National Economic Council Director Larry Kudlow appears on CNBC for an extensive interview on upstream economic issues.  With China’s economy at a standstill; and with the troubles of the coronavirus spreading outward; what does that mean for us?
There’s some good questions in this interview.  Domestically, as we noted yesterday, the U.S. economy is strong and growing. However, the Wall Street multinationals are very exposed to the China issues. On the bright side the overall China issues are helping to push more corporate decisions toward domestic investment and away from Beijing.

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Given these lessons being learned, I sure wish we didn’t have China involved in making our medicines and medical products.  The administration needs to look at this more.
Director Kudlow also appeared on Fox Business with Lou Dobbs.
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Senator Tom Cotton appears on Fox News to discuss the latest on the troubling issues with the Coronavirus.  China has approximately 70 million people in quarantine during their effort to contain the spread of the virus.
Senator Cotton has been a leading voice in the U.S. warning about the potential risks from Coronavirus spread.  Interestingly Mr. Cotton explains the origination of the virus did not come from the food market initially blamed. However there is a level-4 bio-lab within a few miles of the Wuhan market. Occam’s razor? Interesting information.

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White House manufacturing policy advisor Peter Navarro has an important discussion with Maria Bartiromo about the consequences of the Coronavirus which includes the need for U.S. companies to return manufacturing to the United States on key medical products and pharmaceuticals.   A very important subject.
Both Navarro and Bartiromo note that our dependency on Asia for medical products is a problem when a global virus erupts, global demand for those products peaks, and the supply of those products becomes most urgent.

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It would seem obvious (to me) that medical products and pharmaceuticals would be two sectors for the Commerce Department (Sec. Wilbur Ross) where a national security review would be well worth the time & effort.  The multinationals would fight the administration, but it might be worth this fight.
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White House trade and manufacturing policy advisor Peter Navarro appears on Fox News to discuss the strong January jobs report of 225,000 gains.  Navarro highlights something few pay attention to.  The Trump administration not only focuses on the macro policy principles to create the economic environment for job growth, but President Trump also personally engages on specific company, state, and regional efforts.
The engagement of a U.S. president to discuss and influence U.S. jobs on a company by company basis, and get down in the details of deals, is a completely unique political standard in the modern era.  President Trump is very uniquely fighting for each job.

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It is very disappointing to hear vulture capitalist Jeff Bezos having a disinterest in protecting American intellectual property rights, and instead choosing to accept/allow cheap Chinese, knock-off goods as the backbone of his Amazon business model.
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Even before the Coronavirus surfaced in China there was lower manufacturing factory activity within the Chinese economy.  The necessary response within China to control the spread of the Coronavirus has been to shut down most commerce.  Factories, schools &  businesses throughout China are empty as various containment measures are underway.

The direct result of this response is a severe drop in economic activity.  Many analysts are speculating about how this cessation of production might impact supply chains that use Chinese component goods.  Obviously, with manufacturing facilities closed any downstream multinational company relying on those products may have supply issues as soon as existing inventories deplete.
There is a natural lag before the manufacturing void hits the consumer market; however, the financial markets are forward looking and they are already reflecting severe drops in stock prices, depending on the dependency/exposure of the company and/or sector.

BEIJING/SHANGHAI (Reuters) – Chinese stock and commodity markets fell heavily on Monday as the death toll from a coronavirus epidemic in China rose to 361 and investors retreated into safe-haven assets in the first trading session after an extended Lunar New Year break.

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In response to an escalating spread of the Coronavirus President Trump initiated a suspension of entry visa’s for persons traveling from China:  “The entry into the United States, as immigrants or nonimmigrants, of all aliens who were physically present within the People’s Republic of China, excluding the Special Autonomous Regions of Hong Kong and Macau, during the 14-day period preceding their entry or attempted entry into the United States is hereby suspended and limited” [link].
The travel restrictions went into effect at 5:00pm today.  Essentially President Trump is putting the health of Americans first. However, in an effort to politicize the Coronavirus, presidential candidate Joe Biden says travel entry restrictions are “hysteria, xenophobia and fearmongering”:

[…] “We have, right now, a crisis with the coronavirus,” Biden said in Iowa Friday. “This is no time for Donald Trump’s record of hysteria and xenophobia – hysterical xenophobia – and fearmongering to lead the way instead of science.”  (more)

…And just like that Democrats become the party of pro-virus.
You know the professional open-border democrats have lost their minds when they start defending the rights of a potentially deadly virus to enter the U.S.A.  Nuts.  Great job Joe.
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Earlier today the federal Coronavirus Task Force established by President Trump held a press conference to explain the U.S. response status and answer media questions.
The task force is being led by HHS Secretary Alex Azar and includes:  Dr. Robert Redfield, Director of the Centers for Disease Control and Prevention; Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health; Ken Cuccinelli, Acting Deputy Secretary, Department of Homeland Security; Matthew Pottinger, Assistant to the President and Deputy National Security Advisor.
[Video and Transcript Below]

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[Transcript] – SECRETARY AZAR: Well, good afternoon, everyone. I’m Alex Azar, Secretary of Health and Human Services, and Chairman of the President’s Task Force on the Novel Coronavirus.

I’m going to start by turning things over to Dr. Robert Redfield, the Director of the Centers for Disease Control and Prevention, to discuss the current situation on the novel coronavirus. Dr. Redfield.

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The Bureau of Economic Analysis released their first estimate of Q4 GDP growth today.  The BEA first estimate is 2.1 percent growth for the fourth quarter and 2.3 percent growth for the year. [Data Here]   The U.S. economy is now approximately $21.7 trillion.
Commerce Secretary Wilbur Ross appeared on Fox Business with Maria Bartiromo to discuss the ‘big picture’ outlook for the U.S. economy.  Strong employment, strong wage growth, strong consumer spending, and now the USMCA passage delivering the backdrop for domestic capital investment.   Good interview:

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The headwinds by Boeing and the GM strike had some negative impact.  However, 2019 was dominated by Wall Street multinational investors taking the ‘wait-n-see’ position on the China/Asia -vs- USMCA trade dynamic (manufacturing investment) overall.
The USMCA passage gives certainty to North American manufacturing investment.  The China ‘phase-one’ agreement allows time for re-positioning, and/or time to extract profits from prior investment.  A corporate decision to manufacture in China is now based on an entirely different set of considerations than 24 months ago…. ‘phase-one’ buys time but doesn’t reduce the long-term risk.  North America is now the place for investment stability.
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The Coronavirus was first first diagnosed in China less than a month ago. On Thursday (U.S.) / Friday (Beijing) the Chinese government stated they have confirmed cases of 830 patients and the death toll has risen to 25.
The virus has infected more than a dozen people outside China around the world, mostly in Asia. However, the first U.S. case has been reported in Texas who traveled to the epicenter of the outbreak, Wuhan City, China.

A total of 18 million people are now under quarantine in China.

(Via CNBC) […] Local authorities in China have quarantined Wuhan and Huanggang, which have a combined population of 17 million. Including Wuhan where the virus was first identified, travel bans were in effect Thursday for at least eight cities.
[…] The previously unknown, flu-like coronavirus strain is believed to have emerged from an animal market in central Wuhan city.

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Earlier today Treasury Secretary Steven Mnuchin appeared on CNBC for an extensive interview from the Davos, Switzerland, World Economic Forum.
Good grief.  What is so hard to understand about the statement: “economic security is national security”?

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