On Monday morning, the stock market plunged dramatically, presaging potentially the biggest economic shock since the financial crisis of 2008. As soon as markets opened in the U.S., the S&P 500 dropped 7 percent. The drop was so extreme that it triggered a safety mechanism, halting all trading for 15 minutes. Once trading resumed, the market recovered, slightly, but was still down by 6 percent. Trading will automatically pause again if the drop reaches 13 percent, and then again at 20.
The immediate cause was the start of a price war between Saudi Arabia and Russia, with each country trying to undercut the other’s oil prices over the weekend. With demand suppressed by coronavirus, the price of oil dropped by 25 percent, the biggest fall since the early 1990s, and that shook markets around the world. Even the price of Bitcoin dropped by 10 percent and cumulatively all cryptocurrency lost $26 billion in value.
But Monday’s collapse came after weeks of the market fluctuating wildly as investors all around collectively freak out over the impact of the novel coronavirus outbreak—more than 105,000 people have contracted the disease in more than 45 countries, and the death toll currently stands at over 3,600. In Italy alone, there are 7,375 cases of coronavirus and 366 deaths—schools across the country have been shut down as part of a nationwide quarantine effort. Even before the weekend and the dip in oil, the S&P had dropped more than 12 percent since the outbreak began—the biggest drop in almost a decade. The New York Times estimates that represents a $1 trillion loss. That primarily affects the wealthiest Americans, since the top 10 percent of earners own almost 85 percent of all stocks in the U.S. But still, 55 percent of Americans own at least some stocks, and financial experts warn against trying to game a potential stock market crash, since even professionals are notoriously bad at it.
Meanwhile, Donald Trump has spent the last two days at Mar-a-Lago, the resort he owns in Florida, where he reportedly golfed with players from the Washington Nationals. Now, he’s apparently incensed that the outbreak is undermining his main selling point for his presidency—other than white resentment—a strong economy. In a half dozen tweets, he tried to argue against the stock market, pointing out that a drop in oil prices is good for consumers. He also blamed the media for reporting on the coronavirus outbreak at all, claiming that reporters are only covering it in an attempt to hurt him, pointing out that more people died last year from the flu, yet, “Nothing is shut down, life & the economy go on. At this moment there are 546 confirmed cases of CoronaVirus, with 22 deaths. Think about that!”
This content was originally published here.