OPINION:
So far, the coronavirus has been relatively contained — in the United States, at least. What hasn’t been contained has been the carnage on Wall Street. Stock market indices just suffered their worst fall in value since the 2008 financial crisis.
To some observers, this looks like an overreaction. One major bank economist has said the stock market’s behavior “boggles the mind.”
We’re not so sure. Should the United States — or even parts of this sprawling country — be subjected to the kind of lockdown measures now in place in China, South Korea, Italy and Iran, consumer spending will collapse. Consumer spending, of course, is 70 percent of U.S. gross domestic product. Prolonged lockdowns would wreak havoc on every sector from retail to travel to automobiles to banking.
“Buy the dip” if you like. But don’t count on a bounce any time soon.
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