The coronavirus is crushing stocks.
The Dow Jones Industrial Average suffered its worst drop since the 1987 Black Monday market crash on Thursday, dropping 2,352.60 points and notching a 10% loss after government officials failed to calm investors' fears about the fast-spreading virus's economic impact.
Here's what seven market commentators, including CNBC's Jim Cramer, are watching as stocks spiral.
Cramer, the host of "Mad Money," said the federal government should step in and borrow as much as possible to get companies through this market turmoil:
"We could be the strongest country on Earth if we used the federal government's balance sheet, not necessarily the Federal Reserve, but the actual federal government. Everyone owes the government at all time[s], everyone in this country — individuals, corporations. That has to be suspended right now so they have more money. Are these radical actions? You bet they are. Can they be done smoothly? Absolutely. Are we going to sit here and let so many companies go bankrupt because of an illness? I think that is stupid. This is the time for radical action, and the action can be done by the federal government. Once we settle that out and stop worrying about money, we can worry about health simultaneously. Right now, we can't do both. I see a number of companies in the S&P 500 that could easily go bankrupt in the next four weeks. Does that make any sense at all? No. We do not want to reformulate any corporation, let alone the large corporations, because they cannot get paid. How do you make an airplane with so many suppliers when the suppliers — this is, of course, the largest export we have — when people at the suppliers, of course, get sick? The federal government could tide us over here. I don't want everything closed. I want everything to work smoothly. And the only way to work smoothly is to take advantage of what the rates are and for the federal government to borrow as much as possible and then give it to us. This can be returned after we get healthy. Do we want to come in here every day and see which CEO is taken down by this illness, how many workers are taken down? No. What we have to do is be able to say, 'You know what? No matter what, the country will keep running because money is not a necessity at this time.'"
Jeremy Siegel, finance professor at the University of Pennsylvania, agreed with Cramer that some kind of economic cushion from the federal government "would be most welcomed":
"Obviously, we're in a dark tunnel here. I think there's light at the end of that tunnel. I think fear is obviously dominating. Fear is a very psychological response that builds on itself. I think we should listen to what Jim Cramer says. I think we need bold measures. Maybe a three-month tax holiday. Not just payroll tax, but tax holiday — $2,000 tax credit for individuals; a fund that would insure the credit lines so that no financial institution feels [like], 'They're all drawing on my lines. Do I have that credit?,' ... The Federal Reserve can say, 'We'll be able to supply that credit.' I think some big move by the government would be most welcomed. It is dispiriting to see partisan wrangling on this issue. I think that that's factor No. 1, factor No. 2 going to the disease itself."
Alli McCartney, managing director of UBS Private Wealth Management, said to proceed with caution in this volatile market:
"You have to have perspective. You have to stay away from your screens. You have to make sure you have the liquidity that you need to get you through this with opportunities. You have to use this for two [things] right now and only two things. The first is to tax-loss harvest in areas where, not that you want to get out on the market and sell at the bottom, [but] where you want to trade into something that you are more comfortable with at these levels and where you think there's more upside."
CNBC's Carl Quintanilla: It's not too early for that?
"Only if you're switching like for like in a way where you feel, for whatever reason, that there's more upside in where you're going than where you're coming from. The second is, if you have been under-risked and if you have a long-term perspective and if you have lived through Sept. 11 and if you have lived through the financial crisis, which many — and I think that part of this issue is that not all of us have — this is a long-term opportunity, but we're not there yet, so use options strategies to get in at below market levels. Don't fully-funded go in yet."
Richard Repetto, managing director of Piper Sandler & Co., said market makers were seeing very few issues as of yet:
"I do cover virtual market maker[s] in some of these instruments. We've checked with them. So far, they're saying they're seeing very little issues right now. There's pockets of concern, but it isn't a widespread problem. But it's these market makers — and, to get a little bit more technical, they create and redeem the ETFs, and they have to be able to trade the underlying ... [in] slim instances of becoming more difficult to trade. Again, it isn't widespread at this point, but, as speakers on [CNBC] earlier [Thursday] have noted, that's something to watch."
Raghuram Rajan, former Reserve Bank of India governor, said the U.S. market needs to "get ahead of the virus" before it gets even worse:
"We already had a weakened global economy because of the trade war that we had last year, and put on top of that the fact that last quarter in Europe and Japan was miserable. We were coming off that, and then we were hit by the coronavirus. So, the problem really is, at this point, to get ahead of the virus, to make sure that this is a few weeks rather than a number of months, and that is where I think a number of countries — Italy, and perhaps even the United States — are behind the curve. At this point, some of the experts are saying that the spread is considerably more than suggested by the number of cases, that we may already have thousands rather than hundreds of cases at this point in the United States. I would pay close attention to the professionals and see what is needed in terms of social distancing, in terms of closing down, because it seems to me that the more we get ahead of this, the shorter the impact is going to be on the economy, the better we will have resources to manage the most serious cases and the quicker the recovery will be."
Seth Carpenter, chief economist at UBS, said the colossal unknowns are presenting struggles for traders:
"I think, judging from the comments I get from our sales and trading desk, there is a big lack of liquidity in the Treasury market, worse, naturally, in the off-the-runs, but even in the on-the-runs, [traders] are having some trouble with trading conditions. And I think people are really struggling for a couple of things. One, people had had on a couple of very specific trades that are now not working, but on top of that, I think people really are trying to figure out, where is the bottom? What is the macro fundamental that they're trying to trade against? And that's just super hard because the unknowns are massive."
Brian Belski, chief investment strategist at BMO Capital Markets, said he was defaulting to his "three Ps," perspective, poise and process:
"When you're a strategist and a portfolio manager, because we do both, we are defaulting to terms of — I call it the three Ps of investment management — perspective, poise and process. The perspective is that this too shall pass. We don't know — by the way, nobody knows — when this is going to end. The only guide that we could say is that when we start to see a quote-unquote law of diminishing returns with respect to the headlines and to the news and to the facts. ... This has been a marketplace and a society that has been feeding on fear since 9/11, exacerbated and accelerated in '08-'09. Those two events — we knew we were going to come to an end to those, right? When the Fed came in and injected capital into the system, that helped create a bottom [on] March 9 of 2009, right? A lot of people didn't believe it. Now we're looking for things. We're trying to find a template and a playbook. We don't have one. This is fear and emotion. So, through that, you must employ your poise. What does poise mean? Do not make binary decisions. Talk with your financial advisor. Revisit your asset allocation and focus on your process, which is [the third] 'P'. What's the process? We have the best companies in the world here in the United States. Best companies in the world, most stable, with the best products, best management, best services, period. So, that's why I believe that we will come out of this faster and stronger than everybody else, and we are not going to change our year-end target. The internal parts of our discussion are under review, and we'll have a report out shortly."