Healthcare risk isn’t usually the leading factor in economic analysis, but the rise of coronavirus (Covid-19) has changed the focus and the calculus. Covid-19, in short, is on everyone’s short list for modeling the near-term macro outlook, in the US and around the world. At some point this, too, shall pass and something approximating a “normal” environment for economic analysis will return. Meantime, the uncertainty surrounding Covid-19 is shredding the usual macro modeling efforts. With that in mind, here begins a preliminary and evolving effort by CapitalSpectator.com for projecting the near-term path of cumulative reported cases of Covid-19 on a global basis, using a proprietary econometric forecasting methodology.

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Govt’s around the world take more aggressive stance on coronavirus: Reuters
Trump announces VP Mike Pence to lead US coronavirus response: USA Today
First US coronavirus infection reported not linked to int’l travel: NY Times
New coronavirus cases reported in S. Korea tops China for first time: SCMP
US-S. Korea military drills on hold due to coronavirus: Reuters
Is the stock market selloff just getting started? Bloomberg
Eurozone economic sentiment rebounds in Feb–fourth month of improvement: EC
New US home sales surged to 13-year high in January: Bloomberg

The coronavirus is weighing on economic estimates around the world and it’s likely that the US will eventually feel some of this pain. The degree of the macro price tag for America remains a guessing game at this point. As a baseline, we can monitor how the first-quarter nowcasts evolve in the days and weeks ahead. On that front, the latest numbers point to a slightly softer increase in output for Q1 vs. the previous quarter.

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Global equities continue to slide on Wed amid escalating coronavirus worries: WSJ
US prepares for spread of coronavirus: Reuters
Several European countries announce coronavirus cases: BBC
Fed’s Clarida: “still too soon” to discuss a rate cut: MW
Globalization faces a new front of attack with coronavirus: NY Times
JP Morgan warns investors on climate-change risk: Bloomberg
US home price growth picked up in Dec, marking eighth year of price gains: Mstar
Mfg activity ticked lower in February in Richmond Fed district: Richmond Fed
US Consumer Confidence Index rose in January to five-month high: MW

Well, that was painful. The increasingly hazy risk outlook linked to the coronavirus outbreak inspired a 3.35% haircut in the US stock market (S&P 500). The tumble was certainly a bracing counterpoint to the idea that sunny optimism is the only game in town. But before we let recency bias flip to the opposite extreme, let’s review where we stand after yesterday’s smackdown.

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Forecasting the economic impact of coronavirus is mostly guessing: WSJ
It’s premature to rule out a global recession triggered by coronavirus: MW
Is black swan blowback from coronavirus stalking Trump’s re-election? Politico
Will US stocks bounce after Monday’s dramatic selloff? CNBC
Iran may become the main source for spreading coronavirus: NY Times
Italy appears to be Europe’s epicenter for coronavirus: Bloomberg
Deadly protests rock Delhi as Trump visits India: Guardian
Dallas Fed Mfg Index rises sharply in February: Dallas Fed
US economic trend strengthened in January: Chicago Fed

Risk-off sentiment driven by coronavirus worries took a bite out of stocks around the world last week. The selling has spilled over today’s trading in Asia and Europe and looks set to weigh on American shares once markets open in a few hours. While we’re waiting for the opening bell to ring in New York, here’s a quick look at how the major asset classes fared for the trading week through Friday, February 21, based on a set of exchange-traded funds.

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Coronavirus cases top 79,000 as outbreaks spread across the globe: CNN
US health officials preparing for coronavirus to become pandemic: USA Today
China eases curbs as new coronavirus infections in the country fall: Reuters
Coronavirus blowback threatens global supply chains: WSJ
German business sentiment steady despite coronavirus risk: Bloomberg
Former Putin advisor re: US election preference: “Our candidate is chaos”: GQ
JP Morgan economists: climate crisis threatens human race: The Guardian
What are the telltale signs of a bear market? Here’s a short list: CNBC
US Composite PMI survey data indicates economic contraction in Feb: IHS Markit

● The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It
By Michael J. Graetz and Ian Shapiro
Q&A with co-author (Graetz) via Yale News
Q: Why prioritize economic insecurity over economic inequality?
A: There are several reasons. The first is that economic insecurity is rampant in the United States. About 40% of Americans say they couldn’t cover an unexpected $400 emergency expense with cash or a credit card charge they could pay off at the end of the month. Unless this insecurity is addressed, our politics will become increasingly ugly. You’ll see increased polarization and anti-immigration sentiment.
Second, as we learned from Daniel Kahneman and Amos Tversky’s critique of conventional economics, the prospect of loss is a more potent political motivator than the prospect of gain. Trump’s slogan “Make America Great Again” was effective because it implies that he would restore something that was taken away. It wasn’t about addressing inequality. He didn’t promise to make people rich or redistribute wealth. In fact, he bragged about his own wealth. Two-thirds of Trump’s primary voters earned above the U.S. median income of $50,000 for a family of four. These are not blue-collar folks, but they fear that they’re losing things. They’re worried about downward mobility — that their kids will be less successful than they are.
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The fear trade that’s animating Treasury buying is alive and well. Although you might have missed it by focusing on the soaring US equity market, the rush into safe-haven Treasuries has hardly missed a beat this year — a preference that’s pushed bond prices up and yields down.

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