Terry’s Columns Tues. Pre-open: Rock, Paper, Scissors!

Tues. Pre-open: Rock, Paper, Scissors!

By Terry Savage on March 10, 2020

Pre-markets show a huge bounce – perhaps up 1,000 points on the Dow – after yesterday’s record 2,000 point drop. Governments around the world – from the US to Japan and Europe – are promising they will throw money at the economic problems caused by the Coronavirus.
Logic leaves a bit to be desired in that strategy. A proposed payroll tax cut helps only those who are still on the payroll – not the unemployed maids, Uber drivers, and restaurant servers who work hourly and lose their income to an economic slowdown.
You may remember that old childhood game, “Rock, Paper, Scissors”. Scissors cuts paper. Paper covers rock. Rock pounds scissors.
Only this time the agents are “Fear, Money, and Stocks.” We are about to see if an injection of Money can conquer the Fear of the Coronavirus. Or if Fear trounces the influx of Money by further slowing economies. Or if rising Stocks create enough confidence to trounce the Fear that is grinding the global economy to a crawl.
The only problem is: it doesn’t look as if — at this point, anyway — Money can cure the Coronoavirus. So this power game could be an expensive, very expensive illusion.
Knowledge trumps money, in this case. What would truly be helpful is if they could make the Coronavirus test widely available, so we could get a realistic analysis of the exposure of the public. Until that happens, the markets will be vulnerable to uncertainty – and volatility.



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