9 Things You
Should Know About the 2020 Stock Market Crash
By Mike Whitney
March 16, 2020 "Information
Clearing House" -
1– Investors are cashing
in and heading for the exits
According to Bloomberg News: “Investors made their
biggest dash for cash in history” in the last week.
“They channeled $137 billion into cash-like assets
and a record $14 billion into government bonds in
the five days through March 11…..(while) money
managers are liquidating en masse.” (“Investors
Liquidate Everything in Record $137 Billion Cash
Haul”, Bloomberg)
Why are investors exiting the
market?
Because the psychology that
drives business investment (“animal spirits”) has
been dramatically impacted by the coronavirus.
Expectations for future prosperity have been
dampened by the fog of uncertainty. When uncertainty
prevails, confidence wanes and investors cash in and
get out. Coronavirus is fiendishly designed to push
stocks and bonds lower in response to the staggering
deluge of bad news.
2–Stocks have been
walloped, but consumer confidence is just now
starting to drop
According to the University
of Michigan, consumer sentiment fell from 101.0 to
95.9 in February. These calculations were made
before the “Thursday’s stock-market plunge — the
worst since 1987 — and the rapid shutdown of
university campuses, public schools, major sports
and entertainment venues over the last 24 hours….
the data suggest that additional declines in
confidence are still likely to occur as the spread
of the virus continues to accelerate.” (Bloomberg)
Stocks will undoubtedly
reflect investor pessimism in the months ahead,
pushing prices lower while the virus spreads.
