Why President Donald Trump's Speech Spooked the Stock Market

Markets Now Markets Scott Gottlieb Christine Lagarde Stephen Stanley Donald Trump Lloyd Blankfein Amherst Pierpont Denniss DeBusschere Trump Political/General News Derivative Securities Commodity/Financial Market News Content Types Factiva Filters C&E Exclusion Filter G/FED N/DRV N/ECB N/GEN N/MKT iShares iBoxx $ Investment Grade Corporate Bond ETF iShares iBoxx $ High Yield Corporate Bond ETF Barrons.com Barrons Blogs DJIA Dow Jones Industrial Average Nasdaq Composite S&P 500 CODES_REVIEWED Markets Now Markets author Ben Levisohn author|Ben Levisohn author Ben Levisohn id Ben Levisohn name Ben Levisohn topicid 8022 rank 1 topicid barrons_display_brand BARMKTNOW barrons_display_brand|BARMKTNOW codetype BARRONS_DISPLAY_BRAND name Markets Now source MANUAL value BARMKTNOW code BARMKTNOW canbedisplaybrand true status modified barrons_display_subject BARMKTS barrons_display_subject|BARMKTS canbedisplaysubject true codetype BARRONS_DISPLAY_SUBJECT name Markets source MANUAL value BARMKTS code BARMKTS status modified djn N/ECB djn|N/ECB significance passing name N/ECB why occur source FACTIVA fcode N/ECB codetype djn code n_ecb onlinesignificance passing-mention djn G/FED djn|G/FED significance passing name G/FED why occur source FACTIVA fcode G/FED codetype djn code g_fed onlinesignificance passing-mention djn N/GEN djn|N/GEN codetype djn why about source FACTIVA code n_gen name N/GEN significance prominent fcode N/GEN onlinesignificance prominent djn N/DRV djn|N/DRV codetype djn why about source FACTIVA code n_drv name N/DRV significance prominent fcode N/DRV onlinesignificance prominent djn N/MKT djn|N/MKT codetype djn name N/MKT why lineage source FACTIVA code n_mkt fcode N/MKT exchangetradedfund ISBING exchangetradedfund|ISBING symbol LQD country US codetype exchangetradedfund displayname iShares iBoxx $ Investment Grade Corporate Bond ETF extractedtext iShares iBoxx $ Investment Grade Corporate Bond ETF source MANUAL code lqd name iShares iBoxx $ Investment Grade Corporate Bond ETF significance prominent exchange U.S.: NYSE Arca exchangeisocode ARCX chartingsymbol FUND/US/ARCX/LQD fcode ISBING status modified onlinesignificance prominent exchangetradedfund ISIBHY exchangetradedfund|ISIBHY symbol HYG country US codetype exchangetradedfund displayname iShares iBoxx $ High Yield Corporate Bond ETF extractedtext iShares iBoxx $ High Yield Corporate Bond ETF source MANUAL code hyg name iShares iBoxx $ High Yield Corporate Bond ETF significance prominent exchange U.S.: NYSE Arca exchangeisocode ARCX chartingsymbol FUND/US/ARCX/HYG fcode ISIBHY status modified onlinesignificance prominent first_publish_headline Why President Donald Trump’s Speech Spooked the Stock Market first_publish_headline|Why President Donald Trump’s Speech Spooked the Stock Market flow Barrons.com flow|Barrons.com codetype FLOW name Barrons.com source MANUAL value Barrons.com code online status modified name Online title Product code Barrons.com flow Barrons Blogs flow|Barrons Blogs codetype FLOW source MANUAL title Product code Barrons_Blogs name Barrons Blogs value Barrons Blogs status modified headline Why President Donald Trump’s Speech Spooked the Stock Market headline|Why President Donald Trump’s Speech Spooked the Stock Market id facebook id|facebook news_tab_url https://www.barrons.com/articles/why-president-donald-trumps-speech-spooked-the-stock-market-51584026366 index Dow Jones Industrial Average index|Dow Jones Industrial Average symbol DJIA country US codetype index displayname Dow Jones Industrial Average extractedtext Dow Jones Industrial Average source MANUAL code djia name Dow Jones Industrial Average significance prominent exchange Dow Jones Global exchangeisocode DOW JONES GLOBAL chartingsymbol INDEX/US/DOW JONES GLOBAL/DJIA status modified onlinesignificance prominent index S&P 500 index|S&P 500 symbol SPX country US codetype index displayname S&P 500 Index extractedtext S&P 500 source MANUAL code spx name S&P 500 significance prominent exchange S&P US exchangeisocode S&P US chartingsymbol INDEX/US/S&P US/SPX status modified onlinesignificance prominent index Nasdaq Composite index|Nasdaq Composite symbol COMP country US codetype index displayname NASDAQ Composite Index extractedtext Nasdaq Composite source MANUAL code comp name Nasdaq Composite significance prominent exchange U.S.: Nasdaq exchangeisocode XNAS chartingsymbol INDEX/US/XNAS/COMP status modified onlinesignificance prominent index DJIA index|DJIA name Dow Jones Industrial Average background-info BRIEFING-BOOK significance PROMINENT inset inset-1 inset|inset-1 responsive layout wrap inset inset-2 inset|inset-2 responsive layout inline media media-3 media|media-3 responsive layout wrap softcrop Horizontal imphotoid im-152012 location https://images.barrons.com/im-152012/?size=1.5 media media-2 media|media-2 responsive layout inline media media-1 media|media-1 softcrop Horizontal imphotoid im-152012 location https://images.barrons.com/im-152012/?size=1.5 ns gcat ns|gcat codetype ns why about source FACTIVA code gcat name Political/General News significance prominent fcode gcat onlinesignificance prominent ns m15 ns|m15 codetype ns why about source FACTIVA code m15 name Derivative Securities significance prominent fcode m15 onlinesignificance prominent ns mcat ns|mcat codetype ns name Commodity/Financial Market News why lineage source FACTIVA code mcat fcode mcat ns ncat ns|ncat codetype ns why lineage source FACTIVA code ncat name Content Types internalsymbol true fcode ncat ns nfact ns|nfact codetype ns why lineage source FACTIVA code nfact name Factiva Filters internalsymbol true fcode nfact ns nfce ns|nfce codetype ns why lineage source FACTIVA code nfce name C&E Exclusion Filter internalsymbol true fcode nfce nwchain SB524127563839887334529045862569736117548881 nwchain|SB524127563839887334529045862569736117548881 pe 110608532 pe|110608532 lastname Lagarde visible 1 displayname Lagarde, Christine confidence 92 why occur extractedtext Christine Lagarde source FACTIVA title Finance Minister relevance 53 seoname christine-lagarde significance passing firstname Christine topicid 6594 name Christine Lagarde confidencerange high topicname Christine Lagarde relevancerange medium fcode 110608532 codetype pe code 110608532 nameformat surname_first onlinesignificance passing-mention pe 76067377 pe|76067377 lastname Blankfein codetype pe displayname Blankfein, Lloyd why occur extractedtext Lloyd Blankfein source FACTIVA title Chairman and chief executive officer seoname lloyd-c-blankfein name Lloyd Blankfein nameformat surname_first relevancerange low fcode 76067377 visible 1 confidence 93 code 76067377 relevance 50 significance passing firstname Lloyd topicid 384 confidencerange high topicname Lloyd Blankfein onlinesignificance passing-mention pe 509246 pe|509246 codetype pe displayname Donald Trump why about extractedtext Donald Trump source FACTIVA title President and chief executive officer occurs true seoname donald-trump name Donald Trump nameformat surname_first relevancerange high fcode 509246 visible 1 confidence 92 code 509246 relevance 100 significance prominent topicid 159 confidencerange high topicname Donald Trump onlinesignificance prominent pe 106419114 pe|106419114 lastname Gottlieb codetype pe displayname Gottlieb, Scott confidence 90 why occur extractedtext Scott Gottlieb source FACTIVA code 106419114 relevance 45 name Scott Gottlieb significance passing firstname Scott nameformat surname_first confidencerange high relevancerange low fcode 106419114 onlinesignificance passing-mention pe 176956791 pe|176956791 lastname Stanley codetype pe displayname Stanley, Stephen confidence 93 why occur extractedtext Stephen Stanley source FACTIVA code 176956791 relevance 43 name Stephen Stanley significance passing firstname Stephen nameformat surname_first confidencerange high relevancerange low fcode 176956791 onlinesignificance passing-mention pe Amherst Pierpont pe|Amherst Pierpont lastname Pierpont codetype pe displayname Pierpont, Amherst extractedtext Amherst Pierpont source FACTIVA code amherst_pierpont name Amherst Pierpont firstname Amherst nameformat surname_first pe Denniss DeBusschere pe|Denniss DeBusschere lastname DeBusschere codetype pe displayname DeBusschere, Denniss extractedtext Denniss DeBusschere source FACTIVA code denniss_debusschere name Denniss DeBusschere firstname Denniss nameformat surname_first pe Trump pe|Trump lastname Trump codetype pe displayname Trump extractedtext Trump source FACTIVA code trump name Trump nameformat surname_first relay SYND relay|SYND codetype RELAY name Syndication source EXPANDER value SYND code synd status modified statistic CODES_REVIEWED statistic|CODES_REVIEWED name CODES_REVIEWED value CODES_REVIEWED codetype STATISTIC code CODES_REVIEWED subject BARMKTS subject|BARMKTS codetype SUBJECT selectable true title Markets code BARMKTS name Markets canbedisplaysubject true ruleid BARMKTS value BARMKTS status modified subject BARMKTNOW subject|BARMKTNOW codetype SUBJECT title Markets Now code BARMKTNOW name Markets Now ruleid BARMKTNOW value BARMKTNOW canbedisplaybrand true status modified wordcount 651 wordcount|651 Photograph by Yasin Ozturk/Anadolu Agency via Getty Images Why President Donald Trump’s Speech Spooked the Stock Market Why President Donald Trump’s Speech Spooked the Stock Market Why President Donald Trump’s Speech Spooked the Stock Market

The market wanted to hear solutions for the current crisis. It didn’t get any.

Why President Donald Trump’s Speech Spooked the Stock Market

The market wanted to hear solutions for the current crisis. It didn’t get any.

https://www.barrons.com/articles/the-dow-is-tumbling-again-bull-market-will-soon-end-51583939074 https://www.barrons.com/articles/stock-futures-plunge-on-trump-address-on-coronavirus-51583979828 https://www.newyorkfed.org/markets/opolicy/operating_policy_200312a https://www.barrons.com/articles/msg-stock-is-sinking-coronavirus-nba-suspends-its-season-51584023397 https://twitter.com/lloydblankfein/status/1238122355504939012 mailto:Ben.Levisohn@barrons.com Why President Donald Trump’s Speech Spooked the Stock Market By Ben Levisohn Photograph by Yasin Ozturk/Anadolu Agency via Getty Images

The Dow Jones Industrial Average sank into a bear market yesterday, but only just. And with President Donald Trump addressing the nation Wednesday night, there was still a chance that it would be a short-lived one. In fact, the market was betting on it: Dow futures were up around 300 points before the president’s address began.

And then the president started talking—and futures started falling. By the time Trump was finished, Dow futures were down more than 1,000 points, and any chance of a quick reversal of the bear market had faded.

The Dow fell even more during the day, as the ECB’s Christine Lagarde added fuel to the fire by saying that the central bank was “not here to close spreads,” and has since rallied after the Federal Reserve said it would provide even more money to the repo markets.

So what did Trump say, or not say, that spooked the market? In a nutshell, it appears that he acknowledged the seriousness of coronavirus by banning flights to and from Europe and encouraging Americans to be vigilant in combating the illness—necessary but economically damaging, nonetheless—without providing a plan to compensate for the economic hit. “Following the disaster speech last night (restrictions increasing around the world, European travel ban, everything canceled, but no fiscal offsets), markets are searching for clearing price,” writes Evercore ISI strategist Denniss DeBusschere.

What he means is this: We know the economy is taking a big hit. There will be little to no travel, no basketball games, people will stop going out to eat and to see movies. The economy, or a big chunk of it, is simply going to grind to a near-halt. But it’s not forever. Former FDA head Scott Gottlieb laid out on CNBC two ways this plays out: Either we do nothing and the disease runs through the country in a month, but overwhelms the health system, or we take steps, which prolongs the outbreak to six to eight weeks, but will have less severe outcomes in health terms. “The markets act like this is an infinite bottomless spiral that will go on for quarters and quarters,” writes Stephen Stanley, chief economist at Amherst Pierpont. “Someone who knows far better than me just said that this is probably a March and April issue.”

But not if companies go bankrupt over those two months. What the market wanted to hear was a solution to that problem, or at least the start of a solution. And until it does, some analysts don’t expect it to find a bottom. “We expect markets to remain volatile until we see some combination of: 1) evidence of successful virus containment; 2) clarity on the net economic impact; and 3) a concerted global policy response,” writes Mark Haefele, chief investment officer for global wealth management at UBS.

In a tweet this morning, former Goldman Sachs CEO Lloyd Blankfein put in more clearly: “[At] this point, go all-in on social separation, and all-in on financial relief to those most economically vulnerable (individuals and sm biz). Save the second guessing for later. I would welcome if we look back 3 months from now and think we over-reacted.”

https://twitter.com/lloydblankfein/status/1238122355504939012

Investors haven’t seen enough of that right now, and the markets reflect that. But with the Fed doing it’s thing, maybe it’s starting to.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Data is currently not available

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.