Markets Need to See the Government Panic
Investors are signaling they want politicians to do whatever it takes to stem the coronavirus, even if it damages the economy.
The bull market in stocks has come to an end.
Photographer: Mario Tama/Getty Images
It seems hard to believe but it was only 16 days ago that the U.S. stock market was at record highs. It has since fallen more than 25%, marking the fastest time between a new high and a bear market in history. The old record was set in 1929, when it took 42 days over the course of September and October of that year to drop into a bear market. It is never good when the market is breaking a record set in 1929!
Ironically, it’s a lack of panic over the expanding coronavirus pandemic that is driving the selloff. The declines are being compounded by government officials who still refer to Covid-19 as “just the flu.” More specifically, this is President Donald Trump’s problem, for he thinks this way and believes there has been a giant over-reaction. That attitude came across in his Oval Office address Wednesday night.