Are there zombies roaming the streets? Is the world finally ending? It seems like it, at least based on the panic-driven headlines dominating the media this week. But Matt McCall is here in this week’s episode of “Moneyline” to reassure investors and share what this chaos really means. Here’s a hint: This isn’t the apocalypse. There are also some great buying opportunities out there if you know where to look (and how to stay calm).
So what exactly has the stock market in a panic? Well, the coronavirus from China is spreading, and Italy announced that it was quarantining 16 million people in its northern regions yesterday. OPEC failed to negotiate a deal with Russia and now Saudi Arabia is starting an oil price war. Oh, and yields on the 10-year U.S. Treasury note fell below 0.5%.
In the middle of that, the S&P 500 dropped 7%, triggering a “circuit breaker” that halted trading for 15 minutes. But what does this really mean for investors?
First of all, Matt McCall wants to dispel some of the coronavirus panic. As of Monday afternoon, there were only 550 confirmed cases in the U.S. and 22 deaths. And while even a single death is tragic, it’s important to remember that the common influenza has killed 17,000 in the U.S. just this flu season. And in Italy, which has now quarantined the entire country, the coronavirus is primarily killing elderly people and those with pre-existing medical conditions. It’s not killing children and babies.
So stay calm and wash your hands. Businesses are still running even while some workers are comfy at home. The coronavirus is less dangerous than driving on the average U.S. highway.
OK, but what about the oil price war? Is that a death sentence for the global economy and your portfolio? No. McCall is even willing to argue that lower oil prices could boost the U.S. economy, helping manufacturers output more with reduced costs. For investors, it is true that energy stocks, particularly those of U.S. shale producers, will be hit hard. But Exxon Mobil (NYSE:XOM) and Schlumberger (NYSE:SLB) aren’t disappearing forever.
Oh, and for individuals, you can even expect to pay less at the pump and while heating your house. That sounds good, right?
So if the coronavirus and oil prices aren’t reasons to panic and cash out, what about the U.S. Treasury yields? Yes, it’s true that 10-year bond yields dipped below 0.5% before rebounding, but for those who already owned bonds, the higher prices are actually a positive. And lower yields mean more liquidity, and eventually, increased borrowing. It’s not like the entire country is about to stop buying homes. In fact, mortgage applications increased 15.1% last week alone.
In short, don’t panic. Look beyond the headlines and put the numbers in context. And remember that the coronavirus isn’t going to completely stop megatrends like 5G, artificial intelligence and software.
Tune in to “Moneyline” with Matt McCall for more on keeping your emotions in check, what stocks to buy now and what you should know about the Federal Reserve rate cut.
Matthew McCall left Wall Street to actually help investors — by getting them into the world’s biggest, most revolutionary trends BEFORE anyone else. The power of being “first” gave Matt’s readers the chance to bank +2,438% in Stamps.com (STMP), +1,523% in Ulta Beauty (ULTA) and +1,044% in Tesla (TSLA), just to name a few. Click here to see what Matt has up his sleeve now. Matt does not directly own the aforementioned securities.