Reopening economy too early could backfire for humans and markets, investors say

Reopening economy too early could backfire for humans and markets, investors say
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BOSTON/NEW YORK (Reuters) – U.S. President Donald Trump’s desire to rapidly reopen the economy despite signs the coronavirus is still spreading may backfire, with higher deaths and citizens remaining fearful of going out, some investors said.

U.S. markets have been roiled by the spread of the virus in the country and as states have shut parts of their economies.

Trump said on Monday that at the end of a 15-day shutdown period, which would run to the end of the month, “we will make a decision as to which way we want to go.”

Last week, Trump urged Americans to halt most social activities for 15 days. It is unclear what power Trump actually has to simply turn the economy back on by executive order.

News of Trump reopening the U.S. economy anytime soon would not be taken well by investors, who remain anxious about the coronavirus’ uncertain trajectory and its economic toll, said Axel Merk, chief investment officer of Merk Investments.

“Markets will react badly because they have learned that this approach doesn’t work,” Merk said. “From a medical point of view, you have to break the exponential growth and you do that with shelter in place policies.”

The S&P 500 Index .SPX sank 3% on Monday. It is down more than 30% from its Feb. 19 peak and is at levels not seen since the end of 2016, giving up nearly all of its gains from before Trump was elected.

Source: Reuters

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