The coronavirus plunged a knife in the heart of our raging bull market last week. So did Sen. Bernie Sanders, I-Vt.
That’s what some top investors are saying, suggesting the stock sell-off reflected anxieties about the spreading disease, to be sure, but also real alarm that the socialist ideologue could actually become our next president. That possible outcome to the chaotic Democratic primary season was viewed as a “black swan” event; few took the Vermont senator’s candidacy seriously.
That has changed.
Investors worry that the coronavirus could slow growth in the U.S and trash earnings for a quarter or two; of course, everyone is alarmed at the possible loss of life. But some market-makers are much more anxious that a President Bernie Sanders could impose massive taxes and new regulations which would undermine our long-term prospects and even our free enterprise system.
Consider the timing. In the lead-up to the market’s crash, two important things happened. First, former New York City Mayor Mike Bloomberg, considered by many the Democrat establishment’s best hope for derailing Sanders’ nomination, flopped big time in his first-ever debate.
The billionaire New Yorker entered the contest last fall when progressive Sen. Elizabeth Warren, D-Mass., was surging in the polls. Bloomberg feared that a weak former Vice President Joe Biden, the front-runner at the time, was not going to beat her. He proposed himself as the moderate who could best defeat Donald Trump.
By late February, Bloomberg had already spent an unprecedented hundreds of millions of dollars buying airtime and endorsements, campaigning on his successful three terms as mayor. He was rewarded with rising poll numbers and seemed like a possible winner in the event of a brokered convention.
The Nevada debate on Feb. 19 was Bloomberg’s first at-bats, a chance to be seen on nationwide TV and to mix it up with his rival candidates. Hopes were high that the pragmatic, smart businessman would emerge as the credible alternative to the fellow President Trump calls Crazy Bernie.
It was not to be. Ratings surged for the debate as millions tuned in to see Bloomberg in action, only to witness a major face plant. Bloomberg’s ascent in the polls stopped cold, and moderate Democrats suddenly confronted the very real possibility that Sanders would run away with the nomination.
In the two days after the Wednesday debate, the market started to slide, with the Dow Jones Index closing 128 points lower on Thursday and down another 228 points on Friday.
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