Declaring a global pandemic for the coronavirus AKA Covid-19, the World Health Organization [WHO] sent Wall Street into another tailspin, with the Dow Jones Industrial Average losing 1,464.94 or 5.86%, closing at 23,553.22, continuing the market correction. Yesterday’s 1,134 point run up attests that traders don’t know what to do when confronted with a global pandemic throwing a monkey wrench into the U.S. economy. Before the coronavirus swept the market, Wall Street hit another record high Feb. 12, pushing the blue chip average to 29,551.42. Today’s drop puts the plunge at 21.3%, officially putting the Dow into bear market territory. Short sellers have seized the market since the meltdown started Feb. 13, accelerating when news of the coronavirus swept financial markets. Even with yesterday’s “dead cat bounce,” Wall Street traders are in unknown territory.
Before there’s guidance from WHO or the Bethesda, Md-based Centers for Disease Control [CDC] over the status of the coronaviurs, Wall Street will continue to go sideways, if not down more. Allianz SE 52-year-old chief financial adviser economist Mohamed El Erian warned investors to stay clear of Wall Street until there’s more guidance from WHO and the CDC on Covid-19. “We have therefore made the assessment that #COVID-19’s can be characterized as a pandemic,” said Tedros Adhanom Ghebryesus, Director-general of WHO. Tedros confirmed that 90% of cornoavirus cases are confined to China, South Korea and Italy. If that weren’t bad enough for Wall Street, WHO went further. “In the days and weeks ahead, we expect to see the number of Covid-19 cases, the number of deaths, and the number of affected countries to climb even higher,” said Adhanom.
Climbing today to 125,815 cases and 4.607 deaths, there’s no end in sight to reassure Wall Street or anyone else. Panic buying has already taken place across the world, as the media hypes the pandemic into mass hysteria. Hoarding toilet paper, disinfectant and natural disaster goods, markets in the U.S. and across the globe have fueled even more panic buying. Italy’s decision yesterday to quarantine its entire 60-million population doesn’t reassure anyone on Wall Street or any global stock exchange. Dr. Anthony Fauci, director of the National Institutes of Health Allergy and Infectious Disease, said that the pandemic would get worse before it gets better in the U.S. College campuses, led by Harvard University, have shuttered, telling students to vacate dorms by March 15, continuing instruction with online systems. Major entertainment and sports venues are also shutting down.
Since the coronavirus started three weeks ago, global market has lost over $15 trillion in market capitalization, something that could take years to recover. When you look at what happened to the tech-rich Nasdaq in March 10, 2000 when it hit a record high of 5,056, only to watch its value plummet to 2.052 March 9, 2001. Twenty years later, the Nasdaq ended today’s session at 7,952, gaining since March 10, 2000 only 2,952 points or only 147 points of value a year. If that’s not a failed investment, then what is? Yet financial advisers urge investors to hold at least 60% equities in portfolios for “conservative” investors. Yet the Wall Street beat goes on, with the nation’s biggest funds either shorting the market or looking for value plays to capitalize on market sell-offs. If Covid-19 panic continues, market averages could drop another 20%, proving it’s hard to catch a falling knife.
Wall Street doesn’t get its guidance from the White House, where everything’s seen through rose-colored glasses. If the pandemic continues, there no end in sight to the selling frenzy, where the nation’s biggest hedge and private equity funds continue short-selling. Wall Street knows how to rake in cash while long-term investors watch their retirement accounts vaporize. Only positive news from WHO and the CDC will help turn things around on Wall Street, certainly not proclamations from the White House or Congress. WHO reported that recoveries from Covid-19 are roughly half of new cases totaling 126,007 and rising. As NIH’s Fauci said, things are going to get worse before they get better, expecting a spike in new cases and deaths in the coming days and weeks. Whether there’s a break in coronavirus soon is anyone’s guess, certainly not from the White House, Congress or Wall Street.
Chinese authorities were dealing with a rapidly escalating epidemic before admitting that bodies were piling up in Wuhan China. When reports of Wuhan’s 14 crematoria running 24/7, WHO knew that something was going on. Chinese President Xi Jinping traveled to Wuhan March 9, telling the world that China had Covid-19 under control. After lying about the epidemic for months finally jumping borders and infecting neighboring countries and now the world, Xi thinks his latest PR stunt means something. China should apologize for unleashing the latest plague on the world costing world financial markets $15 trillion and climbing. China’s Wuhan-based Institute of Virology, its major bioweapons’ laboratory, spread coronavirus to Chinese citizens and the world. China hasn’t come clean about what caused the coronavirus outbreak and the extent of its death-and-destruction.
