On the Trey Ware Show, Karl Eggerss discussed the effect of the coronavirus on the economy and the steps China has taken to help their economy and effectively the global economy.
Trey Ware: Now there’s been people talking this weekend about how this is going to affect the economy and the stock markets and so on. So let’s go to Karl Eggerss, creatingricherlives.com. Karl, what do you think about this? Is it going to affect the economy? Will it have an effect on the markets?
Karl Eggerss: It’ll probably have an effect on the Chinese economy more than the U.S. economy. But the interesting thing Trey is, Wall Street’s watching and I think they’re watching the number of cases each day and the rate of change that those are increasing and it’s actually starting to slow down a bit. And I think that’s why you will see a little bounce perhaps in the market. We saw a pretty tough day Friday. But here’s what’s interesting, you have oil prices dropping really fast, you have interest rates falling really fast and overnight you had China come out and actually cut their interest rates and put more money into their economy. So everybody’s kind of treating this almost like a recession and it’s almost going to fuel the economy even further, I think. So lower gasoline prices coming your way and lower interest rates is going to actually spark the economy and then China doing what they’re doing.
Karl Eggerss: So that’s why I think the stock market is watching this so closely because the global economy is cruising along, but it’s cruising along at a pretty low altitude, we’ll call it. And there’s not a huge room for error, at least over there. You saw their stock market down over 8% last night because they’d been closed for several days due to their holiday and they had extended it. So yes, it could affect the economy, not necessarily in the U.S. just yet, but everybody wants to try to prevent that.
Trey Ware: Yeah. Could affect it even further. You’re talking about gas and oil prices going down. I’ll have you explain that in a second. But I had a friend tweet that she saw it at a $1.93 in San Antonio yesterday. So what about buying products out of China? Will that be affected? Are people going to back off from buying products out of China with a fear of infection or whatever?
Karl Eggerss: How can we? I mean, honestly, look at everything you purchase every day. I think that part’s impossible. I think obviously that the travel there, you’re seeing the foot traffic in Macau, the big gaming area, down 90%. So I think again, it’s going to be more localized in terms of China, but this is a huge, huge economy. So there’s no doubt it’s going to affect them. Can it translate into something over here? Absolutely it could, but in terms of us buying products, I don’t think we know when we’re buying Chinese stuff and when we’re not.
Trey Ware: Real quick, why is the oil price going down because of this?
Karl Eggerss: Essentially, it’s a global commerce slowing down. It’s the fear that, you know what? Airplanes aren’t going to be traveling as much perhaps because they’re grounding some of those and there’s this less demand. So this is a less demand story, not a supply story.
Trey Ware: Got it. All right. Karl Eggerss, creatingricherlives.com, with me every Monday morning at this time and other times as needed. Thank you, Karl. Appreciate it very much.