Trump Stimulus Won’t Save the Dow Jones From Crashing Below 20,000

The Dow Jones Industrial Average (DJIA) briefly dropped below 20,000 on Tuesday for the first time in nearly three years. The Trump administration’s latest stimulus package proposal rescued the stock market, at least temporarily. But according to Chantico Global founder Gina Sanchez, no fiscal policy or stimulus package – not from Trump, and not from the Federal Reserve – will save the Dow Jones from suffering an even more devastating crash. The Dow Jones began to see heightened levels of institutional sell-off after the World Health Organization (WHO) declared the coronavirus outbreak a global pandemic.

The number of confirmed U.S. coronavirus cases officially stands at 4,226, and several states risk succumbing to Italy-style outbreaks. Against that backdrop, Chantico Global’s Sanchez warns that no amount of stimulus will rescue the stock market from this panic-driven sell-off. Only actual progress in containing the virus can do that. So as the Fed slashes interest rates to zero and the Trump administration scrambles to send cash payments to Americans, Sanchez expects them to have a minimal impact on the Dow Jones.

She said on Squawk Box Asia: This isn’t a monetary crisis. So, bringing in a monetary tool—while it can’t hurt—can’t necessarily help. What we need to hear is that the virus is contained and no amount of fiscal stimulus will help that.

She further warned that the U.S. may start to see a no-end-in-sight scenario where the effect of coronavirus containment policies on the economy and the Dow Jones will impose dire consequences down the line. The strategist explained: The element of slowing the spread or stopping the spread or creating containment is one element, but the reality is that the policies we are instituting in order to do that are basically causing an economic lockdown. And that in itself will have a significant effect that could be more than just short-term.

For the Dow, Tuesday’s dip below 20,000 could be just the beginning, CCN, Mar 18