Premarket: Trump’s address didn’t help Apple, markets

From “Dow futures drop over 1,000 points after Trump’s coronavirus plan fails to impress investors” posted on CNN Business early Thursday:

US stock futures plummeted Thursday after President Donald Trump used a national address on the coronavirus to announce a ban on most travel from Europe, but failed to deliver the comprehensive economic and medical response to the outbreak that investors are craving.

Dow (INDU) futures plunged more than 1,000 points, or 4.6%. S&P 500 (SPX) futures are down 4.3% and Nasdaq (COMP) futures dropped 4.5%.

The pain extended to global markets. London’s FTSE 100 (UKX) dropped 5.3%, Germany’s DAX (DAX)declined 5.5% and France’s CAC 40 shed 5.4%. Italy’s benchmark stock index, which has dropped 18% this week, fell another 5.1%…

Investors are struggling to see the endgame and “traders are hammering the sell button now thinking the US government has fallen well behind the curve in its [coronavirus] response,” said Stephen Innes, a market strategist at AxiCorp.

My take: In China, they’re taking everybody’s temperature and isolating possible cases. That’s what I call a plan.

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  1. Jacob Feenstra said:
    Much of my work involvement is about strategic planning. A set of ad hoc reactions doesn’t constitute a plan in my book of definitions.

    March 12, 2020
  2. Jerry Doyle said:
    I can’t help believing that the president sees Covid-19 as just another influenza strain working its way through the populace and his believing that the appropriate response should be no less than the response to other flu viruses. It is this belief why I feel he continues to procrastinate in delivering a comprehensive economic and medical response to the outbreak investors crave. The president’s personality usually dominates issues affording him the forceful ability to maneuver a path toward his liking. And so, he announces what he feels is the needed antidote to the problem confronting the nation: a travel ban for 30 days intended to insulate Americans from the coronavirus to stop the spread and some other measures lacking specificity. But the virus already is here in the US. The response seems more of a knee-jerk reaction instead of a comprehensive economic and medical plan most everyone view is needed to address the virus. And even the travel ban response seems nebulous. Lordy, just notice the circuit breakers hit. Markets in free-fall.

    March 12, 2020
  3. Fred Stein said:
    The problems are bigger, but we will get through them. Having a president that fires people who speak truth to power makes them worse.

    The problems in no specific order: (All have ripple effects)

    1) Covid-19: We aren’t testing or screening, nor do we have a plan to do so. Hence we do not know where and to what extent the threat is, nor do we have a plan. (But, the mortality rate is likely lower because the denominator is higher. And it seems for people under 40, the mortality rate is much lower.) As Jerry points out, the lack of plan adds uncertainty which hurts the economy and the market.

    2) Oil price war: This creates localized economic pain and some asset devaluations. Oil exploration and development requires debt, adding to the woe. The industry will cut back on infrastructure projects. (Top down stimulus won’t change the dynamics for this sector.)

    3) Positive feedback can be a virtuous, or a vicious, cycle. Before Covid-19, stocks were priced to an infinite goldilocks economy. This created a wealth effect by consumers and companies which increased spending and investing. As these go into reverse, we stabilize to new growth and P/E multiple benchmarks across the board.

    March 12, 2020

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