Mother of All Relief Rallies Sets Records For Wall Street

Whether it was animal spirits, a concerted effort by the PPT, or simply a matter of the market being temporarily oversold, Monday's rally on Wall Street was one for the record books.

Not only was the Dow's gain a record in terms of points, it's 5.09% rip was also the best percentage gain since the bottoming out from the the Great Financial Crisis (GFC) on March 23, 2009 (2009-03-23, 7,775.86, +497.48, +6.84). Readers should be informed that the two greatest percentage gains on the Dow Industrials came in the midst of a massive market meltdown in October, 2008. On the 13th the Dow gained 936.42 points for a percentage gain of +11.08% Just two weeks later, on the 28th, an 889.35-point rip to the upside produced a rise of 10.88 percent. The point is that the largest point and percentage gains usually are accompanied by the same on the other side of the ledger, and vice versa. No, this time is no different.

The gains follow what was the worst point loss in market history as the prior week produced the largest point loss along with the fourth and fifth largest.

Ditto for the NASDAQ, with a record point gain of +384.80, surpassing the prior mark of +361.44, from December 26, 2018, after Treasury Secretary Steven Mnuchin had purportedly made a number of calls to various members of the Fed and the President's Working Group on Financial Markets, aka, the PPT.

The S&P 500 also registered a record point gain, surpassing the +116.60 upside burst also marked on December 26, 2018. Reliable data was unavailable for the NYSE, though it can safely be assumed that if Monday wasn't a record point gain, it was certainly close.

Meanwhile, back in the real world, the number of Americans to die from complications (generally pneumonia) attributable to coronavirus reached six, four of them victims at a nursing home in Washington state. Health officials and other commentators have been sounding the alarm over outbreaks in clusters, and it appears that Washington, and possibly Oregon and California are about to experience clusters of cases arising at the community level.

COVID-19 is not going to slow down on its own, nor are government officials going to give the public the straight story (they almost never do in any crisis situation). In China, the government is variously telling its people that the virus came from outside the country (which it definitely did NOT) and that it has been defeated. Oddly enough, most Chinese citizens are not back to work, three to four weeks after the government began mass quarantines.

In the US and many European countries, including France and Germany, the issue is testing. The health departments of developed nations apparently see little need to test for the virus, which has the effect of showing the public vary few cases. Regardless, more testing is about to take place in the United States and elsewhere, and the number of new cases could skyrocket by the weekend.

In the interim, there will be much jawboning over what are effective measures to take against the virus but much of the focus will be on the expanding spread of the disease.

Bonds weren't completely buying into the rally. After dipping as low as 1.03%, the yield on the 10-year note closed out the session at 1.10%, another record low. The curve is inverted at the very low end. There is just 15 basis points separating the yield on a 1-month bill (1.41%) and the 30-year bond (1.66%). Figure that one out.

The low point is at the 2-year (0.84%), making the whole trip across the treasury complex a voyage of just 82 basis points, or 0.82%. It's not a pretty sight for bankers, yet interest rates on credit cards are still averaging around 14-18%, while mortgage rates have dropped to fresh lows. A 30-year fixed rate is hovering in a range of 3.15% to 3.40%, while a 15-year fixed can be had at under three percent generally across the country.

With the huge relief rally now comfortably on the books, Wall Street and the world must brace for the next shock from COVID-19. This isn't over. Not by a long shot. In many ways, in various countries around the world, it's just getting started.

At the Close, Monday, March 2, 2002:
Dow Jones Industrial Average: 26,703.32, +1,293.96 (+5.09%)
NASDAQ: 8,952.17, +384.80 (+4.49%)
S&P 500: 3,090.23, +136.01 (+4.60%)
NYSE: 12,827.99, +447.02 (+3.61%)

Stock Rally Sizzles, Fizzles As COVID-19 Fear Spreads Globally Sell. Everything. Now.

From the outset, it looked like US stock investors were going to shed the fear of coronavirus effects and get back to the greed side of the equation, as all major indices roared back after a string of losses.

By midday, however, the rally lost steam as news from around the world indicated that the virus was continuing to spread, inflicting people in far-away lands as well as within the borders of the United States. When President Trump announced he was giving a press briefing at 6:00 pm ET (later moved to 6:30 pm ET) on the government's response to the virus, stocks faltered badly, as all but the NASDAQ gave up gains and ended in the red.

"Sell. Everything. Now. You may curse me today, tomorrow, and even next week, but a couple of months down the road, you'll see why I am telling you to get out of stocks now."

At the press briefing, the president appeared confident, though cautious, appointing Vice President Mike Pence to spearhead the federal government's response.

So much for hope, false hope, bravado, and confidence. COVID-19 already is worse than MERS or SARS in the number of inflictions and deaths, and there seems to be no stopping it. Even employing extreme measures such as travel bans and quarantines, is unlikely to completely halt the spread of this pathogen; governments are hoping at least to contain it and prevent it from becoming an overwhelming medical crisis as it already has become in China, and soon, South Korea, Japan, Italy, and elsewhere.

Underpinning the obvious threat to health and well-being, Wall Street and investment centers around the world are focused on the after-effects. Idled workers, slowing production, chinks in the supply chain, and slack demand are all tied to efforts to contain the virus and will certainly have adverse effects on the bottom lines of many companies.

Now, almost two months since the crisis began in China, fears of a near-global shutdown of financial and business activity is becoming a frightful scenario.

As one pundit wrote to friends yesterday, "Sell. Everything. Now. You may curse me today, tomorrow, and even next week, but a couple of months down the road, you'll see why I am telling you to get out of stocks now."

This is precisely the sentiment Wall Street hopes would never surface, but it's becoming more and more evident to more and more people that COVID-19 presents an existential threat to global commerce.

Oil was down sharply on the day, as WTI crude futures broke below $50 per barrel and fell into the $47 price range Thursday morning. The treasury yield curve continued its flat-to-inverted pathway, the yield on the 10-year note losing another two basis points before returning to its prior level at 1.33%, the lowest level in history.

At the Close, Wednesday, February 26, 2020:
Dow Jones Industrial Average: 26,957.59, -123.77 (-0.46%)
NASDAQ: 8,980.77, +15.16 (+0.17%)
S&P 500: 3,116.39, -11.82 (-0.38%)
NYSE: 13,046.62, -97.10 (-0.74%)

Go Figure: Trump Is A Winner And So Are Stocks

Editor's Note: I've been itching to write a post-mortem on the election for the past two days, but Wednesday was spent mostly recovering from the victory celebration which went late into Tuesday night and today the weather here in upstate New York is a breathtaking thing of beauty for mid-November with temperatures in the low 60s. Thus, I'm itching to get outside and enjoy the fresh air my little slice of America. I'll take my bows and victory lap for a month ago having predicted Trump's victory another time, likely at some point over the weekend.

There are more than a few points I wish to make and I am not yet over the elation of having gotten my country back to focus on penning a reasonably good essay, though I intend to in due time.

--Fearless Rick

Being just two days hence, the historic win in the presidential election by Donald J. Trump is still fresh in the mind, but already there are signs that the script has not yet been written for this chapter in American history.

Stocks, especially the Dow Jones Industrial Average, will close at record highs today should current prices be maintained or closely held.

The public had been led to believe that a victory for the Donald (can we still call him that once he's sworn in?) would be a death knell for stocks, but apparently, wall Street types see it somewhat differently, especially since not only did a Republican take control of the presidency, but the house and senate remained firmly in control of the GOP.

As strange as it may seem, Wall Street could actually believe in what Mr. Trump has been preaching and the last two days of trading may well be proof of that. Stranger yet is gold being down and silver up. Could the historic deviation from the gold/silver ratio we've witnessed over the past 30 years be starting to unwind? The best advice offered is one made a few months ago in Money Daily: buy solar panels (preferably American made).