Stocks had their worst week in the 2008 crisis at corona virus fears and hedge fund trading of the smile index ruled the day. At the close the Dow was down 357 at 25,409. The NASDAQ was up. Today was the first time this week we saw a rally at the close. Both IBD and BTS are on the sidelines. The big issue is uncertainty regarding the human and economic cost and with a two week incubation period this uncertainty could last a couple weeks. Some brave souls are indicating that US markets have become oversold but there is more worry about Europe since they went into this on a weaker economic footing and are more dependent on exports to China than the US. For the week the Dow was off 13%.
The corona beer virus spread appears to have crested in China while it continues to grow globally with Iran, Italy and South Korea being hot spots. The concern is how soon businesses in China can get back to work and will they be able to survive the intervening cash crunch without defaulting. Reports show that Starbucks and Apple stores in China are opening up again but travel restrictions are preventing customers from rushing into stores and getting back to work at factories. From a global standpoint various countries are clamping down on travel and gurus are now forecasting a slowing global economy as a result meaning less demand for oil and other raw materials. Here is the latest data for virus counts.
• Mainland China: 2,788 deaths among 78,824 cases, mostly in the central province of Hubei
• Hong Kong: 94 cases, 2 deaths
• South Korea: 2,337 cases, 16 deaths
• Japan: 931 cases, including 705 from the Diamond Princess cruise ship, 11 deaths
• Italy: 650 cases, 15 deaths (caused by wealthy Chinese on a ski trip in the Apls)
• Iran: 388 cases, 34 deaths (Iran’s VP reportedly has the virus)
• United States: 60 cases
In the US there is action on several levels to monitor and contain the virus while also keeping the economy humming. Fed Chair Powell noted that the US economy appears in good shape but they are ready to act if things change. WHO (World Health Organization) and CDC are working together with states, hospitals and other jurisdictions to monitor and report while biotech companies are working overtime to find a treatment.