Today is Monday March 9th, 2020 or perhaps ‘Black Monday of 2020’ as the world economy and financial markets would suggest. The Dow Jones Industrial Average dropped (-5.41%) today as the US Stock market experiences decline of the same undoing as the 2008 financial crisis.
To make matters worse for the ‘safe’ investors who want to transition their investments toward bonds, the fed rates cut of 0.50% took place last week and declining 10-year treasury yields continue. To be clear, I love investing in treasury bonds as the long-term performance is outstanding and I am not worried in the slightest about the future of the bond market. If the treasury does not issue any bonds there will be more complex repercussions.
Similar losses reported today in the NASDAQ and S&P 500 👇
The outbreak of the coronavirus has caused mass panic across world markets and the media are reporting the spread of the virus and containment efforts in accordance with public officials. To add fuel to the fire (no pun intended) oil prices plunged HALTING THE STOCK MARKET for 15 minutes due to fear of recession! In my investment career this has never happened in such extreme circumstances.
The fact that the statistical data of the coronavirus doesn’t compare with the flu, it certainly has been promoted heavily by the media as financial markets are absolutely tanking. The first case of the coronavirus in the US reported on January 20th occurred in Washington State and since then 552 confirmed cases were recorded. It is safe to say the US has been largely untouched by this virus comparatively however the economy is cause for concern.
Below is a map of the outbreak in the US:
President Trump illustrating statistics regarding the virus 📲
President Trump has been reassuring the American people that the Administration is doing everything possible to contain the outbreak and spread of the disease in accordance with public officials. He insists that “nothing is shut down, life and the economy go on”. The CDC has been issuing precautions as the virus spreads throughout Europe and into the US.
Here is how the CDC describe the virus, “CDC is responding to an outbreak of respiratory disease caused by a novel (new) coronavirus that was first detected in China and which has now been detected in almost 90 locations internationally, including in the United States. The virus has been named “SARS-CoV-2” and the disease it causes has been named “coronavirus disease 2019” (abbreviated “COVID-19”).
On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the outbreak a “public health emergency of international concernexternal icon” (PHEIC). On January 31, 2020, Health and Human Services Secretary Alex M. Azar II declared a public health emergency (PHE) for the United States to aid the nation’s healthcare community in responding to COVID-19.
Let’s hope the world leaders, governments, and public officials can all unite to discover solutions to the decline in the economy and put away the recession fears. For now investors should remain calm as the long-term is where real returns are made.
Thanks For Reading,
Michael Moran, IHG Management