Negative market Monday opening, dire economic numbers predicted
If you ever were wondering what max uncertainty and fear and panic is, it is right now in the financial markets as the stocks globally opened up, US stocks open limit down, and I’m doing this on a loom so you can see the headlines to my left. You can see that there are limits down, oil tumbles, markets are a wreck. The Senate just had a procedural vote that was blocked by Democrats who are unhappy with the nature of the $2 trillion spending bill. Speaker Pelosi over in the House says that they’re going to pass their own bill, which is vastly different from what the Senate is. And you’re hearing a lot of people scream 2008 tarp. And I totally understand where they’re coming from. And that’s one of the reasons why we’re seeing the market’s down as much as we have.
What’s going on with the coronavirus?
We also had a lot of uncertainty on Friday. Markets ended down 4.5% or more depending on which ones you look at. But this is all about what’s going on, not only in the US Senate and in the House, but it’s just the way it’s being perceived. Like not enough is getting done as fast as it could be done. And the reason for that is of course is what’s going on with the Coronavirus. And that’s why I’ve got the John Hopkins screen up over to your left, my right, and you can see these numbers. They’re just growing and growing and growing. Italy’s numbers are particularly troublesome. What I also think though, the number of deaths that they had today was less than they had yesterday. So the rate of change of the rate of change is really what we’re trying to get at.
In other words, it’s not so much that the increase. If we had a 5,000 increase in the number of infections in the United States today, that would be large. But if that comes from a base of 33,000, which is where we’re at right now, that’s less than what it was two days ago when we only had 15,000 and we had a 5,000 increase. So that’s what we’re trying to get at. We’re trying to figure that out. Let me just click on what’s going on in the US so you can see it and I’m going to zoom in here and then we’re going to take just a quick peak, but you can understand why New York’s aflame right now because what we’re seeing there is that they really have become the epicenter for what’s going on in the United States with 15,000, almost 16,000 confirmed with 400 deaths, and that’s really disturbing.
Now the rest of the country isn’t experiencing as much. Washington’s gone up, but it’s certainly not anywhere near the numbers in New York. Even California, only 1,600 confirmed there. If you go down to Texas, 625, but Chicago obviously… Or that’s Michigan, sorry. The Chicago’s at a thousand. I mean, these are much smaller than New York, so New York has become the epicenter for the United States. Now, what I want to point out here, and I want to go down to this graph down here, is this is what we’re getting at. We’re trying to look at the number of infections and these are the raw numbers and you can see how fast they’re growing outside of China. So that’s China and that’s pretty much flattened out. But the rest of the world is still growing rapidly. And that’s what I think is interesting here.
This is the actual versus logarithmic. So let’s go to log. And that’s really what we’re trying to see. You can see how China’s flattened out for sure. And the number of recovers is starting to go up a little bit more, but this curve is still going up. Maybe not at the same pace that it was down here or even right here where it had a big jump, but that’s what we’re trying to figure out, if that’s going to eventually flatten out. So the rate of change is what we’re looking for and this is what the markets are focused on. There’s just so much fear and uncertainty when it comes to what’s happening in the markets. We’re having a negative contest going on between all of the major financial institutions to predict the worst outcome for this quarter and maybe for the year. I’ve seen some predictions that unemployment is going to go up by 20% in this quarter, that the US economy could drop by 30%. Those are staggering numbers in this quarter and they certainly would extend beyond this quarter.
Economic predictions for a recession?
Not sure what they would be for the third quarter and maybe into the fourth quarter. But the good news is, what we’re seeing overall is that there are a lot of things happening from the Federal Reserve that are pumping money in dramatically into the economy. And remember, this isn’t like 2008. Yes, this is much worse, but thank goodness that we already have so many of those programs that the Fed can just reach and grab and plug in like the money market support, like backstopping commercial paper, and so on because we’re going to need them. And we’re going to need as many as possible. So it’s a very, very difficult time. This is about as ugly as I’ve ever seen in my lifetime. It’s kind of hard to wrap your head around how fast things are moving and how bad things are moving.
Will the fiscal stimulus bill get done?
So, let’s see what goes on this week. My guess is within 24 hours, we’re going to have a fiscal spending bill because we’re going to see the markets continue to tank and we’re going to have a strong wakeup call by both the Democrats and the Senate and, in the House, and the Republicans. Everybody needs to get on board with this and move forward on it. There’s some other good things that are happening, but I don’t want to sound like a broken record. It’s hard to see positive things happening right now in the face of these day to day declines. So let’s keep an eye on the rate of change and the rate of change and we’ll go from there. I’m Andy Bush, economist and market experts. I’m sharing my views on what’s going on. I hope this helps, although I wish it was better news.
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