Stocks Have Rolled Over Again – Could They Crash? Dear Money & Crisis Reader, Perception is reality, at least in the short to intermediate term. The man who drives an Aston Martin and lives in a mansion is believed to be rich, even if he is in fact up to his eyeballs in debt. The woman who has millions of followers on Instagram is famous, even if none of them could actually recognize her on the street. The company that has the massive office and 10,000 employees on payroll is a global powerhouse, even if it is one quarter away from bankruptcy and liquidation. And the coronavirus is becoming a pandemic, even if statistically it is far less dangerous than the ordinary flu – which NO ONE refers to as a pandemic. The markets are beginning to be impacted by this. The Media Has Created a Panic About Coronavirus Indeed, the stock market is a sea of red again this morning. By the look of things, stocks will revisit last week's lows. The real issue is NOT the coronavirus itself, but how much the PANIC around coronavirus will impact the economy. The media has incited a full-blown panic, to the point that there are toilet paper and sanitizer shortages in major cities like New York. This is for a disease that has infected 100,000 people globally, killing a little over 3,000. By way of contrast, the swine flu infected 61 million and killed 12,000… in the U.S. alone. Again, coronavirus has infected 100,000 globally and killed 3,000 globally… Swine flu infected 61 MILLION in the U.S. and killed 12,000 in the U.S. alone (over 500,000 globally). And yet, there were not toilet paper shortages or people freaking out like they are today. This is a media-created panic. BUT it could have a very real impact on the economy. And that is why stocks are freaking out. The other reason stocks are freaking out is because this is a situation the Fed cannot fix with monetary easing. |
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