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Mike Larson, Money and Markets columnist and editor of the Safe Money Report, is out this afternoon. Mark Najarian, the managing editor of Money and Markets, is filling in. Mike’s regular afternoon column will return on Monday…
Yesterday afternoon, the Dow Jones Industrial Average was rolling along, up 300 points and bolstered by solid corporate earnings and economic data. Suddenly, though, news surfaced of a man in New York City being tested for Ebola and stocks quickly gave up 100 of those points. Overnight, it was confirmed that the man — a doctor who had been treating Ebola patients in Africa — had tested positive for the frightening disease.
Initially, fear spread — Ebola in New York City! The disease became subject No. 1 on all the TV and radio business news broadcasts and all over the Internet. Stock futures were whacked. I’m a long way from New York, but I admit I’m watching every development on the Ebola front.
Ebola Bellevue Hospital in New York is treating the first Ebola patient to be confirmed in the city.
But it’s good to see that panic didn’t take over. Futures recovered their losses and the market opened higher, indicating that investors are examining the risks in a clear, calm manner.
Still, the situation is worth watching, and the government needs to get a grip on the crisis to reassure investors and everyone else. Heck, I get nervous when someone sneezes on the seat next to me on a bus even in non-Ebola times.
Here’s what we know: The New York patient was a physician, 33, who had been working for Doctors Without Borders and had arrived in the city from Guinea on Oct. 17. He’s being treated at Bellevue Hospital. Reports say he became feverish Thursday morning and contacted officials, who arranged to have him sent to Bellevue, one of the hospitals designated to treat Ebola patients. His fiancée and at least two friends have been quarantined.
You have to admire the doctors who travel the world to treat people in danger zones, something for which Doctors Without Borders has become justifiably famous. And this doctor must have been quite courageous to treat Ebola patients. But I have to question his actions upon his return to the U.S. Reports say that he took several trips on the subway, went bowling, went jogging, went out to dinner and took an Uber car (the driver is not at risk, officials say).
I take to heart the reassurances put out by officials, saying that Ebola is not an airborne illness and is only contracted when a person is extremely ill and symptomatic, and this patient apparently turned himself in when he first experienced symptoms. But is it really necessary to travel the subways, go bowling, go out to dinner, and jog immediately upon return from treating Ebola patients?
I understand it’s probably not fun to stay at home after a journey of that type, but this is one of the most frightening illnesses in the world, and it seems a little discretion for a while would be prudent. Am I wrong? Am I being too cautious? Too critical? Of course, reported facts often change in situations like this, so we’ll reserve final judgment until more is known.
“Should Ebola have such an impact on the markets?“
But aside from all that, should Ebola have such an impact on the market? Is it affecting your investment decisions? Does it cause you to sell stocks? Buy something else? Is the government doing enough to contain the disease, along with containing any panic? Should we be stricter? They’re Americans and we can’t ban them from returning to this country, but should we require quarantine whether they immediately show symptoms or not?
Let us know your views and exchange them with other readers by clicking here.
Our Readers Speak
Mike Larson will be back next week to review and respond to your questions and comments. Add your views on Ebola, earnings, the economy or whatever by clicking here.
Other Developments of the Day
Corporate earnings continued to flood in. Ford Motor Co. (F, Weiss Ratings: B) said it made $835 million in the third quarter, a decline from $1.3 billion a year earlier. The company has been aggressively re-launching its product line and the costs related to that were blamed. Revenue fell slightly to $35 billion from $36 billion. Pretax profit was $1.2 billion, down from $2.6 billion a year earlier. But earnings of 24 cents a share beat analyst estimates of 19 cents. Ford has warned that profits this year will be lower as it features 23 launches globally this year, including a new Mustang and new F-150, according to the Detroit Free Press.Microsoft Corp. (MSFT, Weiss Ratings: A-) reported a sales rise of 25 percent, beating analyst forecasts, citing growth in cloud-computing services and higher personal computer sales. It also got some good news from its Nokia handset business, which it bought earlier this year (it’s planning to drop the Nokia name and use Lumia brand at some point). Meanwhile, Surface, its tablet computer offering, posted revenue of a solid $908 million. Net profit was $4.54 for the quarter, or 54 cents a share, beating analyst forecasts of 49 cents a share but was still a decline of 13 percent from the year-ago quarter. Some of the bottom-line decline was attributed to integration of the Nokia unit.
Amazon.com Inc. (AMZN, Weiss Ratings: C-) wasn’t so amazing. After the market closed Thursday, it posted its biggest quarterly loss since 2003 and blasting the shares at the open. The company blamed a high level of investment, saying it would pay off in the future. “We have been in investment mode because of the opportunities we have in front of us,” Chief Financial Officer Thomas Szkutak was quoted by Bloomberg as saying. “There’s still lots of opportunities in front of us, but we know we have to be cautious about which opportunities we pursue.”
Europe is doing it again. On Sunday, regulators there will release a scorecard for some 150 lenders going through another “stress test.” According to The Wall Street Journal, banks are likely to need about $12.6 billion to meet capital shortages identified in the tests. Regulators are saying these will be the toughest in a series of stress tests in recent years. The Journal says that investors are guessing that only a handful of mainly smaller banks will fail the tests, which could help boost stock prices there Monday.
“We are not expecting any major banks to need to launch a rights issue to meet capital requirements,” the WSJ quoted Stephen Macklow-Smith, a portfolio manager at J.P. Morgan Asset Management, as saying. “It’s likely to be a positive for the sector.”
Best wishes,
Mark Najarian
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