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February 8, 2020 | Update on CoronaVirus – will it affect our financial markets?

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian: http://kingdomecon.wordpress.com.

 

My investor friends at the clubhouse do not view this coronavirus as relevant for Americans. The majority think that this virus will not affect our growing economy (under the Trump administration). Job growth and stock market growth will not be affected is their view. Is this valid? My sense is that it is not valid. Let’s review some data to discern what is happening:

1. This coronavirus started in January, 2020, from a meat market in Wuhan, China (so it seems). The virus is now shutting down major cities over in China (some 17 cities are in lock-down as I write).
2. The deaths from the virus as of January 29 were 170 (all in China) and confirmed cases were at 7,783. The first American to die was report today (February 8). As of February 2, the numbers grew to 425 deaths and 20,438 confirmed infections. As of February 8, the deaths are at 724 with 34,974 cases of infection.
3. The trend has not peaked as of today (within China). Some 20 countries have reported that the virus is present. All this implies that the numbers will grow and the effects on our markets will also grow.

Conclusion:
 The financial markets are being impacted by this virus and the shut-downs that have been implemented to date. My sense is that the markets over in China will be seriously affected going forward. This means that economic growth in China will suffer and this will spill over to most markets later in 2020. Already, the slowdown is evident by many indicators.

Oil demand is down, natural gas demand is down, shipping of raw materials is down, and auto sales are down. The next major industry that could be affected is our real estate sector. As I write, this sector is peaking and some think that this could continue for all of 2020. My sense is that real estate sales are slowing now and this will grow during 2020. My Zillow app is giving me daily price drops on many properties in Arizona and California. This is likely to continue in other states during 2020.

The other sector which is being impacted is our auto sector. Falling sales in China are happening now. Some estimates are that sales will decline globally by 4-5 million units. This is a trend in motion and I will watch this trend as it changes. Consumer spending in China is grinding to a halt as people forgo plans to spend during the country’s biggest annual holiday, the Lunar New Year (just over). All this is magnified by the coronavirus situation. Will America experience any effects from all these factors?

My sense is that the USA will be affected later in 2020 (prior to the election date). This impact could play a major role in our coming elections. Mr. Trump could be in trouble if all this happens prior to the election in November. My investor friends support Mr. Trump (mostly) because of his economic policies and the growing stock market. Here are some websites to review on all the above issues:

1. https://www.bloomberg.com/quote/BDIY:IND (this index is a leading indicator of potential changes within our financial markets). Watch this indicator for the next couple of months to confirm its significance.
2. https://www.nytimes.com/2020/02/08/world/asia/coronavirus-china.html (the first American died over in Wuhan from the coronavirus today). The peak infections has not been reached as yet. China will have major financial implications from this virus.
3. https://www.nbcnews.com/health/health-news/coronavirus-map-confirmed-cases-2020-n1120686 (map of the virus with current number being infected).
4. https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda7594740fd40299423467b48e9ecf6 (an on-line dashboard showing current deaths and trends). The peak may be happening in some areas (excluding China).
5. https://www.cnbc.com/pre-markets/ (watch the markets as they change within real-time).

The above sites are worth checking out for more information and data. Our markets are now computer driven and changes can be volatile as algorithms do most of our trading in real-time. The coronavirus data could peak at some point as people recovering are greater than those being infected. As of today, however, the virus is still expanding (but mostly in China). We have no global pandemic as of today. Hopefully, our medical people will solve this issue soon.

Have a good day and enjoy living in the now moment. That’s all we have! I am: https://kingdomecon.wordpress.com.

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February 8th, 2020

Posted In: Kingdom Economics

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