'The Markets Have Panicked'

For the past couple of weeks, Wall Street has looked like a roller coaster. And while there have been days of big gains, the Dow Jones has dropped more than 4,000 points as of Tuesday's close. Monday witnessed the worst losses since the 2008 financial crisis.Concerns over coronavirus are attracting the most attention but upheaval in the oil market and record-low yields in the bond market also have investors jittery.Wall Street hates uncertainty but a top economist says the wild fluctuations we've seen recently are a major overreaction."I just believe that the markets have panicked," said Brian Wesbury, chief economist at First Trust Advisors in Wheaton, Illinois. He is also a former chief economist for the Joint Economic Committee of Congress."Our models suggest right now that investors...are pricing in a 50-80 percent drop in corporate profits in America. I think that's a panic. That's too much."That doesn't mean we can't go down from here, but it does mean that once this passes, we will snap back, I think, very quickly," said Wesbury, noting that all previous outbreaks ran out of steam when the weather turned warmer.Wesbury does think the volatility could last until May or perhaps longer and that oil prices and the bond market add to the uncertainty. But while acknowledging that plummeting oil prices are a nightmare for debt-ridden fracking companies, Wesbury explains why he thinks this could lead to a much more stable industry in the long run.Finally, Wesbury tells Greg Corombos whether the government ought to intervene to ease the economic pain of the coronavirus or whether the markets should sort themselves out.