Investors haven't shown real panic during massive stock sell-off: TD Ameritrade strategist

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JJ Kinahan, TD Ameritrade Chief Market Strategist and David Bailin, Chief Investment Officer at Citi Private Bank, joins ‘Closing Bell’ to talk about markets.

Moody’s Analytics Mark Zandi warns Wall Street is underestimating the damage from a coronavirus pandemic — both on the economy and President Donald Trump’s re-election campaign.

“Right now, we don’t have a whole lot of confidence. I mean he can’t seem to get on the same page with the experts, the CDC,” the firm’s chief economist told CNBC’s “Trading Nation” on Friday. “This is a significant threat to his re-election.”

Not only is the response to the medical emergency key, an economic downturn sparked by the coronavirus would be political kryptonite.

According to Zandi, the probability of a recession is jumping.

“They’re at least even odds,” he said. “If you take the most likely scenario and the CDC is roughly right, then it’s pretty hard to avoid one.”

The market’s historic correction suggests investors are cognizant of the recession risks associated with a coronavirus pandemic.

Stocks just saw their worst week since the 2008 financial crisis. The S&P 500 is off 14% since its Feb. 19 record high. It now sits at its lowest level since October. The Dow just saw its worst weekly point decline ever.

Despite the record losses, Zandi believes Wall Street is dangerously underestimating the magnitude of a recession.

“The general thinking at the moment is V-shaped — that this is a problem here and now. The Fed eases monetary policy, and we’re back up and running pretty quickly. I suspect that won’t be the case,” he said. “The Federal Reserve does not have a lot of room to maneuver… I don’t think policy is up to the task to really juice up this economy to get it going again quickly.”

Before the coronavirus emerged as a risk, Zandi came into 2020 warning investors the economy wasn’t strong enough to sustain the market’s record highs. He believed conditions were ripe for a correction.

Now, Zandi is escalating the call, warning the odds of a coronavirus pandemic have doubled to 40%.

“Valuations were very stretched. Anything probably would have pushed the stock market back on its heels,” Zandi said. “COVID-19 [coronavirus] is more than just something, and that is something very substantive.”

The White House did not provide a statement on Zandi’s remarks.

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Comments

Laura O'Chamney says:

Stocks up and down have nothing to do with recession. Look at other reliable indicators especially the unemployment rate, which is still quite low during the last 3 years of Trump administration!

Moscow Mitch says:

So this stable genius is taken 🇺🇸 like the business he broke before
Trump steak
Trump Airlines
Trump vodka
Trump university
Trump water
Trump casinos
Now trump America's is next
Hey hey mnuchin how the tax cut is working out. ?????

jabba da hutt says:

Jj says Disney off the top of his head says safe it has a dividend, A SMALL WORLD dividend, minuscule.
If virus spreads Disney gets crushed to below 100

петя уралов says:

Trump is learning from Russia ! Want to know why the Russians are defeating the crown Virus? I showed the secret of their victory on my channel. ​@Gl2Y​

American Patriot2020 says:

This is an important fact. Thanks for reporting this. TD Ameritrade is spot on.

Abraham Breuer says:

Wall Street tries to shake out retail investors we have to show them we know the game

Matthew Delsignore says:

so for me walmart was flat and dollar general was up
everything else was down with most way down……….. makes u think people still need to shop

Granville Stout says:

Love the sound of men whistling in the dark!

HeartDoc Andrew says:

While #WonderfullyHungry, I share the thought that many of my fellow evangelical Christians have essentially been "transactional" in engaging in a #QuidProQuo with #DonaldTrump –> "We'll pray&vote for you, but we would like you to do us a favor, though." Instead of seeking GOD's face (2 Chronicles 7;14) so that He'd heal our land, they've made a terrible deal with #ImPOTUS45 with terrible consequences for our country.

OUdaveguy says:

"JJ, go ahead and give our viewers the standard Wall Street bullsh*t denying an overwhelmingly obvious panic and economic collapse."

Lewis K says:

Which fools are going to buy in this environment?

NBA FANBOY says:

The same guys telling us at 27 k it will rebound back great prices to buy stock

Bildgesmythe says:

Calling BS. The numbers don't lie.

Toai Tran says:

Orderly? The market halted within minutes of it's opening. rigght

HollowGram says:

look at 2:20, they are hiding something

Emperor'sNewClothes says:

FED – Killing savers, pensions, seniors, banks with these idiotic low interest rates!

Steve H says:

8% down with double the volume and hitting the circuit breaker… yeh not a panic at all.

RicViperMoto says:

Well Robinhood pretty much locked retailers out from selling lol

Comments are disabled for this post.