Coronavirus contiues to spread and although the global death toll is now 2801 (mostly in China) the fact that it is already preventing markets from operating normally is negatively impacting global markets. Supply line disruptions, quarantines and travel restrictions are expected to get worse for the foreseeable future.
The global markets have been in a central bank-nduced bubble for 12 years and the fact that many indexes are at record highs, leaves them vulnerable to any force that will remind investors that there is no such thing as unlimited growth in financial markets or anything else in the physical world. All growth will reach a limit and then a reduction of some sort will take place until a new balance can be found.
The fact that the CDC announced today that they have the first patient with COVID-19 of "unknown" origin will not instill confidence in the markets tomorrow. Unknown origin refers to cases that can't be tied to a known path of transmission, like travel to China or having contract with somebody who traveled to China. This is also called "community spread" because the patient most likely got the infection from an unknown source in the community, perhaps from a person who is an asymptomatic spreader.
There's also the fact that democratic socialist, Sen. Bernie Sanders, has been gaining momentum and delegates in the Democratic Primary Race of 2020. Bernie's anti-capitalist rhetoric and the possibility that he could be the Democratic nominee and eventually the President of the United States may also be weighing on the market.
Markets don't like uncertainty. COVID-19 and Bernie Sanders are possibly giving the markets more uncertainty than they can handle right now.
Another problem is that market meltdowns feed on themselves. At some point, people who have purchased stocks on credit (margin) get margin calls to put up more cash or sell. If companies can't do business or can't borrow, they have to lay off employees who are then unable to pay their own bills. That's when things really crash. Remember the dot.com crash and the housing bubble crash? But it's too early for that at this point. Or is it?
Here's today's map:
Total number of cases: 82,164
Number of deaths: 2801
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