Super Tuesday lived up to its name, with a surprise rate cut from the Federal Reserve and a big night for Joe Biden, though Bernie Sanders scored enough delegates to keep the race close.
Mid-morning, the Fed cut the overnight federal funds rate by 50 basis points, from 1.50-1.75%, to 1.00-1.25%, actually settling for 1.10% as the official overnight rate, according to the Fed's implementation note.
What most people missed is that the rate cut does not take effect until March 4, or Wednesday, which may be why the market crumbled Tuesday, with a dull thud finish. Futures are pointing to a huge bump at the opening bell. Dow futures are up nearly 700 points as of this writing. The emergency rate cut was only the ninth time the Fed has acted outside the FOMC meeting framework, and the cut was probably unnecessary, though it is certain to give the market a bump, albeit a small one. The Fed's playbook has been seriously damaged since the 2008 crash. This move gives credence to those who argue that the Fed is a patsy to the stock market.
Stocks had been gyrating up and down until the Fed made its move. After a brief uptick, stocks sank, perhaps with the idea that if the Fed was cutting rates, then the brewing crisis over coronavirus may be worse than recognized. It also could be that banks and institutions are so tight, there just wasn't enough liquidity in the system to fend off waves of selling. The Fed's behind-the-scenes liquidity injections have done more to prop up the market than any rate cut possibly could, with their daily and weekly open market operations oversubscribed in recent days.
The bond market certainly wasn't buying into saving the stock market via rate cuts. The 10-year note dipped below the one percent threshold briefly on Tuesday, finally settling in at the close at another record low yield of 1.02%, a decline of eight basis points from Monday's reading. The short end of the curve was obliterated, with the shortest duration, 1-month bills, losing 30 basis points, down to a yield of 1.11% at the close.
Losing 13 basis points, the 2-year carries the lowest yield across the curve, which remains slightly inverted (1-and-2-month bills yielding higher than the 10-year). The 2-year note slipped from 0.84 to 0.71. The entire curve remains relatively flat at 93 basis points top to bottom, with the 30-year sliding just two basis points on Tuesday, to 1.64%.
Precious metals regained some of their shine after the rate cut announcement. Gold rocketed higher by nearly $50, closing the session in New York at $1644.40 per ounce. Silver advanced as well, though it is still quite depressed at a mere $17.19 per ounce.
The true "tell" throughout the day was crude oil. Both before and after the rate cut, WTI crude could scarcely muster a bid, finishing at $47.18 per barrel. Weakness in oil, the actual fuel of the world economy, speaks volumes and can be employed as a bleeding edge proxy for the general health or sickness of the word's financial condition.
Numbers to watch on Wednesday are pretty straightforward. Following a retreat of some 4725.74 points, the Dow ascended on Tuesday to the first Fibonacci retrace level (38%) at 26,476.79. The index actually floated beyond that point, gaining over 27,000 just after the open, but it settled in and remained below the initial Fibonacci level most of the day. If the Dow gains beyond that first retrace, the next stop would be the 62% level, at 27,610.97. Keep in mind that the intraday low was Friday's 24,681.01. If that level is breached to the downside, there's literally no support until around 22,445, the bottom of the December 2018 breakdown.
As for the Democrat race for the presidential nomination, Joe Biden was hailed on network TV as a rebounding hero, winning races in North Carolina, Texas, Tennessee, Virginia, Massachusetts and elsewhere, thanks to two moderates - Pete Buttigeig and Amy Klobuchar - bowing out and endorsing slow Joe on the eve of Super Tuesday. While Biden picked up most of the votes that would have gone to Mayor Pete and Senator Klobuchar, Bernie Sanders was held down by the insistence of Elizabeth Warren to stay in the race when she actually has no hope of winning anything but more negative nicknames. Mike Bloomberg picked off some delegates, giving his campaign enough life to carry forward, but the DNC is hellbent on eliminating Sanders, over fears that he might actually win the nomination.
The possibility of a consistent socialist carrying the Democrat banner into the fall is not the look the party perceives for itself, despite it being the closest to reality in what it represents. From here on out, all the media will be signing the praises of Joe Biden - a deeply flawed individual - and downplaying the power of Sanders' campaign, which has widespread support in the most liberal camps and generates the most excitement of any candidate, bar Trump.
What's interesting about a Sanders versus Trump race is that Sanders, a lifetime liberal and Senator for nearly three decades, will be portrayed as the outsider and Trump as the establishment. Perception is everything in elections, and it's likely that Trump would turn that notion on its head.
Finally, Tuesday was a day in which the coronavirus, or COVID-19 was pushed to the back of the headlines. The death toll in the US reached nine, but those three additional deaths were all from the nursing home in Washington state that had accounted for the six prior fatalities. Look, a tornado that ripped through Nashville, Tennessee early Tuesday morning (around 1:30 am) killed at least 25 people in minutes and left a path of devastation unlike many people have ever witnessed. That's a tragedy. Nine deaths of people all over the age of 63 from a virus that spreads quickly and has a high mortality rate for seniors is a fact of life.
At the Close Tuesday, March 3, 2020:
Dow Jones Industrial Average: 25,917.41, -785.91 (-2.94%)
NASDAQ: 8,684.09, -268.08 (-2.99%)
S&P 500: 3,003.37, -86.86 (-2.81%)
NYSE: 12,542.74, -285.25 (-2.22%)
Wednesday, March 4, 2020
Tuesday, March 3, 2020
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%)
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%)
Sunday, March 1, 2020
Coronavirus (COVID-19) Crushes Stocks, Commodities, Oil, Gold, Silver; Crisis Appears To Be Accelerating
(Simultaneously published at Downtown Magazine)
As ugly goes, this past week ranks right up there with bearded lady or three-eyed ogre status.
Over the course of just five trading sessions, stocks lost more than ten percent on all the main indices. The Dow topped the list with a drop of 12.36%. The week and the preceding Thursday and Friday (all but the NASDAQ are sporting seven-day losing streaks marked the fastest that stocks fell into correction territory, officially designated as a 10% slide.
What's worse - if there's anything worse than shaving a couple trillion off the American market cap balance sheet - is that the rush to sell hardly seems to be over. The last week of February looks more like the beginning of something more severe, and with the spread of the coronavirus (COVID-19) just beginning to make an impact in the United States, there isn't much talk about "buying the dip" at this particular juncture.
Just because everybody loves numbers, here are the current losses from the respective tops and the levels needed to reach down to a 20% loss, the designated level at which would kick in a bear market. Bear in mind that stocks recently hit all-time highs.
Dow: Top: 29,551.42 (2/12/20); Current: 25,409.36 (-14.02%); Bear Market (-20%): 23,641.14
NASDAQ: Top: 9,817.18 (2/19/20); Current: 8,567.37 (-12.74%); Bear Market(-20%): 7,853.74
S&P 500: Top: 3,386.15 (2/19/20); Current: 2,954.22 (-13.76%); Bear Market (-20%): 2,708.92
NYSE: Top: 14,183.20 (1/17/20); Current: 12,380.97 (-12.71%); Bear Market (-20%): 11,346.56
The potential for a bear market are palpable for more reasons than just the threat of COVID-19 spreading across the great expanse of the United States. A widespread outbreak, like the one in China, would be devastating, but already there are strong indications that community transmission has already taken place in the state of Washington, in Chicago, and in California.
Widespread infections that close schools and businesses would only be the tip of the issue. Large public gatherings - and that is a concern with baseball's regular season less than a month away - would carry warnings to the public. Many would likely stay away just out of personal caution, but hope is that the department of Heath and Human Services (HHS), CDC and Vice President Pence's executive branch team will keep community outbreaks well contained. However, France and Switzerland have banned large gatherings over 5,000, and cancelled all sporting events. Imagine the same for the United States in just a few weeks. It could happen. It may not.
Possibly also working against the virus is time. Many similar viruses, like the flu, die off naturally or lose their effectiveness and ability to transmit and spread.
On he other hand, the aftereffects from China's production slowdown have not been fully felt and won't be evident until companies report first quarter results. That's early April and beyond, giving the markets more than a month to navigate whatever trend emerges.
Stocks were significantly overvalued when the slide began; today they are less so, though still hanging in the high end in the valuation regimen. There is more room on the downside. All through 2019, companies were not reporting robust results. The S&P was generally flat on earnings yet stocks rose. Capacity Utilization and Productivity have also shown signs of a slowdown, even prior to the coronavirus event.
While unemployment remains a bright spot, business expansion has been slow to nearly nothing. A slew of variables - in effect the market's wall of worry - are mixed and unresolved. With sentiment now having shifted violently from greed to fear, any bad or marginal data is going to get the bum's rush, encouraging more selling.
Elsewhere, crude oil took a massive hit during the week. WTI crude closed at $54.88 on February 20, but by Friday of this week had dropped to $44.76 per barrel, a slide of 18.45%.
Precious metals abruptly went negative midweek after rallying for the better part of the last month. The silver continuous contract closed Friday at $16.46, the lowest price since last July. Gold topped out at $1691.70 per ounce on Monday, but by Friday could be purchased for $1566.70, more than a hundred dollar discount. Four straight down days snapped a rally in gold that started in late November, 2019. The gold price remains elevated, having only caught down to a price that was last seen the first week of February.
Particularly telling was action in the treasury market and bonds overall. The entire yield curve was decimated with the benchmark 10-year note checking in at an all-time low of 1.13%. The 30-year bond also posted a record low yield at 1.65% on Friday. With inversion on the short end - the 6-month bill is yielding 1.11 - the 2-year, 3-year, and 5-year are yielding 0.86%, 0.85%, and 0.89%, respectively.
With everybody from President Trump on down calling on the Federal Reserve to get into the act, rumors began circulating late Thursday that the Fed would coordinate with other central banks for some kind of symmetric cuts in overnight rates as early as Sunday, though as of this writing, nothing has come of it. The Fed is virtually guaranteed to cut by at least 25 basis points at its next FOMC meeting, on March 17-18, though for many in the markets, that seems a long time off and may in fact be too late to have much influence.
It wasn't just treasuries feeling the heat. According to Doug Noland's Credit Bubble Bulletin, "There were no investment-grade deals for the first time in 18 months, as $25bn of sales were postponed awaiting more favorable market conditions."
If credit markets begin to seize up, which appears to be the evolving case, the Fed will have no choice but to lower the federal funds rate prior to the meeting. 50 basis points would appear appropriate if the virus continues to spread not just in the US, but around the world. More than 60 countries have at least one case of the virus and the United States, Australia, and Thailand have reported their first deaths just in the past 24 hours.
Preparedness is the key to surviving whatever form the crisis takes, be it medical or economic. Households should have on hand at least a three-week supply of food and other essentials at the minimum. Investors should have moved money into safe havens, as many did. Money market funds and bonds provide some relief from the roller coaster of stocks. Precious metals usually provide some protection, but, as was the case in 2008, gold and silver fell off dramatically as stores of the metals were sold in order to shore up cash liquidity. Back then, they were the first commodities to recover, besting the markets by a number of months, though right now, they don't appear to be stunning buying opportunities.
If the worst case scenario occurs and there are wide ranging quarantines, travel restrictions and cancelation of public gatherings, expect nothing short of a complete meltdown of the financial system and conditions which have never been seen before. A stock market decline of 60-70 percent would be a real possibility. The entire rip to the downside could take as long as 18 months or as little as six.
That's not to say that a total collapse will occur. There may be mitigating factors in the interim, plus the advent of warmer weather with higher humidity might slow down the virus, but market direction has turned violently to the negative. Now is not the time to jump in a buy equities as most rallies will likely be met with strong resistance and more selling.
Presently, everything is up in the air, including the virus and the world's finances.
At the Close, Friday, February 28, 2020:
Dow Jones Industrial Average: 25,409.36, -357.28 (-1.39%)
NASDAQ: 8,567.37, +0.89 (+0.01%)
S&P 500: 2,954.22, -24.54 (-0.82%)
NYSE: 12,380.97, -166.29 (-1.33%)
For the Week:
Dow: -3583.05 (-12.36%)
NASDAQ: -1009.22 (-10.54%)
S&P 500: -383.53 (-11.49%)
NYSE: -1594.81 (-11.41%)
As ugly goes, this past week ranks right up there with bearded lady or three-eyed ogre status.
Over the course of just five trading sessions, stocks lost more than ten percent on all the main indices. The Dow topped the list with a drop of 12.36%. The week and the preceding Thursday and Friday (all but the NASDAQ are sporting seven-day losing streaks marked the fastest that stocks fell into correction territory, officially designated as a 10% slide.
What's worse - if there's anything worse than shaving a couple trillion off the American market cap balance sheet - is that the rush to sell hardly seems to be over. The last week of February looks more like the beginning of something more severe, and with the spread of the coronavirus (COVID-19) just beginning to make an impact in the United States, there isn't much talk about "buying the dip" at this particular juncture.
Just because everybody loves numbers, here are the current losses from the respective tops and the levels needed to reach down to a 20% loss, the designated level at which would kick in a bear market. Bear in mind that stocks recently hit all-time highs.
Dow: Top: 29,551.42 (2/12/20); Current: 25,409.36 (-14.02%); Bear Market (-20%): 23,641.14
NASDAQ: Top: 9,817.18 (2/19/20); Current: 8,567.37 (-12.74%); Bear Market(-20%): 7,853.74
S&P 500: Top: 3,386.15 (2/19/20); Current: 2,954.22 (-13.76%); Bear Market (-20%): 2,708.92
NYSE: Top: 14,183.20 (1/17/20); Current: 12,380.97 (-12.71%); Bear Market (-20%): 11,346.56
The potential for a bear market are palpable for more reasons than just the threat of COVID-19 spreading across the great expanse of the United States. A widespread outbreak, like the one in China, would be devastating, but already there are strong indications that community transmission has already taken place in the state of Washington, in Chicago, and in California.
Widespread infections that close schools and businesses would only be the tip of the issue. Large public gatherings - and that is a concern with baseball's regular season less than a month away - would carry warnings to the public. Many would likely stay away just out of personal caution, but hope is that the department of Heath and Human Services (HHS), CDC and Vice President Pence's executive branch team will keep community outbreaks well contained. However, France and Switzerland have banned large gatherings over 5,000, and cancelled all sporting events. Imagine the same for the United States in just a few weeks. It could happen. It may not.
Possibly also working against the virus is time. Many similar viruses, like the flu, die off naturally or lose their effectiveness and ability to transmit and spread.
On he other hand, the aftereffects from China's production slowdown have not been fully felt and won't be evident until companies report first quarter results. That's early April and beyond, giving the markets more than a month to navigate whatever trend emerges.
Stocks were significantly overvalued when the slide began; today they are less so, though still hanging in the high end in the valuation regimen. There is more room on the downside. All through 2019, companies were not reporting robust results. The S&P was generally flat on earnings yet stocks rose. Capacity Utilization and Productivity have also shown signs of a slowdown, even prior to the coronavirus event.
While unemployment remains a bright spot, business expansion has been slow to nearly nothing. A slew of variables - in effect the market's wall of worry - are mixed and unresolved. With sentiment now having shifted violently from greed to fear, any bad or marginal data is going to get the bum's rush, encouraging more selling.
Elsewhere, crude oil took a massive hit during the week. WTI crude closed at $54.88 on February 20, but by Friday of this week had dropped to $44.76 per barrel, a slide of 18.45%.
Precious metals abruptly went negative midweek after rallying for the better part of the last month. The silver continuous contract closed Friday at $16.46, the lowest price since last July. Gold topped out at $1691.70 per ounce on Monday, but by Friday could be purchased for $1566.70, more than a hundred dollar discount. Four straight down days snapped a rally in gold that started in late November, 2019. The gold price remains elevated, having only caught down to a price that was last seen the first week of February.
Particularly telling was action in the treasury market and bonds overall. The entire yield curve was decimated with the benchmark 10-year note checking in at an all-time low of 1.13%. The 30-year bond also posted a record low yield at 1.65% on Friday. With inversion on the short end - the 6-month bill is yielding 1.11 - the 2-year, 3-year, and 5-year are yielding 0.86%, 0.85%, and 0.89%, respectively.
With everybody from President Trump on down calling on the Federal Reserve to get into the act, rumors began circulating late Thursday that the Fed would coordinate with other central banks for some kind of symmetric cuts in overnight rates as early as Sunday, though as of this writing, nothing has come of it. The Fed is virtually guaranteed to cut by at least 25 basis points at its next FOMC meeting, on March 17-18, though for many in the markets, that seems a long time off and may in fact be too late to have much influence.
It wasn't just treasuries feeling the heat. According to Doug Noland's Credit Bubble Bulletin, "There were no investment-grade deals for the first time in 18 months, as $25bn of sales were postponed awaiting more favorable market conditions."
If credit markets begin to seize up, which appears to be the evolving case, the Fed will have no choice but to lower the federal funds rate prior to the meeting. 50 basis points would appear appropriate if the virus continues to spread not just in the US, but around the world. More than 60 countries have at least one case of the virus and the United States, Australia, and Thailand have reported their first deaths just in the past 24 hours.
Preparedness is the key to surviving whatever form the crisis takes, be it medical or economic. Households should have on hand at least a three-week supply of food and other essentials at the minimum. Investors should have moved money into safe havens, as many did. Money market funds and bonds provide some relief from the roller coaster of stocks. Precious metals usually provide some protection, but, as was the case in 2008, gold and silver fell off dramatically as stores of the metals were sold in order to shore up cash liquidity. Back then, they were the first commodities to recover, besting the markets by a number of months, though right now, they don't appear to be stunning buying opportunities.
If the worst case scenario occurs and there are wide ranging quarantines, travel restrictions and cancelation of public gatherings, expect nothing short of a complete meltdown of the financial system and conditions which have never been seen before. A stock market decline of 60-70 percent would be a real possibility. The entire rip to the downside could take as long as 18 months or as little as six.
That's not to say that a total collapse will occur. There may be mitigating factors in the interim, plus the advent of warmer weather with higher humidity might slow down the virus, but market direction has turned violently to the negative. Now is not the time to jump in a buy equities as most rallies will likely be met with strong resistance and more selling.
Presently, everything is up in the air, including the virus and the world's finances.
At the Close, Friday, February 28, 2020:
Dow Jones Industrial Average: 25,409.36, -357.28 (-1.39%)
NASDAQ: 8,567.37, +0.89 (+0.01%)
S&P 500: 2,954.22, -24.54 (-0.82%)
NYSE: 12,380.97, -166.29 (-1.33%)
For the Week:
Dow: -3583.05 (-12.36%)
NASDAQ: -1009.22 (-10.54%)
S&P 500: -383.53 (-11.49%)
NYSE: -1594.81 (-11.41%)
Friday, February 28, 2020
All Major US Indices Post Record Losses On Coronavirus (COVID-19) Shocks
This is how it always ends. A pileup on the interstate. Panic at the disco.
And this is only the beginning of the end of a bull market that's survived long past its sell-by date, the final six months being kept upright by oodles of fake bucks from the Fed via the repo market.
Prior to that it was stock buybacks and more Fed printing. It's over. Get used to it.
A couple of friends yesterday were in the first stage of he Kubler-Ross five levels of grief, denial, saying that the stock market would come back. This, despite evidence right in front of their faces of massive losses and still they won't move their money to a safer place.
Smart money will be making more all the way down. Most money will simply disappear.
All of the major indices suffered yesterday their worst point losses in stock market history. That's right, the worst ever.
The Dow Jones Industrials managed to dispose of 1,190.96 points, edging out the 1,175.21 trashing on February 5, 2018. The NASDAQ put down a marker that is likely to stand for a long time (if it's not broken sometime during the next few months), dropping 414 points, bettering the former record of -355.49 from April 4, 2000, by some 59 points. That's a lot.
The S&P 500 also crushed its previous record, ripping off 137.63 points, topping the old mark of -113.19 from February 5, 2018.
It's been a bad week for stocks as the coronavirus (COVID-19) continues to spread across the globe.
Oddly enough, but with some historical precedence, precious metals have been bashed down over the past few days as well, just as they were at the height of the global meltdown of 2008. Everything lost value then. Same now.
Crude oil took another bump lower, with WTI crude as low as $45.25 pr barrel. Yield on the ten-year note fell to yet another record low, checking in at 1.30% at the end of the day. The 30-year was at 1.79%.
With the final trading day of the week on deck, there isn't much more to say than glad it's over, but the tide has turned, with all the major indices already - in the span of just five days - in correction territory, donw by more than 10%. Unless something changes quickly, there's a bear market staring investors in the face.
Cant say that it hasn't been apparent. This is no surprise. All the market needed was a good scapegoat and it found one in coronavirus and its aftereffects.
At the Close, Thursday, February 27, 2020:
Dow Jones Industrial Average: 25,766.64, -1,190.96 (-4.42%)
NASDAQ: 8,566.48, -414.29 (-4.61%)
S&P 500: 2,978.76, -137.63 (-4.42%)
NYSE: 12,547.25, -499.35 (-3.83%)
And this is only the beginning of the end of a bull market that's survived long past its sell-by date, the final six months being kept upright by oodles of fake bucks from the Fed via the repo market.
Prior to that it was stock buybacks and more Fed printing. It's over. Get used to it.
A couple of friends yesterday were in the first stage of he Kubler-Ross five levels of grief, denial, saying that the stock market would come back. This, despite evidence right in front of their faces of massive losses and still they won't move their money to a safer place.
Smart money will be making more all the way down. Most money will simply disappear.
All of the major indices suffered yesterday their worst point losses in stock market history. That's right, the worst ever.
The Dow Jones Industrials managed to dispose of 1,190.96 points, edging out the 1,175.21 trashing on February 5, 2018. The NASDAQ put down a marker that is likely to stand for a long time (if it's not broken sometime during the next few months), dropping 414 points, bettering the former record of -355.49 from April 4, 2000, by some 59 points. That's a lot.
The S&P 500 also crushed its previous record, ripping off 137.63 points, topping the old mark of -113.19 from February 5, 2018.
It's been a bad week for stocks as the coronavirus (COVID-19) continues to spread across the globe.
Oddly enough, but with some historical precedence, precious metals have been bashed down over the past few days as well, just as they were at the height of the global meltdown of 2008. Everything lost value then. Same now.
Crude oil took another bump lower, with WTI crude as low as $45.25 pr barrel. Yield on the ten-year note fell to yet another record low, checking in at 1.30% at the end of the day. The 30-year was at 1.79%.
With the final trading day of the week on deck, there isn't much more to say than glad it's over, but the tide has turned, with all the major indices already - in the span of just five days - in correction territory, donw by more than 10%. Unless something changes quickly, there's a bear market staring investors in the face.
Cant say that it hasn't been apparent. This is no surprise. All the market needed was a good scapegoat and it found one in coronavirus and its aftereffects.
At the Close, Thursday, February 27, 2020:
Dow Jones Industrial Average: 25,766.64, -1,190.96 (-4.42%)
NASDAQ: 8,566.48, -414.29 (-4.61%)
S&P 500: 2,978.76, -137.63 (-4.42%)
NYSE: 12,547.25, -499.35 (-3.83%)
Thursday, February 27, 2020
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.
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%)
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%)
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