There are decades where nothing happens; and there are weeks where decades happen. — V.I. Lenin
One of the most momentous political and economic decisions of the current century took place last weekend, with tumultuous consequences for markets, industries and entire economies. And yet amid the craziness of the past week's news, you could easily have been forgiven for missing it.
Illustration: Sarah Grillo/Axios
The fate of countries around the world lies in a very few individual politicians' hands — more so than at any other time in half a century or more.
The spread of the novel coronavirus is similarly a function of decisive action by heads of state, or the lack thereof. Governments alone determine whether the number of new cases increases exponentially, or whether it is brought under control within days.
Why it matters: The Chinese government, through inaction, allowed COVID-19 to grow to the degree that global infections were inevitable. Subsequent Chinese actions, however, were decisive and effective.
The big picture: It's generally very difficult to determine the amount of credit or blame for economic conditions that can be laid at the feet of any individual politician. Heads of state tend to inherit an economic system and stick with that system. But a global pandemic is exactly the kind of shock that only government action can address.
The bottom line: In normal day-to-day life, someone with the novel coronavirus will infect more than 3 other individuals. That's a simple recipe for exponential growth. Effective heads of state have shown that they have the ability to change individual behavior across their country so that the number gets reduced to less than 1.
Illustration: Sarah Grillo/Axios
Three major long-term trends have just been thrown violently into reverse: The rise of cities, the rise of global just-in-time supply chains and the rise of the sharing economy.
Cities are victims of the virus, but they're also a key vector for its spread. By their nature, they involve hundreds of thousands of humans living and working in close proximity to one another and relying on myriad shared services. Without cities the coronavirus would find it much harder to spread.
The sharing economy is built on a simple and powerful premise: that items from scooters to cars to homes can be put to most effective use if they're shared among multiple individuals. But sharing, now, is exactly what the world is trying to minimize.
Global supply chains are similarly being hurt by the virus. They're often based on the hyper-efficient movement of parts and components among dozens of different countries, in a complex dance in which a single missing piece can mean no end product at all.
The bottom line: All three trends maximize the efficiency of an economic system. The downside of that is becoming clear: Fragility and efficiency are two sides of the same coin. The more efficient a system is, the more easily it can break.
China and Korea show that it's possible not only to slow the spread of the virus, but to significantly decrease the number of new daily cases. Italy is the most worrying counterexample.
Illustration: Aïda Amer / Axios
The stock market is down significantly, but insofar as that market-reporting cliché the "wave of selling" is anywhere to be seen, it isn't coming from mom-and-pop investors.
By the numbers: As stocks plunged on Monday, more than twice as many Fidelity customers were buyers than sellers. “Customers are using the market volatility to add equities to their portfolio,” Fidelity’s Robert Beauregard told Yahoo Finance.
One reason people rotate into stocks is when they pay out much more in dividends than a Treasury note does in interest payments.
Earlier this week, however, the dividend yield on the S&P 500, at 2.09%, was more than 4 times the yield on the 10-year Treasury note. That easily marked an all-time high for the ratio.
Why it matters: This ratio doesn't help you time the market — stocks can always fall further. But it's easy to see how investors in Treasury bonds might start worrying that their money is no longer working hard for them.
The broad U.S. stock market was not (quite) in an official bear market as of the close of trade on Wednesday — but the Dow Jones Industrial Average was. Thank Boeing for that.
By the numbers: Boeing's share price has fallen from $440 in March last year to $162 in early trade today. That's a drop of $278 per share.
The bottom line: The fall in Boeing's share price alone has wiped more than 1,885 points off the Dow.
The World Health Organization finally declared COVID-19 to be a pandemic on Wednesday.
The other side: At a time like this, the WHO has to also be worried about unreasonable lack of fear. Fear, after all, is a very useful social distancing mechanism.
Between the lines: The WHO's announcement on Twitter was hardly sober and contained. It has two siren emoji, abundant ALL CAPS and a glaring red-on-blue color scheme.
My thought bubble: The WHO has an ally in the stock market. The plunge in stock prices is helping many Americans understand the gravity of the current situation.
Photo: Florent Rols/SOPA Images/LightRocket via Getty Images
During the global financial crisis, we experienced run-like dynamics in commercial paper markets. This time around, the run-like dynamics on commercial paper are a bit more literal.
Why it matters: People aren't buying toilet paper because they need toilet paper. They're buying toilet paper because everybody else is buying toilet paper. Runs can happen in just about anything and tend to be self-fulfilling. That's true whether they happen in the debt markets or the supermarkets.
Illustration: Aïda Amer/Axios
The Federal Reserve is expected to cut interest rates again on Wednesday, writes Axios' Courtenay Brown.
Why it matters: Wall Street is expecting another big move lower. 50 basis points seems to be the bare minimum; quite possibly we'll see a full percentage point lopped off rates, bringing them all the way to zero.
Photo by Fabrice Coffrini / AFP via Getty Images
The great Swiss architect Jean Tschumi, famous for his swooping Nestlé headquarters in Vevey, also designed the World Health Organization's Geneva headquarters, which was completed in 1966. (Architect Bernard Tschumi is his son.)