(1) It is impossible to gauge the impact the coronavirus is having on the economy, and not all of it is negative. Most corporations are carrying on with business as usual, but with accommodations for workers they could have easily put in place in the modern era to begin with. More spending is staying here instead of flowing out of the country.
(2) Some major events are being called off, which will impact local economies. But that does not mean people will not spend that money elsewhere. When people attend a basketball game, they are not putting more money into the economy than they otherwise would. They are spending money they would have otherwise spent on other forms of entertainment. That’s what they are going to do now.
(3) The hospitality industry is not systemically important to the US the way the banking system was systemically important to all consumers and corporations in 2008. Treating these events like they are erasing years of earnings for regular corporations in the stock market is idiocy. And I don’t care what anyone says, there is not an argument for bailing out cruise ships, most of which aren’t domestic operations anyway.
(4) Trump’s travel ban to Europe is unlikely to last as long as he says it will. This is exactly what I said he was going to do in an earlier post, and by all indications banning travel to affected areas for weeks has been highly successful at limiting the spread here. If you do not believe that to be true, we should have seen a dramatic escalation in cases here a month ago.
(5) There is likely going to be significant popular push back against these drastic measures at some point, probably some point soon. I do not see most Americans demonstrating fear on the level that the chattering class is pumping out. The resentment toward politicos arbitrarily trying to tank the economy will probably be strong.
(6) Trump has economic stimulus plans in the works, and they include things like a long-term payroll tax holiday. Woe to the politicians who stand in his way during an election year. They will be the ones who own any further pukes, not Trump. The American people have high levels of distrust in the media and Congress on a normal day. If they see you standing in the way of a normal, functioning economy, you are toast.
One thing Trump is doing that his critics underestimate is coming up with stimulus ideas that go directly to households. That is what did not happen in 2009 under Obama, and that’s why recovery efforts then floundered. That also means Trump’s “bailout” ideas will be a hell of a lot more popular with ordinary Americans than bailing out specific corporations (like Government Motors).
(7) Once those stimulus plans are released, you will see stocks reverse sharply, which they already do with even rumors of a stimulus.
(8) In the end, this is going to be a month-long period of extreme volatility. It’s not even unprecedented. It’s a great opportunity to invest in durable American brands.