I see 3 things driving the market now. An overdue market correction, reasonable reaction to supply chain issues and an irrational reaction to the virus.
A temporary boost to the market gives more time for the true long term impact to the supply chain to play out. It may turn out that the boost only gave a short respite but it may also turn out that it saved the market unneeded turmoil.
A short term boost also gives people a chance to take a breath, step back and take a more rational approach.
Eh, it probably buffers against overreaction, especially when a correction in fundamentals is being mixed with a reaction to new pressure.
But this is still a good point: if the market really is overheated then short-term monetary policy won't change that, and we can expect a lasting hit regardless of how disease issues play out. And it's not necessarily going to be obvious what's market movement and what's disease-related; I wouldn't be surprised if some over-hyped companies seize this as a chance to lower guidance faster than they normally could without spooking investors.
People keep saying that responses are irrational but we know next to nothing about this virus. We don’t have a firm understanding of how deadly it is, how long it takes to incubate, how easily it can be spread, or what long term damage it could do to people who recover.
There are reports of kidney damage and damage to fertility among men who have recovered. Are those true? We don’t know. We have no idea.
The rational response to a deadly virus with so many unknown factors is to hunker down, avoid mass gatherings, and exercise other precautionary measures. These precautionary measures mean fewer people traveling, going to the movies, going out to dinner, attending conferences, etc. There is nothing the Fed can do to blunt this reaction besides pour money into Coronavirus research and hope they find a vaccine or remedy before it drags the economy into a recession.
No, we know quite a bit about it at this point. The incubation period can range from 1-14 days but is 5 days on average[1][2]. The virus spreads through physical contact with commonly touched surfaces and through the air via droplets of saliva or mucus[2]. The deadliness of the disease is also becoming clear as time progresses. The current fatality rate is ~3% (likely overestimated) and most (almost all) deaths are either elderly or people with pre-existing heart or lung conditions[2][3].
Please refrain from fearmongering. Yes, COVID-19 is serious, but dishonestly inducing a public panic only makes matters worse.
Your links don't say what you think they say. Did you even read them? It's mostly ambiguous language and uncertainty. We think this, it's not certain that. It changes day to day.
Case in point the incubation period from your own link. "Most estimates of the incubation period range from 1-14 days, most commonly around five days. These estimates are updated as more information becomes available."
How long does it remain on the surface. "It is not certain how long the virus survices on surfaces."
Can asymptomatic people spread coronavirus? "How often asymptomatic transmission is occurring is unclear."
How deadly is the coronavirus? "We don’t yet know."
Can I catch the virus by eating food prepared by others? "It's not clear if this is possible."
TLDR: We have decent guesses in some categories and in others we don't know at all. People acting like they know for sure the details of this virus are lying at worst and merely uninformed at best.
> Case in point the incubation period from your own link. "Most estimates of the incubation period range from 1-14 days, most commonly around five days. These estimates are updated as more information becomes available."
Yes, it continues to become more accurate. Initial reports thought the incubation period could be up to 20-30 days. Continued study of the virus has refined the numbers and will continue to do so.
> How long does it remain on the surface. "It is not certain how long the virus survices on surfaces."
Interesting that you purposefully leave out the rest of the quote:
"It is not certain how long the virus that causes COVID-19 survives on surfaces, but it seems to behave like other coronaviruses. Studies suggest that coronaviruses (including preliminary information on the COVID-19 virus) may persist on surfaces for a few hours or up to several days. This may vary under different conditions (e.g. type of surface, temperature or humidity of the environment).
If you think a surface may be infected, clean it with simple disinfectant to kill the virus and protect yourself and others. Clean your hands with an alcohol-based hand rub or wash them with soap and water. Avoid touching your eyes, mouth, or nose."
> How deadly is the coronavirus? "We don’t yet know."
Again, you leave out the rest of the quote and this one has hard numbers behind it as the infection, recovery, and mortality rates are being tracked internationally.
"As of February 25, 2020, the reported confirmed cases and deaths in China suggest the mortality rate is roughly 3%. It is important to remember that early on in an epidemic there is a “tip of the iceberg” phenomenon where we overestimate more severe cases and mild or asymptomatic cases go unrecognized, so the mortality seems higher than the reality. That may be happening when we speak of up to 3% mortality. By contrast, SARS had a mortality rate of around 10%; the MERS mortality rate is closer to 30% to 40%. There appear to be many more COVID-19 cases confirmed than there were with SARS and MERS."
> Can I catch the virus by eating food prepared by others? "It's not clear if this is possible."
Yet another misleading partial quote.
"It’s not clear if this is possible, but if so it would be more likely to be the exception than the rule. That said, COVID-19 and other coronaviruses have been detected in the stool of certain patients, so we currently cannot rule out the possibility of occasional transmission from infected food handlers. The virus would likely be killed by cooking the food."
None of these are "guesses". They are scientific observations backed by evidence. Stop spreading misinformation. You claimed that we "know next to nothing about this virus" which is simply not true.
Where you see certainty I see ambiguity. None of what you are reading in those links confirms your forceful statement of facts where no such facts exist.
Nothing about any of the posted information is ambiguous. On the other hand, you decided to extract partial quotes that fit your narrative in a way to be purposefully deceptive.
Researchers saying "we are not completely certain but the evidence appears to indicate X" is not logically equivalent to "we have no idea why X happens"
Saying that this is a big deal isn't fearmongering -- all of our elected officials are downplaying this as hard as they can, and most people don't seem concerned about it.
People need the truth, and they need time to be able to react to it before we're already in the midst of a bad situation.
A Harvard scientist predicted that 40-70% of the world could get this, and the death rate could be 1%. That rate is much higher among the elderly and the unwell.
A lot of people are going to die amidst the backdrop of a completely overloaded and mostly unprepared healthcare system. We need to acknowledge that.
I do not believe anything I've written is exaggerated or written from a place of fear.
Referring to the extreme uncertainty is not fear mongering. Read the links that were posted. They don't say what the individual confidently claims they do. We know little and what we do know are guesses with wide ranges.
A temporary boost to the market gives more time for the true long term impact to the supply chain to play out. It may turn out that the boost only gave a short respite but it may also turn out that it saved the market unneeded turmoil.
A short term boost also gives people a chance to take a breath, step back and take a more rational approach.