Markets are here for the long term: NYSE president
New York Stock Exchange President Stacey Cunningham discusses the stock market’s 15-minute halt following a seven percent selloff on the S&P.
Let’s get real, America. This is the reality – the stock market has grossly overreacted to the coronavirus threat. We are facing a humanitarian tragedy. As President Trump and White House Economic Adviser Larry Kudlow have been stating, it shouldn’t also become a financial tragedy.
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When I woke up Monday morning, one of the first online headlines I saw stated: “Coronavirus cases doubled in Massachusetts.” That was disconcerting, so I pulled up the article. They had doubled to 15. Seriously.
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I wondered if I would have even opened an article with the headline “There are 15 Coronavirus Cases in Massachusetts” or “Fifteen People in Massachusetts Have Come Down With Flu-Like Symptoms”? In reality, probably not.
In reality, there are about 113,000 known coronavirus cases in the entire world (there are surely cases of which we are unaware). Only about 25 percent of these cases (27,000) are outside China and the cases in China are declining. They are also declining in South Korea, a country with one of the largest outbreaks outside of China.
About 4,000 people have died – which is tragic. However, the world’s population is about 7.7 billion.
Should these numbers really cause the markets to tumble?
In reality, the coronavirus numbers are nothing compared to the flu. The Centers for Disease Control and Prevention estimates that, in the US, from October 1, 2019, through February 29, 2020, there were between 34 – 49 million flu illnesses; 350,000 – 620,000 flu hospitalizations; and, 20,000 – 52,000 flu deaths. Yet, the markets not only remained stable, but they also hit new highs.
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The World Health Organization (W.H.O.) recently stated that the death rate from the coronavirus was 3.4 percent. President Trump was criticized for stating that he had a hunch it was lower. In reality, The New York Times spoke with “a number of experts in epidemiology, and they all agreed that 1 percent was probably more realistic (the W.H.O. has also said the number would probably fall).”
In reality, this outbreak has not yet been declared a pandemic. On January 30th, the World Health Organization declared the COVID-19 outbreak a "public health emergency of international concern" primarily because of concerns that the virus could spread to countries with weaker health systems.
Let me be clear, the coronavirus is a serious threat and should be taken seriously, particularly by the elderly and medically fragile. We should have ample testing available. We should all take the necessary precautions. The government should make sure we have the necessary ICU capacity and a sufficient number of ventilators. We should take whatever steps are necessary to protect nursing homes or other elder care facilities. No one should be concerned about the costs of seeing a doctor or receiving the necessary medical care.
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But, in reality, should the stock markets be reacting as if the economy is collapsing? This is not like the 2008 economic crisis. We did not have an underlying economic bubble that burst.
The economy is strong as the February jobs numbers demonstrated. The Atlanta Fed’s GDPNow forecasting tool is projecting first-quarter GDP growth of 3.1 percent. In reality, even if it is half wrong, that’s still not recessionary. If we experience a drop in consumer demand along with the disruption of our supply chains, a recession is always a possibility. But, even if we were to experience a recession, the economy will recover quickly because, again, in reality, the underlying economy is strong.
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Finally, it's worth noting that, no matter what you may hear from the Democrats and their mainstream media allies, in reality, this situation is not President Trump’s fault. The virus originated in China, the Chinese handled it secretively and poorly and it spread.
If anything, this situation helps prove that President Trump was correct when he emphasized we should reduce our dependence on supply chains that depend on China. We were and are too dependent on the Chinese. This is particularly true with respect to pharmaceuticals.
President Trump acted quickly to halt the spread of the disease in the United States buying us much needed time to prepare. According to Johns Hopkins University’s Global Health Security Index, we are the best-prepared nation in the world to stop the spread of this disease. A solid, professional and very competent team is in place to deal with the issue.
We should not overreact. In reality, this too shall pass.
Andy Puzder was chief executive officer of CKE Restaurants for more than 16 years, following a career as an attorney. He is currently a Senior Fellow at the Pepperdine University School of Public Policy.” He was nominated by President Trump to serve as U.S. labor secretary. In 2011, Puzder co-authored "Job Creation: How It Really Works and Why Government Doesn't Understand It." His latest book is "The Capitalist Comeback: The Trump Boom and the Left's Plot to Stop It" (Center Street, April 24, 2018).
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