Donald Trump’s Coronavirus Diagnosis Will Cause ‘Substantial Turbulence’ In Financial Markets, Economist Says
In a Saturday op-ed for The Hill, economist and professor Lee E. Ohanian, a senior fellow at Stanford’s Hoover Institution, predicted that Donald Trump’s recent coronavirus diagnosis would likely generate “substantial turbulence” in the world’s financial markets.
“We should expect much higher than normal volatility in equity prices and possibly interest rates while the president and the first lady quarantine, because their COVID test results create new economic and political uncertainty, and uncertainty almost always roils financial markets,” he wrote.
The professor noted that Trump’s diagnosis has “enormous uncertainty on many fronts.” Just one day before his piece, Dr. Ezekiel Emanuel appeared on MSNBC’s The Rachel Maddow Show and warned that Trump faces a significant risk of death over the next few weeks.
“The most important source of uncertainty is the president’s health and his current and potential symptoms,” Ohanian opined. “Even if the president has only mild symptoms, he will need to remain quarantined for about 14 days.”
The economist predicted that such a quarantine means that Trump will need to take time off the campaign trail and postpone the remaining two presidential debates, the latter scenario which the Trump campaign has claimed will not happen.
Although Ohanian noted that previous presidential emergencies don’t provide much information on the future of modern financial markets, he nevertheless argued that volatility is inevitable until the nature of Trump’s condition is resolved.
“As we learn more about President Trump’s condition, uncertainty ultimately will be resolved, and market volatility will decline. “
As reported by The New York Times, stock markets fell after news broke of Trump’s positive COVID-19 test. However, market historian Charles Geisst told the publication that the effect was less significant than past presidential scares due to its timing among the chaos and confusion of 2020, which has seen the coronavirus spread across the world and wreak economic collapse in its wake alongside civil rights protests marred by violence and riots.
Paul Donovan, the chief economist at UBS Global Wealth Management, told clients that the news of Trump’s diagnosis is likely only to have a long-lasting effect on the market if it is viewed as something that influences public health or the outcome of the election. Given Emanuel’s warning of the president’s significant risk of death and concerns around the spread of the virus to lawmakers, these scenarios appear to be possible.
Trump is currently admitted at the Walter Reed National Military Medical Center, which the White House claims is out of precaution rather than necessity.
