Sentiment dropped in the immediate-term again as fears about the coronavirus, the upcoming election and the economy settled in for marine dealers.
According to a monthly survey of marine retailers, sentiment on current conditions declined from 69 in January — its highest reading n months — to 47 in February
"The fallout from the coronavirus on the financial markets this week could decimate spring and summer boat sales,” wrote one dealer in the comments section of the Pulse Report, a survey administered by Baird in conjunction with the Marine Retailers Association of the Americas and Trade Only Today. “It could also affect the outcome of the election next fall."
Dealers were asked to rate the potential impact of four risk factors in the survey — coronavirus, the 2020 U.S. election, the economy and current or pending waterways legislation, a popular topic since red tide decimated marine businesses in Florida last year.
However, waterway legislation was the only risk factor that didn’t register as a “major risk” for dealers, who overwhelmingly listed it as a slight risk to business.
Caption 2: Three of the four possible threats were deemed “major risks” by dealers responding to the Pulse Report.
The economy was ranked by most of the 83 respondents as being a major risk, followed by the U.S. election, and then coronavirus.
“Our checks suggest positive trends continued into February, but stock market volatility and the coronavirus pose new threats to 2020 demand,” wrote Baird in a report discussing the survey results. “Marine stocks have underperformed during the market selloff — down around 20 percent versus S&P, down about 10 percent.”
"Coronavirus scares me and not from a health point of view,” wrote one dealer.
If this thing lingers for a few more months, it could really dampen our selling season. People don't like to buy when there's uncertainty in the marketplace.”
Many dealers blamed news outlets for the coronavirus effect on sales.
“I have never seen such mass hysteria especially over something that is no different than the normal flu,” wrote one dealer. “We are fighting a terrible local economy and don’t have the tools to fight the mass hysteria the media is creating.”
The stock market instability that followed the coronavirus was also on the minds of dealers.
Trading on Wall Street paused for 15 minutes today after a 7 percent stock market plunge, which occurred shortly after trading began, triggered a “circuit breaker,” according to the Boston Globe.
The plunge triggered a “circuit breaker” which paused trading on the NYSE for 15 minutes. The last time a circuit breaker was triggered was December, 2008.
The drop continued after trading resumed, with the Dow falling more than 2,000 points shortly before 10 a.m. before recovering slightly. As of 10 a.m., the Dow was down more than 1,500 points, or 6 percent.
The election was also viewed as a major risk.
“Current election front runners are spooking buyer confidence,” wrote one dealer. “As we get further into the election cycle the swings will be greater if this continues.”