“Trump Faces An Impossible Trade-Off”: Why A Global Recession Is Now Inevitable
With California reporting late on Friday that a second coronavirus case of “unknown origin” has been uncovered, prompting Santa Claria’s Health Department to caution that “now is the time to prepare for the possibility of widespread community transmission” echoing similar warnings from the CDC, the Trump administration’s response to what now appears an inevitable surge in US-based coronavirus cases is becoming an increasingly politicized topic, and not without justification: after all, it is hardly a secret that Trump’s favorite “job approval” barometer has been the stock market – which hit an all time high as recently as last week – and it is also hardly a secret that Trump hardly wishes to inspire a stock market panic by disclosing the full extent and severity of any potential domestic epidemic (which ironically, aligns Trump ideologically with China, which is now willing to sacrifice its population in the pursuit of restarting the Chinese economy).
President Trump on the coronavirus: “We made a decision very early to close up our borders to certain areas of the world and we did that so we are hopefully getting lower from [15].”
Yet the more Trump, or various domestic institutions, appears evasive over the full extent of the corona crisis inside the US, the more markets get hit. Worse, the longer Trump avoids addressing the potential domestic epidemic, the more likely it is that the market crash that saw stocks plunge this week at the fastest rate since the financial crisis, will persist.
This brings us to an absolutely spot-on observation made by Bank of America’s rates strategist Ralf Preusser, who explains why for Trump, and US stocks, it may only get worse, before it gets even worse. That reason is that markets now seem to be taking the view that authorities – i.e., Trump – face an impossible trade-off:
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