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Market crash eases — MM wrote for DAYS that the coronavirus would eventually exact a serious toll on stock prices. And on Monday it finally happened, with a global sell-off wiping out gains for the year and sending the White House into something of a panic with NEC Director Larry Kudlow calling on investors to buy the dip and the administration requesting $2.5 billion in new funding to fight the disease.
But overnight in Asia the panic seemed to abate a bit, though that could easily reverse. Via Bloomberg: “A sell-off that wiped out global stock gains for the year eased in Asia Tuesday as authorities around the world move to keep the coronavirus from spreading.
“Ten-year Treasury yields ticked up from near record lows. Japan tumbled as traders came back from a holiday to catch up to the plunge in equities spurred by concerns about the potential for a global pandemic, and Australian equities fell for a second day. But U.S. futures climbed about 1%, South Korea’s Kospi advanced, and declines in Hong Kong and Shanghai were more modest.”
No big U.S. impact yet — Via Pantheon’s Ian Shepherdson: “[The] stock market bloodbath stands in contrast to the U.S. economic data, most of which so far show no impact from the Covid-19 outbreak. …
“Nationally, manufacturing is struggling, but the February Philly Fed survey was exceptionally strong, and the Empire State report was robust too. ... [B]oth reports were much better than we expected, suggesting that parts of the country which are not China-sensitive are doing well, even in manufacturing.”
GOOD TUESDAY MORNING — Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver.
Markets will try to bounce back from Monday’s bloodbath … President Donald Trump is in India meeting with Prime Minister Narendra Modi … Senate Banking has a hearing at 10:00 a.m. on "Surface Transportation Reauthorization: Public Transportation Stakeholders' Perspectives." …
The Credit Union National Association (CUNA) meeting continues with remarks from Board Chairman Rodney Hood, Rep. Patrick McHenry, Sen. Cory Gardner, CFPB Director Kathy Kraninger and more … Consumer Confidence at 10:00 a.m. expected to dip to 132.1 from 131.6
INSIDE THE 5G FUTURE — POLITICO Agenda takes a sweeping look at 5G, the new wireless network that’s poised to transform the world — but also causing huge friction on the global stage. What’s all the fuss about, how did we get here, and why does a new wireless network matter so much?”
VIRUS THREATENS WHITE HOUSE AND THE WORLD — Our Dan Diamond and Nancy Cook: “Trump’s top aides faced an increasingly urgent threat … with potentially monumental implications: a global outbreak knocking down the U.S. economy and walloping markets in an election year, all against accusations about whether the Trump administration had mismanaged and underfunded a critical response with American lives on the line.
“A swift drop in the stock market — the Dow Jones Industrial Average fell more than 1,000 points, its largest slide in two years — jolted officials in the White House and across Washington, delivering implications from the long-simmering coronavirus threat to a wider swath of Americans.”
U.S. HOPES TO AVOID BIG HIT — Our Victoria Guida: “Trump's chief economist, Tomas Philipson, said … the coronavirus outbreak poses a ‘real threat’ to U.S. growth but added that the economy has been resilient in the face of much higher deaths from influenza.
“Philipson, speaking at a conference hosted by the National Association for Business Economics, said the administration is taking a ‘wait-and-see approach’ on the effects of the virus, saying that the health risks have been overstated.”
TRUMP HITS INDIA — Our Anita Kumar: “Trump arrives … in a country featuring the most Trump properties outside the U.S. … The White House hopes the visit will advance trade talks and bolster the president's standing with Indian-Americans ahead of the 2020 election. But it's also a trip that will create attention that could help Trump-branded properties amid a slumping real estate market and slowing economy in India.
“Already, in the days leading up to the trip, some Indian media outlets have referenced the Trump properties in their coverage, with one even suggesting the president chose his speaking location because of his longstanding ties to realtors in the region.”
DON’T EXPECT QUICK MARKET RECOVERY — Mohamed A. El-Erian on Bloomberg Opinion: “[M]arkets have yet to internalize an important difference: This shock is taking longer to reverse itself on the ground, and the longer that persists, the deeper and the broader the economic damage.”
BIDEN/SANDERS LOCKED UP IN S.C. — Our Myah Ward: “Joe Biden and Bernie Sanders … are polling neck-and-neck in South Carolina, just days before the Democrats are set to battle in the state’s Saturday primary.
“Biden has the support of 27 percent of likely Democratic primary voters in South Carolina, Monday’s NBC News/Marist poll shows, with Sanders following close behind at 23 percent. The difference between the two candidates falls within the poll’s margin of error of 6 percentage points.”
BLOOMBERG PLANS SANDERS ASSAULT — Our Sally Goldenberg: “Mike Bloomberg and a handful of staffers spent Monday at the so-called happiest place on earth, preparing for the bruising task ahead the next day. Hunkered down at the Four Seasons hotel in Florida’s Disney World, the former New York City mayor prepared for a mission to salvage his half-billion dollar investment in the presidential race with a debate performance designed to quiet the critics and stall frontrunner Bernie Sanders’ momentum. …
“After a disastrous first outing — his net favorability rating dropped 20 points in the aftermath, according to Morning Consult — Bloomberg’s debate goals in the Charleston debate are twofold: Persuade viewers that Sanders is too divisive to defeat. … Trump in November, while sidestepping landmines surrounding complaints from women at his private media company and his race-based policing practices as New York City mayor.”
DOW DROPS MORE THAN 1K — AP's Alex Veiga and Damian Troise: "The Dow Jones Industrial Average slumped more than 1,000 points Monday in the worst day for the stock market in two years as investors worry that the spread of a viral outbreak that began in China will weaken global economic growth.
“Traders sought safety in U.S. government bonds, gold and high-dividend stocks like utilities and real estate. The yield on the 10-year Treasury fell to the lowest level in more than three years. Technology stocks accounted for much of the broad market slide, which wiped out all of the Dow’s and S&P 500’s gains for the year."
STOCKS BEGINNING TO PRICE IN CORONAVIRUS — WSJ's Spencer Jakab and Justin Lahart: "The most surprising thing about Monday’s sharp drop in stock markets around the world is that it was so long in coming. After all, the number of coronavirus cases around world-wide has been mounting steadily for weeks and epidemiologists and health experts have become increasingly concerned. Markets still flirted with records.”
FED OFFICIALS SAY IT'S TOO SOON TO ASSESS CORONAVIRUS IMPACT — WSJ's Nick Timiraos: "Federal Reserve officials said it was too soon to know how the fallout from the coronavirus, which weighed heavily on global markets Monday, would ripple through the U.S. economy and whether it would force a return to interest-rate cuts later this year.
“In a speech Monday, Cleveland Fed President Loretta Mester said she was comfortable with the central bank’s current interest-rate posture and was closely watching the impact of the coronavirus outbreak on global growth."
But markets are betting the Fed will be pushed to cut rates — Reuters: "Financial markets on Monday ratcheted up bets the U.S. Federal Reserve will be pressed to cut interest rates to cushion a feared hit to economic growth from the spread of the coronavirus”
JPMORGAN CHASE TO UNVEIL CLIMATE PLANS AT INVESTOR DAY — Reuters' Elizabeth Dilts Marshall: "JPMorgan Chase & Co executives plan to announce new climate-change initiatives on Tuesday, including restrictions on financing coal mining and Arctic drilling, as well as a $200 billion target to provide financing for sustainable projects.”
INTUIT TO BUY CREDIT KARMA — NYT's Nathaniel Popper and Michael J. de la Merced: "Intuit, the parent company of TurboTax and Mint, agreed on Monday to pay $7.1 billion for Credit Karma, a start-up that has become one of the most popular financial applications for young consumers.
"The deal, which is being done with both cash and stock, is expected to create a Silicon Valley financial technology company that can help people easily get their credit scores, calculate and file their taxes and better access loans."
TRANSITIONS — Anthony Coley is starting his own consultancy, Corner Office Strategies, but will also be spending the next several months working with Democratic candidates, causes and campaigns.
He previously was EVP for communications and senior adviser to the CEO at the Managed Funds Association and also served in the Obama Treasury Department and as communications director for the late Sen. Ted Kennedy (D-Mass.).
Ed Silverman is joining Better Markets as a senior fellow. He previously was head of government relations for TD Bank.
2020-02-25 13:00:00Z
https://www.politico.com/newsletters/morning-money/2020/02/25/market-crash-eases-785638
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