As of writing this post S&P futures are down over 50 points; Dow Futures are down almost 500 points. The news that novel coronavirus (COVID-19) has broken out in a major way in northern Italy, South Korea, Japan, and Iran has spooked traders who would rather sell first and ask questions later. As the sell-off deepens, margin calls will hit, which will deepen the panic. At that point, we could get capitulation.
We have been saying for some time now the market is richly valued and ripe for a healthy correction; this may be it. It will be interesting to see what the Trump administration (and the Fed) does regarding the pandemic in the coming days as it relates to market pressures. COVId-19 has yet to take hold in the U.S., despite the decision to fly at least 28 infected Diamond Princess passengers to CONUS military bases for quarantine. The American economy is resilient and other than supply chain issues, not correlated to Chinese business conditions. The effects of the Chinese contagion will be company specific.
However, it is likely we will have a breakout of the pathogen sooner or later in-country. COVID-19 is simply too contagious for that not to happen.
This correction will be a massive buying opportunity long-term. The contagion will force American companies to move manufacturing back to the United States. The lure of cheap labor in China will be over, in favor of the America First agenda. This will further strengthen Trump’s economic program`, and results.
In fact, the epidemic is simply accelerating the collapse of the Chinese economy which was already underway due to Trump’s trade policies.
The Trump economic miracle is still in-tact. This correction will simply be an opportunity for those who didn’t believe it at first to get on board at a reasonable price. The next decade will be amazing for America..
- Coronavirus Threat To Economy Never Went Away…Market Just Realized That
- Trump Administration Likely Signed Death Warrant For Many By Bringing Plane Loads Of Infected Ship Passengers Back To US…Question Is Why?