Despite Media Hype, Coronavirus Isn’t the Black Death

Throughout the day I keep hearing news anchors tell me the markets are down because of pandemic fears.  This as the coronavirus spreads rapidly across the globe.  The argument is investors fear the disease slows the worldwide economy.

I think it’s an oversimplification of how markets work.  I just finished a column from a writer at the Wall Street Journal.  His name is Holman Jenkins, Jr.  He points out the reported death rate for coronavirus remains two percent.  The figure is roughly the same percentage for a normal influenza season.  He also suggests there are many cases that haven’t been diagnosed because many people never show symptoms after being infected.  Which means, the death rate is even lower than two percent. 

The writer also points out ships will continue sailing the seas and planes are still flying.

I laughed this morning when I friend wrote me and told me not to pop bubble wrap.  After all, he joked, it contains Chinese air!

There are better explanations for the markets being a little wobbly.  The German and Japanese economies have slowed and may be entering recession.  The Chinese and Indian economies have slowed.  Therefore, markets react.

Is there worldwide recession coming?  Tough to tell.  Americans are buying.  The trade imbalance shows Americans are buying from around the world and have confidence in the future.

You may recall there was a severe recession in Asia in the 1990s and it didn’t impact the United States.

All of that said, we’re going to have a recession at some point in time.  It doesn’t mean it’s going to be severe.  And for now, Coronavirus isn’t the Black Plague.