Donald Trump is on the verge of signing a new act which would release $2 trillion in aid for the US as a means of combating the coronavirus threat. While this is a huge figure there are already serious concerns that it will not be anywhere near enough. As the US stock market looks to Donald Trump for a vote of confidence, what will investors make of the latest move by the president?
New York seriously concerned
The governor of New York has welcomed the bailout plans by the US government but suggested they are nowhere near enough for the state. As a direct consequence of the bill going through Congress, we will see $1.3 billion released to New York City. However, this would appear to be a drop in the ocean with an expected $15 billion revenue shortfall in the New York City budget alone.
The authorities will be able to increase additional funding up to around $3.8 billion as a direct consequence of the new legislation but there are serious concerns. Newspapers are constantly criticising the stance of Donald Trump who effectively dismissed the coronavirus in its early days only to perform a huge U-turn. These vital lost days have put the US behind the curve and already we have seen infections and deaths ramp up right across the country.
At this moment in time there are more than 30,000 coronavirus cases across the state of New York City. This is more than half of the confirmed cases across the US with the authorities likely to close parks, playgrounds and streets in the short term.
Fighting a losing battle?
The $2 trillion relief aid will be spread across the US as a means of filling budget black holes and fighting the threat of the coronavirus. Already experts have suggested it is too little too late and the US could pay with huge casualties numbers in the days, weeks and months ahead. Allegedly, the US government was informed in early January that the Chinese authorities were not being transparent with the truth. This was ignored on numerous occasions until finally Donald Trump made an announcement only to play down the threat. Did he ignore his advisers?
At this moment in time there is no doubt that the US is fighting a monumental battle to control the virus. Rumours that the US government tried to buy up potential vaccine solutions have yet to be proved but are certainly possible. Unfortunately, we are now in a scenario where it is literally first-come first-served and every country will need to put its citizens first going forward.
It is not difficult to see that investors are seriously concerned about the short to medium term outlook for the US as well as the worldwide economy. There will be days when markets will bounce back on renewed speculation and hope. However, it is difficult to see any significant upturn with the current cloud of the coronavirus hanging over not only the US market but also the worldwide economy.
The last thing investors needed was Donald Trump to flip-flop between denial and an appreciation of just how difficult the problem is and could be. Could it cost of his presidency later this year? Quite possibly………….