What Should Investors Fear Most This Week?
Donald Trump’s desire to quickly restore the economy, despite the continued spread of the coronavirus, could backfire, provoking even more panic among the population and an increase in mortality, some investors say..
President Donald Trump said Tuesday that he wants the US economy to be fully operational by Easter Sunday, despite expert warnings about the deadly threat of the coronavirus. Easter this year falls on April 12, which is less than three weeks away..
Trump’s comments on Fox News at the White House are a result of more states imposing emergency measures, including shutting down businesses and ordering residents to stay at home to try to slow the spread of the disease..
«We are discovering this incredible country. Because we have to do it. I would like it to be done for Easter», – Trump said.
The number of people diagnosed with COVID-19 has increased significantly in recent days as test kits become more available in the US.
At least 46,500 COVID-19 cases have been confirmed in the US, including 590 deaths, according to Johns Hopkins University..
Medical experts, including Trump administration scientific director Dr. Anthony Fauci, have strongly advocated limiting human contact, saying it is better to react now than to regret later..
Coronavirus fears, government containment measures that have affected businesses and workers – have spiked unemployment and led to a dizzying plunge in stock markets in recent weeks.
The White House and leading lawmakers spend long hours on Capitol Hill to approve the final details of a massive stimulus bill that will provide relief to those affected by the virus. The stimulus package is expected to cost at least $ 1.5 trillion and could include direct cash transfers to Americans and about $ 350 billion in aid to small businesses..
Trump has repeatedly expressed his desire for the economy in the past few days. «opened», allowing businesses «back to work».
«The sooner we get back the better it will be», – Trump said on Tuesday live in the Rose Garden at the White House.
On Tuesday, he and his chief economic adviser, National Economic Council director Larry Kudlow, suggested that the stimulus bill could be a springboard for an economic revival..
After an abundant "hemorrhage" within weeks, stocks rebounded on Tuesday as lawmakers made it clear that a bipartisan stimulus package deal is nearing approval, and Trump has called for workers to return to factories and shops in the next few weeks.
Trump Says U.S. Can’t Maintain Current Trend of Restricting Business and Trade in All States.
«We’re not made that way, Trump said.. «I don’t want the cure to be worse than the problem itself. … you can destroy the country this way.»
Trump also once again compared coronavirus to more common dangers such as flu and car accidents in a clear attempt to reduce the risk associated with the new disease..
«We lose thousands and thousands of people a year from the flu. We do not isolate the country », – Trump said.
However, the news that Trump may ease restrictions soon has been poorly received by investors who remain concerned about the uncertainty over the coronavirus and the economic losses associated with it, said Axel Merck, chief investment officer of Merk Investments..
«Markets will react negatively, as everyone is already convinced that this approach does not work. First of all, you need to cope with the increase in incidence», – he thinks.
Initial estimates of the economic impact of the pandemic have gotten worse in recent days. Unemployment in the United States could reach 30%, and financial reports for the second quarter risk being half of the norm, said President of the Federal Reserve of St. Louis James Bullard.
Jennifer Pline, head of asset management at Cambridge Trust in Boston, said it was too early to judge whether the restrictions should be lifted..
The cost of a mistake can be fatal. Study by Imperial College London predicts 2.2 million U.S. deaths in an unrelenting epidemic.
Economists at Northwestern University and the Free University of Berlin have calculated that «optimal COVID-19 containment policy» will exacerbate the subsequent recession, but save 600 thousand lives.
David Kotok, chairman and chief investment officer of Cumberland Advisors, said it is critical to get accurate antibody tests and calculate recovery rates.
«Doubt the market will start to grow if people continue to die everywhere», – he thinks.
However, there are those who believe that it is more important to return the economy to its previous level of openness..
Rob Arnott, founder of Research Affiliates, said job losses and other economic hardships that could result from further isolation would potentially be more harmful than the virus itself..
«Our way of coping with the epidemic will kill many more people than it will save», – said Arnott.
Gregory Daco, chief economist at the Oxford School of Economics, said that even if the restrictions are lifted, businesses and households will remain very cautious and financial intermediation will remain under stress.. And, since almost the entire rest of the world is in quarantine, it is not very smart to force events..
Few other countries are currently trying to loosen up the tough measures taken to contain the spread of the disease. Quite the contrary, for example, Indian Prime Minister Narendra Modi on Tuesday announced «complete isolation» countries with a population of 1.3 billion people.