President Donald Trump can try all he wants to blame the news media and Democratic leaders for coronavirus financial turmoil, but the global fears of economic upheaval are based on genuine market concerns. Consumers and travelers are coming face to face with the market realities, belying Trump’s repeated assurances that everything is fine. Financial markets are risk-averse, and the global spread of the coronavirus is boosting the risk factor to new heights, which is why the stock market continued its roller-coaster ride even after Tuesday’s Federal Reserve interest rate cut.
Initial market turmoil reflected concerns about a sharp slowdown in manufacturing because a mass quarantine in China had brought production supply chains to a standstill. Major corporations such as Apple and Microsoft couldn’t get the components they needed, and alternative suppliers outside China were either too slow to meet production demand or their prices threatened to push production costs beyond a tolerable threshold. Companies that routinely dispatch employees back and forth from Asia can no longer afford the risk and 14-day quarantine such travel entails.
The news media didn’t make up these factors. They are the business reality.
Each summer, thousands of U.S. university students take advantage of summer study-abroad programs. But major universities have canceled or suspended their programs in the two most popular regions, Europe and Asia. Insurance companies whose policies protect universities from liability say the risk factor is simply too high. Universities that knowingly send their students into harm’s way could face exposure to high-dollar lawsuits without liability coverage.
Webster University reportedly has canceled university-sponsored travel to China and South Korea for the rest of the spring semester but is keeping options open for summer travel. Washington University has canceled its study-abroad programs in China and South Korea, while travel to Italy remains on a watch list for suspension.
Southern Methodist University in Dallas has canceled its entire study-abroad program from now through the summer. Students currently studying or working abroad are advised to come home, the university stated, asking that they “self-isolate for 14 days within their homes before returning to campus.”
Airlines are grappling with mass cancellations. Several are offering flexible policies for travelers to rebook at a later date without the normal penalties. Some canceled flights qualify for full refunds. Hotels, cruise ships, restaurants and tour groups all face big potential losses. Add those factors to the earlier market tensions over Trump’s trade wars with China, Europe, Canada, Mexico and Brazil, and the conditions are ripe for more stock market roller-coaster rides.
If Trump had offered a more articulate and structured plan of action, perhaps the market and consumers would feel reassured. Instead, he offers rambling, incoherent assessments that appear to be based on nothing more than his less-than-informed, armchair diagnosis of the coronavirus problem. No wonder investors are running for cover.