Could it be possible that this coronavirus outbreak will be the trigger that finally bursts the biggest stock market bubble in U.S. history? As I have discussed previously, stock prices in the United States were the most overvalued that they have ever been during the month of January, and our stock market has never been more perfectly primed for a huge meltdown. But stock prices are all about what investors believe will happen in the future, and if they remain convinced that the future is bright then perhaps this stock market bubble could persist for a while longer. Unfortunately for Wall Street, this coronavirus outbreak is starting to create a wave of fear in the financial community. In fact, concern about the coronavirus pushed the Dow Jones Industrial Average down more than 600 points on Friday, and that represented the worst day for the Dow since last August…
Stocks fell sharply on Friday, wiping out the Dow Jones Industrial Average’s gain for January, as investors grew increasingly worried about the potential economic impact of China’s fast-spreading coronavirus.
The Dow dropped 603.41 points, or 2.1%, to 28,256.03 in the 30-stock average’s worst day since August. The S&P 500 had its worst day since October, falling 1.8% to 3,225.52. The Nasdaq Composite dropped 1.6% to 9,150.94.
Up until now, investors were very confident that the Fed and the Trump administration could keep the party rolling, but now that is changing. Just consider what Ilya Feygin just told CNBC…
“The theme coming into this year was the Fed and Trump are going to bail us out of any problems, but the virus is something neither one can do anything about. That’s a reason to become more fearful.”
A reason “to become more fearful”?
That certainly doesn’t sound good for stocks.
And this coronavirus outbreak has also been pushing down the price of oil…
Oil prices have also suffered from the virus outbreak, because China is a big consumer of the commodity.
US oil prices are on track for their worst month since May last year, when the US-China trade war and high inventory levels weighed on prices.
Ultimately, the economic impact of this crisis will be determined by how bad this outbreak eventually becomes, and that is very uncertain at this point.
But without a doubt the coronavirus is already having a substantial impact on the Chinese economy. The following comes from CNN…
The economic impact of the virus is still impossible to determine, but one state media outlet and some economists have said that China’s growth rate could drop two percentage points this quarter because of the outbreak, which has brought large parts of the country to a standstill. A decline on that scale could mean $62 billion in lost growth.
Goldman Sachs is warning that this outbreak will also cause the U.S. economy to slow down this quarter, but the bank is still convinced that next quarter will be better…
The fast-spreading coronavirus could slow first quarter growth of the United States economy, according to a new report from Goldman Sachs.
Analysts at the firm forecast a 0.4 percentage point decline on US annualized growth through March. But it’s not all doom and gloom: Goldman Sachs (GS) also predicts that growth will rebound in the second quarter by roughly the same amount.
Of course the analysts over at Goldman Sachs are assuming that this coronavirus outbreak is not going to turn into a horrifying global pandemic.
But what if they are wrong?
During the last two weeks of January the number of confirmed cases got 236 times larger, and if this outbreak continues to grow at an exponential rate it is going to be absolutely catastrophic for the entire global economy.
Quite a few experts are now recognizing this reality, and that includes Tuomas Malinen…
Global recession, a European banking crisis and a crash in the U.S. capital markets will produce a global economic collapse which will almost certainly overwhelm any attempts—massive and coordinated as they may be—to turn the tide by over-stretched central banks and over-indebted governments.
This is, why the coronavirus outbreak should be treated for what it is: a potential harbinger of human and economic calamity.
Whether such a scenario materializes in the weeks ahead all depends on how widely this virus spreads.
Personally, I am hoping that this outbreak fizzles out as rapidly as possible. This virus has an incubation period of up to 14 days, and wondering who might have the virus is going to drive a lot of people completely nuts.
Unfortunately, it looks like things are only going to get worse. According to a study that was just released, we could soon have “independent self-sustaining outbreaks in major cities globally”. The following comes from Natural News…
A new, urgent study just published in The Lancet warns that “independent self-sustaining outbreaks in major cities globally” may be “inevitable” due to the “substantial exportation” of symptomless carriers of coronavirus. That same study also calculates that 75,815 individuals are infected right now in mainland China, where the official government numbers are currently under 10,000.
Titled, “Nowcasting and forecasting the potential domestic and international spread of the 2019-nCoV outbreak originating in Wuhan, China: a modelling study,” the study is authored by Professor Gabriel M. Leung, MD and Kathy Leung, PhD.
Coming into this year, so many of us felt such a sense of urgency, but I don’t know anyone that thought we would potentially be facing a horrific global pandemic by the end of January.
The worse this outbreak becomes, the more pain the global economy is going to feel.
And there is no way that this stock market bubble is going to survive a severe global economic downturn.
The only way anyone ever makes money in the stock market is if they get out in time. And unfortunately the ridiculously elevated prices that we have been witnessing may not last too much longer if this outbreak continues to spiral out of control.
About the Author: I am a voice crying out for change in a society that generally seems content to stay asleep. My name is Michael Snyder and I am the publisher of The Economic Collapse Blog, End Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe. I have written four books that are available on Amazon.com including The Beginning Of The End, Get Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned) By purchasing those books you help to support my work. I always freely and happily allow others to republish my articles on their own websites, but due to government regulations I need those that republish my articles to include this “About the Author” section with each article. In order to comply with those government regulations, I need to tell you that the controversial opinions in this article are mine alone and do not necessarily reflect the views of the websites where my work is republished. This article may contain opinions on political matters, but it is not intended to promote the candidacy of any particular political candidate. The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions. Those responding to this article by making comments are solely responsible for their viewpoints, and those viewpoints do not necessarily represent the viewpoints of Michael Snyder or the operators of the websites where my work is republished. I encourage you to follow me on social media on Facebook and Twitter, and any way that you can share these articles with others is a great help.
The post Will The Coronavirus Outbreak Cause A Massive Stock Market Crash? appeared first on The Economic Collapse.
Source: theeconomiccollapseblog.comFollow us: