New York City is Now Epicenter of Coronavirus COVID-19 Outbreak in the USA

Coronavirus Outbreak Crashing Financial Markets from Wuhan to Wall Street

The Coronavirus originated in Wuhan, China killed over 811 people and infected more than 9,692

The Dow Jones Industrial Average Drops 600 Points on Global Growth Worries

Anxiety ravaged multiple markets on Friday as Uncertainty over Economic Impact of Coronavirus spreads

The Coronavirus originated in Wuhan, China have killed over 811 people and infected more than 9,692 with infection rate rapidly rising. People are literally falling ill and dying in the streets of Wuhan, China.

According to the World Health Organization (WHO), Coronaviruses (CoV) belongs to a large family of viruses causing illness ranging from the common cold to more severe diseases, such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV).

Coronaviruses’ zoonotic nature of being able to transmit between animals and human with ease, poses the greatest threat to future novel coronavirus (nCoV) outbreaks in humans.  A novel coronavirus (nCoV) is a new Coronavirus strain that has never been previously identified in humans.

Bats serve as the primary reservoir and source of coronaviruses; although Chinese Experts suspect that the Wuhan Virus may have been introduced to humans by snakes. Chinese Scientists suspect this because further genetic analysis revealed that the genetic building blocks of the Wuhan coronavirus closely resembled the genetic makeup of snakes, a strain normally seen in bats. It is suspected that bats were the original carrier of the coronavirus, then wild snakes such as the Chinese Cobra became infected by eating fruits contaminated by bat droppings or saliva. Wild life vendors sell the Chinese Cobra snake at Wuhan Wet Markets as one of their wildlife-meat offerings.

Huanan Seafood Market otherwise known as the Wet Market in Wuhan, which sold wild animal meats, such as dogs, chicken, snakes, wild pigs and other wild life, provided the perfect environment for transmission of the coronavirus to human through aerosol. However, Chinese Scientist were quick to dismiss the Wuhan Wet Market as the source of the Wuhan coronavirus outbreak in a paper published in The Lancet Infectious Disease Journal. The paper revealed that Chinese scientists found out that the first reported case of the Wuhan coronavirus in December had no link to the Wuhan Seafood Wet Market.

Could the coronavirus cause the Stock Market to crash in 2020? Certainly!

The Coronavirus outbreak could very well be the catalyst for a major stock market correction or an all-out stock market crash. This crash or Stock Market correction would not be the result of an economic recession or an economic slowdown. It would instead be the result of investors’ fervor to seize the opportunity of taking some well-deserved profits from a Stock Market that has been rising non-stop for the past 11 plus years.

Stocks tumbled sharply on Friday, wiping out the Dow Jones Industrial Average’s gain for the entire month of January, as investors’ anxiety and worry levels rise, from the inevitable economic impact of the rapidly spreading, Chinese Wuhan coronavirus. The CBOE Volatility Index rose from 16.25 on January 31 to a daily high of 19.99, with a 52-week range of 11.03-24.81. Investors fear index is definitely hitting high gear.

The Dow fell 610 points, or 2.1 percent, the worst day since August. The S&P 500 gave up 1.8 percent while the Nasdaq composite shed 1.6 percent. 

On Friday The National Health Commission of China confirmed 9,692 cases of the coronavirus, with 213 deaths; however, as of this writing, the death toll has risen to 811.

The U.S. declared the coronavirus a public health emergency within the country on Friday. Airlines such as Delta, American, and United suspended all flights between China and the United States.

The World Health Organization designated the rapidly-spreading Wuhan coronavirus as a global health emergency. This designation helps the United Nations health agency to mobilize financial and political support to contain the outbreak.

The Wuhan coronavirus has now spread to at least 18 countries and has introduced anxiety and worry in financial markets worldwide, putting a damper on sentiment over global economic growth, but we shall overcome it. We have overcome viral outbreaks before and we will be able to do so again. It will just take a little time.

How to protect yourself from coronavirus exposure?

Coronaviruses cause respiratory symptoms like the common cold; however, these symptoms and complications could be much worse simply because humans don’t have any natural biological defense against such new coronaviruses, since these viruses came from animals and has never been previously encountered by the immune systems of humans.

According to the WHO, like any other virus protection protocol, one should wash hands with soap and water especially after touching animals, cover mouth and nose with flexed elbow or tissue when sneezing or coughing. Avoid unnecessary unprotected contact with live animals and make sure hands are washed thoroughly after coming in contact with animals, and make sure meat is cooked thoroughly before consuming. Use personal protective equipment (PPE), such as personally fitted face mask or face shield when in contact with potentially infectious persons.

Some financial market experts predict anywhere from a 10% or more of a market plunge as the coronavirus rapidly spreads. Some even predicts an all-out stock market crash. We can’t agree with an all-out stock market crash scenario because there is no solid underlying fundamental factor in the economy to support that; however, we could possibly agree on a significant market pullback. Granted, the economy has been motoring along at a slow steady pace, the slowest in history, as a matter of fact. There are possible signs of overpriced equities, but that alone is clearly not a recipe for an all-out stock market crash.

Stock market crashes often occurs from infrastructure weaknesses within the economy due to irrational exuberance; there is currently no new revolutionizing, paradigm-shifting technology that is positioning itself to overthrow current technologies. Like how the internet disrupted the thought process of investors, turning them into a bunch of exuberant irrationals, during the dotcom bubble.

US GDP grew 2.1% in the fourth quarter, matching forecasts of 2.1% and a previous reading of also 2.1%. The Gross Domestic Product (GDP) measures annualized changes in the inflation-adjusted value of all goods and services produced by the U.S economy. The GDP serve as the primary indicator of economic health and is the broadest measure of economic activity.

A higher than expected reading should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. The fact that the GDP numbers remained unchanged from previous reading tells us that the economy has continued to expand, but at a very slow and steady pace. Current GDP readings suggests that the economy has continued to follow the slow growth rate of previous quarters of previous years.

It has been said that the current U.S. economic expansion rate has been the slowest in history. Therefore, the current GDP numbers simply remind us of that historic slow rate of growth. The economy has been in an expansion phase since the Great Recession of 2008. The Great recession was the global economic meltdown period between 2007 and 2009 that devastated world financial markets, including the banking and real estate industries.

The crisis caused widespread home mortgage foreclosures worldwide and also caused millions of people to lose their jobs, homes, and their lifesavings. This is what we call a recession and a primary reason why the stock market crashed in 2008.  Our global economy is currently not facing such predicament at this time. Therefore, this is another reason why we should not expect the stock market to crash anytime soon, despite the coronavirus outbreak. The Bureau of Economic Analysis released the Fourth Quarter GDP on Thursday, January 30th, 2020 at 8:30 AM, New York Time.

The Eurozone economy could be on the rebound. Jobless Rate in the Eurozone Fell the most in more than 11 years. That’s saying a lot knowing that the Eurozone economy has struggled so much in recent months. The Euro Area seasonally-adjusted unemployment rate fell from 7.5 percent in the previous months to 7.4 percent in December 2019, beating market expectations of 7.5 percent.

The New Home Sales Report for December missed forecasts of 730,000, by coming in at 694,000, well below the previous months reading of 697,000. The New Home Sales Report measures the total annualized number of new single-family homes sold during the previous month. The report tends to be more impactful when released ahead of the Existing Home Sales Report because the reports tightly correlates with each other.

A higher than expected reading should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. So, why the New Home Sales Report missed forecasts while the economy is booming? Very simple, it’s the winter time when less homes are available on the market for purchase. In fact, the winter time should be the ideal time to buy a home because during this time less buyers are looking for homes to purchase.

Therefore, any homes on the market to be sold during the winter time could’ve been placed on the market by a very motivated seller, someone who could be willing to unload her house at a great price to a buyer, thus increasing the chances of a buyer getting a great deal. Also, with less buyers being on the market, there is less competition in buying a home, no bidding war should be expected that would drive up the price of the home. The U.S. Census Bureau released the New Homes Sales Report for December on Monday, January 27, 2020 at 10 AM, New York Time

The Pending Home Sales Numbers came in low also, and to no one’s surprise. It too reflected the time of year the report is released. The Pending Home Sales Report, months-over-month for December missed forecasts of 0.5%, by posting a -4.9%-reading, falling below last month’s reading of 1.2%. The National Association of Realtors (NAR) Pending Home Sales Report measures changes in the total number of homes under contract to be sold but still awaiting closing transactions.

A higher than expected reading should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. The National Association of Realtors released the Pending Home Sale Report on Wednesday, January 29, 2020 at 10 AM, New York Time.

If New Home Sales and Pending Homes Sales Numbers are down, then the Core Durable Goods Orders Numbers should also be down. Let’s see if this is the case. Core Durable Goods Orders Report, Month-Over-Months for December missed market expectation of 0.2% by posting a -0.1%, beating out last month’s reading of -0.4%. The Core Durable Goods Orders Report measures changes in the total value of new orders for long lasting manufactured goods, excluding transportation items. The Core Number gives a more accurate gauge of ordering trends as a result of the volatile nature of aircraft orders. A higher reading indicates an increase in manufacturing activity.

Therefore, a higher than expected reading should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. The fact that the home sales numbers came in below expectation, tells us that Core Durable Goods items or household appliances such as refrigerators, washing machines, and stove orders should also be down, and this is exactly what happened. The U.S. Census Bureau Released the Core Durable Goods Report for December on Tuesday, January 28, 2020 at 8:30 AM, New York Time.

Despite the low home sales numbers and Core Durable Orders Numbers, Consumer still shows a high level of confidence in the economy. This is to show that those numbers are due to seasonal changes in consumer spending. The Conference Board (CB) Consumer Confidence Report came in better than expected, posting a 131.6, beating expectation of 128 and a previous reading of 128.2. The Consumer Confidence Report measures the level of consumer confidence in the economy. It serves as a leading indicator as it can predict consumer spending, which plays a large role in overall economic activity. A higher reading points to higher consumer optimism.

A higher than expected reading should be perceived as positive for the U.S. Economy and Bullish for the USD, while a lower than expected reading should be perceived as negative for the U.S. economy and bearish for the USD. The Conference Board released the CB Consumer Confidence Report for January on Tuesday, Jan 28, 2020 at 10AM, New York Time.

On Wednesday, January 29, 2020 at 2PM, New York Time the Federal Open Market Committee (FOMC) members release the results of their vote on where to set the Federal Interest Rate. Well, the Federal Reserve Voted to leave the current interest rate of 1.75% unchanged. Traders watch interest rate changes closely as short-term interest rates dictates currency valuations.

A higher than expected interest rate decision should be perceived as positive for the U.S. economy and bullish for the USD, while a lower than expected interest rate decision should be perceived as negative for the U.S. economy and bearish for the USD. The fact that the current interest rate remained unchanged tells us that the Federal Reserve doesn’t feel that the economy could not handle an interest rate hike.

In addition, a lowering of interest rate is out of the question because lowering rates any further could cause inflation to rise too quickly, which would force the Fed to increase interest rates, which could cause dire consequences, such as an economic recession. In fact, the past few economic recessions have begun after rising interest rates.

Coronavirus Outbreak Crashing Financial Markets from Wuhan to Wall Street

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