By Friday night, The New York Times counted 308 cases in the U.S., with 17 deaths, including the first on the East Coast.
Sunday morning, we discovered that Italy had decided to quarantine 16 million people. France is banning big gatherings. And the Louvre is closed.
The Washington Post:
Panic grips world markets as coronavirus fear unleashes oil-price war
A new oil price war sparked by the coronavirus sent shock waves through financial markets, with stocks tumbling around the world as more countries implemented measures to contain the outbreak and the United States’ tally of infections passed 500.
Oil is down to $30 a barrel. And the Dow plunged 1,800 points at the open.
Also from Europe came two more bits of news. The first was a tragedy: Our ‘home’ town in Ireland, Youghal, cancelled its St. Patrick’s Day parade. The second struck a more light-hearted note:
(Bloomberg) — A top political party leader in Italy and a French lawmaker caught the coronavirus as the outbreak continued its global advance.
A 55-year-old Iranian lawmaker died from the illness, the first fatality among 23 infected members of parliament.
Typically, politicians spare themselves from the mischief they do. But the Coronavirus is no respecter of the elite. And it doesn’t give a hoot about rate cuts.
Already, two members of Congress are self-quarantining. Will Congress close its doors? Will the next presidential election be called off?
What a drama!
Imagine, the commander in chief lying in the hospital, as the whole world holds its breath…one half praying that he pulls through…the other half rooting for the bug!