Declaring a State Emergency today, 52-year-old California Gov. Gavin Newsom tanked Wall Street, driving short-sellers back after the Dow Jones Industrial Average gained 1,170 yesterday, in the second biggest one-day gain in U.S. history. Newsom jumped all over today’s $8.3 billion urgent aid bill passed by the U.S. Senate today, awaiting Trump’s signature. Newsom wanted to be first in line for millions in U.S. coronavirus AKA Covid-19 funds, instead costing investors over trillion dollars in market wealth. “We have the resources,” said Newsom. “We have the capacity. By this evening we will have contacted every county health official that his someone who came off this cruise. They will have their contact information and begin the process to contact those individuals,” said Newsome. Newsom refers to the Grand Princess Cruise that disembarked in San Francisco Feb. 22.
Newsom is racing against time to stop the spread of more Covid-19 coming from the Cruise ship passengers infecting scores of Californians. “This is a proclamation, I want to point out, is not about money,” Newsom said, raising even more suspicions. “It’s about resourcefulness. It’s about our ability to add tools to the tool kit.” Newsom sent Wall Street tumbling declaring a statewide emergency, prompting Wall Street to sell-off. Had Newsom gone about his preventative efforts quietly, it wouldn’t have created the kind of panic seen on the street. Global cases of coronavirus exceed 96,000, over 80,000 in China, where the virus metasticized Dec. 31 from humans consuming infected bat meat in Wuhan, China. If China reports accurately, and that’s a big if, there’s been over 3.200 deaths, with more cases emerging in the U.S. and 20 other countries. So far, the U.S. has 160 known cases, with 11 confirmed deaths.
Wall Street reacted today to Newsom’s emergency declaration, dropping the Dow Jones Industrial Average 969.58 points or 3.58%, giving back most of yesterday’s 1,170 point gain. Newsom’s declaration sowed more panic in Wall Street and Main Street, where the uncertainty about transmission and death rates spread growing panic. “We don’t have a very good sense for simple things like lethality, its infectiousness and its current prevalence in the population,” said Dr. Howard Forman, medical professor at Yale’s School of Public Health. “It’s becoming harder and harder to reassure them [public] when we see, every day, tens, if not dozens, of cases now coming out,” raising more concerns for health officials. If the Covid-19 crisis spirals, public health officials could cancel concerts, sporting events and any public event expected to draw large crowds including debates and political rallies.
Vice President Mike Pence met today with 3M, the maker of N95 facemasks to ramp up production. Pence got commitment from 3M to produce 35 million more masks a month starting soon. Gilead Pharmaceuticals CEO Daniel O’Day said his company is working round-the-clock on clinical trials of its antiviral drug remdesivir to provide urgent treatment to those infected with Covid-19. Health and Human Services Secretary Alex Azar confirmed that the federal government is working to complete 1 million test kits. Despite these efforts, Wall Street grows more wary by the day, watching Federal Reserve Board Chairman Jerome Powell slash the Federal Funds Rate March 3 from 1.75% to 1.25%. Like everyone else, Powell’s at a loss to know what to do to deal with Covid-19. Upending Wall Street, coronavirus threatens to push the world economy from slowdown to recession.
Wall Street has a way of making profits no matter what the economic conditions around the globe. It’s clear that short-sellers have taken over markets, sweeping up hefty profits at the expense of long-term investors. More bad Covid-19 from China suggests that the crisis will get worse before it gets better, leaving Wall Street in sell mode. Analysts worry about first quarter GDP growth, especially if a wide swath of industries tied to travel business, including air, train and sea travel, hotels, restaurants, suppliers, etc. take a hit. If public officials start canceling entertainment and sporting events, it only breeds more uncertainty on Wall Street. Today’s emergency declaration by Newsom threw markets into a tailspin, exaggerating dangers, while, at the same time, getting in line for federal dollars. As long as Covid-19 cases and deaths rise, Wall Street won’t settle down anytime soon.
Chasing after federal emergency management dollars, Newsom sowed more panic in Wall Street, causing today’s sell-off. With about 50 cases and one death, it was premature to declare a state of emergency. Newsom could have gone about his Covid-19 preparedness with county and state health agencies without hitting the panic button. While it’s good to be safe, it’s also good to not panic or spread that panic to other states. “If you believe the market . . . there is an expectation of a severe economic disruption coming in the form of school closures, now large gatherings, widespread business closures, and everything else,” said senior market analyst Jim Bianco. Talking about worst-case-scenarios does nothing other than create more panic in the public, already freaked out. If local, state and federal officials don’t want to harm the U.S. economy, they should refrain from public declarations.
