Wall Street 'propaganda'- suggesting for weeks the epidemic wasn't any more than a blip has proven wrong. Some analysts came out last week in a belatedly recognition things were changing, days after we forewarned it was not a situation where central banks could stem the tide overall. Late today a Chinese Aviation Minister made comments about 'starting up' the Chinese Airline flights, since the virus was 'under control'. I didn't believe them at the start of the virus, and I don't now. I'd like to, but really this is a move likely capable of backfiring if they actually do it prematurely. Aside a diversion (which may help rally the market on such early hopes) the bank situation matters, because of so many firms there at risk of failure.  

Clearly the Fed and PBOC or others have roles, but monetary policy here or in China, really takes a backseat to a lack of modern 'bankruptcy laws' in China and Hong Kong, as generally fail providing for reorganization when businesses spiral downward in out-of-control situations. Chapter 11 style arrangements would help.  

So keep in mind that China contributed half of the world's growth recently and that means the USA is not entirely an island devoid of concern (that's an economic concern, as discerned separate from medical concerns with regard to the actual spread of the virus). As I have said for weeks, if U.S. cases expand severely, what you saw so far will be minor by comparison.

And lower rates (nonsense about the Fed cutting to zero like Europe did, to no avail) won't help. I mentioned of course the Fed has to stay friendly, but it can't kill the virus. Ask the CDC, NIH and Gillead Sciences (GILD) on that. The supply-chain issue will not be solved by easier monetary policy. And Gillead is not yet able to report success with it's drug efforts on the virus, and that is so sad. 

At some point if this worsens (especially in Europe) rates can dive due to more foreign funds coming in, but concurrently you could get free-fall in a slew of stocks and ETF's, which are a danger I've previously noted, related to the dangerous concentration of money into often-dissimilar stocks. At first though, with markets cratering on Monday, we oddly may rebound. 

What we have here is what I've forewarned of. So the efforts of weeks to try being informative about the pathogens both medically and politically if you will, aren't necessary to expand on-now. So let's highlight tidbits:

• You know there's 'something wrong' when we now learn that the US Senate is going to be provided with 'classified briefings' on WuFlu as of tomorrow.

• A spike in WuFlu especially in Italy and South Korea too, is freaking the world, as the globe quietly shifts (as I have also forewarned) from containment to trying to mitigate the impact of the corona-virus.

• A 'travel warning' has JUST been issued to South Korea.

• South Korea early Tuesday is considering a lock-down like China.

• Spain reports first case of WuFlu.

• Now we know about the 7000 'unreported' self-isolated people, they are all in California and had flown back from any of the hotspots, no data on their condition or percentage of infections is available.

• And Chinese airlines talk about resuming service (ridiculous).

• When (not if I fear) the under-reported cases are grasped, and as this gets into Africa or more countries with low capacity to address or help their populations.. well it won't just be markets that are 'at-risk.

• The President is in India today (incredible to have a rally there, so I'll tend to think it's more than his well-known ego involved, but possibly unannounced travel to Afghanistan, and might be associated with the ceasefire and/or agreement, but just wild speculation about that.. but it should be something more given the taxpayer dollar for all this).

• The WuFlu mortality rate may seem encouraging on the surface, but it is a lot of people, therefore such data is not so comforting.

• Furthermore the fear of that fatality denominator (of a couple percent) rising, alone, is causing cocooning in the United States and Europe in my view for a couple weeks already, not just South Korea of course.

• Luxury goods purveyors from China and South Korea (and elsewhere of course) are or were in Milan for Fashion Week. Now they return to their home countries, and some may be exposed to WuFlu. Austria as an example closed their rails to Italy to try to protect their country. Of course I expect more of that.

• Problem is, the failure to designate this as a 'pandemic' slows speed of response and increases prospects of spread (even to New York).

• Today I obtained a copy of the Northern Command US Navy alert to all stations. This includes CENCOM; Africa Command, Pacific Fleet and so on. It's about 'Force Protection' for Naval personnel with very detailed guidelines (it's unclassified so the media could report it).

• This guidance specifically about COVID-19 (WuFlu) is authored by the Undersecretary of Defense, and signed by Vice Admiral Sawyer, Deputy Chief of Naval Operations, and refers to it as.. a pandemic.

• Hence my view is supported by the Pentagon not pulling punches, as they must protect our Forces and secure our Bases, and not wait for a politically-driven statement from WHO or CDC.

'Free Everything'  

'The Bern' was a part of this market's defensiveness too, although it is hard to discern how much, since most of the big market drop is related to the pandemic. (I know neither WHO or CDC haven't declared it that ..yet.. stay tuned they will.) Stocks will decline more on that, even if we get an intervening bounce. And I do expect a bounce. 

In the course of 5 minutes late today, the trend of 'pulling guidance' that started with United Airlines (UAL), moved to MasterCard (MA). Many more coming as they ratchet-down revenue and earnings guidance for the year or just flat-out say the truth: it's impossible to divine right now. And remember it is an S&P (SPY) that was priced for perfection.  

As to Bernie... well.... a couple thoughts. Other than saying what he'd do on day one (besides wonderful relations with Cuba I suppose), he is truly a complete anomaly for our system. What Bernie poses, regardless of the Congress at this point, is nevertheless beyond prediction, so not pleasing to Wall Street (his ideas of a financial transaction tax aren't the big deal).  

We have no idea what he'd be going to able to get done first. If it's banks, so their weakness probably tells you people would be pulling out. There sort of is no scenario to 'model' from. That frustrates the algo crowd too.  

I have young friends that favor Bernie, and think they'll be fine with their IRA's and so on, so welcome the healthcare and student loan pictures. It is not so simple and they are overly impressed by grandiosity. I point out to them that if (your) income stream collapses and home lenders want to be paid, you'll not see mortgage loans forgiven like student loans might be, and that's rather problematic.  

With yet-higher debt a crash in housing and disposable incomes could make the financial debacle of 12 years ago look like a picnic. I hated the debt picture already thanks to all administrations since Clinton (who had a nice recovery so could balance the Budget at least). Raising debt from here with baby boomers retiring soon, and needing to draw-down IRA's (mandatory minimum annual withdrawals too) is courting disaster. 

Moderate Caution is our 'glue' 

You need not be a fan of Trump or Bernie, to realize why adult common sense is not a boring moderate stance. 'The Center' is the glue that holds the country together. If Bernie would stop brainwashing his followers and embrace free markets, with tax loopholes fixed, and additionally push his other programs for health (etc) fine, but discard the socialist nonsense if he wants the Nation to thrive, not merely at best, survive. Of course if he keeps up this pseudo-Marxist stuff, he won't be in the center of the ring.   

In-sum: we need stability right now. When there's a crisis you don't just blow up the system. You create stability and then implement changes in an evenly-based strategy, not grandiose generalisms. Bernie lured folks with magical promises like just disappearing college debt, and youngsters really want that. Marx and Lenin lured people too, but the Czar was even more of a plutocrat than Trump. And Trump had similar goals as Bernie.

Yes, both Trump and Sanders are 'populists', one in-favor of individual vs the other favoring big Government making the social decisions. But both 'claim' to be for the working man. They are more alike than either side will admit, and while the drama makes for divisiveness, the reality is 'centrism is the new normal', even if unexciting. Too many are impressed by 'grand schemes' and not how to pay for them, or how they erode our liberties. 

Bottom-line: some new ideas and millennial thinking are welcome, it is their generation that inherits all this after all.  But, sudden implementation of a radical idea (even if it has merit) invites a whirlwind, not a solution.