CHINA CORONAVIRUS AFTERMATH -- PBS WealthTrack

Not to beat this coronavirus thing to death (To death?  Really?  As if it's drawing to a close? No, this is going to be with us for a while), but I felt I would be remiss if I did not take this opportunity to bring you the latest and greatest about the crisis from PBS's WealthTrack program Thursday night.  There is so much gloom and doom out there, even though the flu is so much more contagious and so much more deadly.  It's really the disruption of global supply chains and the threat that poses to triggering shortages of basic materials and a global recession that has everyone, at least in the financial world, so much on edge.  I suspect that a month from now we'll have much more clarity on this situation; it will by then be either a full scale pandemic or be considered under control and, if hopefully the latter, things will then go back to normal.  I hope this WealthTrack program will provide some more clarity and relieve some concerns.  Enjoy the remainder of this very pleasant and sunny weekend.

Coronavirus concerns drag down Wall Street, but indexes eke out weekly gains

It was another day of coronavirus panic with the Dow plunging almost 900 points until just before close when it rallied to close down 256.  The issue today was not so much the spread of the virus but that the measures being taken to contain the virus could have a profound impact on commercial and consumer activity, once again spurring concerns of a potential global recession.  But despite the fact that the S&P has had declines in 10 of the past 12 sessions, all three major indexes still finished the week with modest gains over last week.  The volatility index rose to nearly 42 putting it at its highest level since 2015.  Volume was again extreme at 14.2 billion shares traded. 

Wall Street drops over 3% on virus fears, travel shares slammed

With new cases of coronavirus reported today in New York City and San Francisco, the markets again went due south all day with the Dow losing 969 points despite continuing strong fundamentals.  Today those included new filings for unemployment falling, bolstering the view of a strong labor market.  Thus, today’s expert explained, “The market is clearly trading on emotion today.”  Investors are trying to test a bottom and haven’t found it yet, despite optimism that we had reached it last Friday.  As we search for that bottom, volume continues at a furious pace with 12 billion shares traded. 

Wall Street surges on Biden bounce

It turns out that the rout that has plagued the market in recent days was easily enough placated by just some small assurances that perhaps Bernie Sanders, with his Medicare For All proposals that scare the crap out of Wall Street, may well not be the Democrat nominee after all.  So after yesterday’s very strong showing by Joe Biden, who is largely considered even by the staunchest conservatives as being the most benign of all the contenders, the Dow soared a remarkable nearly 1200 points, more than recouping yesterday’s losses and now having recovered about half the correction from the record highs achieved a couple weeks ago.  But despite the recent panic, economic data remains strong with hiring exceeding expectations, the services sector expanding at its greatest pace in a year, and mortgage rates hitting a seven year low.  Volume was again quite furious at 11 billion shares. 

Another foul day on Wall Street after surprise Fed rate cut

So here’s the deal.  Exactly what Wall Street wanted from the Fed yesterday, exactly what caused the market to boom almost 1300 points yesterday, was delivered in spades today, only it came early, wasn’t expected until the Fed’s meeting later this month.  But today the Fed announced an emergency 0.5% rate cut.  At first the Dow spiked almost 400 points.  But then investors thought about it for about five minutes and then panicked thinking that if the Fed came through this early, they must really be worried.  With that , the rest of session saw a downward slump with a 1400 point range between the high and the low and finally closing down 785 points, giving up more than half of yesterday’s recovery, and  once again on extremely high volume of 14.7 billion shares.  It just proves the old adage, “Careful what you wish for, you just might get it.”  It also proves once again that the market is not always rational.  Still, the market has recovered more than a quarter of its losses from last week.  That’s how it goes.  One day everyone’s elated, the next everyone’s panicked.

Dow has biggest daily jump since 2009 as Wall Street buys the dip

The market was only looking for the tiniest bit of hope on the global economic threat posed by coronavirus. So despite the fact that China today reported its fewest new cases since the crisis began, what really moved the meter was Japan’s central bank promising to take steps to stabilize its markets.  That led investors to presume a virtual certainty that our central bank will be announcing another rate cut later this month and that zoomed the market back an astounding almost 1300 points, the biggest one-day gain in eleven years.  But as today’s expert pointed out, “The Fed can cut rates all it wants, that is not going to put a person in a factory producing a product if that person is quarantined.”  This illuminates the fact that the real problem in this crisis is the interruption of the global supply chains which could lead to very serious economic consequences if this virus is not brought under control.  However, if the inability to pay debts becomes a consequence of the crisis, then a rate cut certainly will help.  But the best news is that new cases in China are declining, at least today.  Tomorrow?  Stay tuned.  This incredible one-day rally was supported by an enormous trading volume of 14 billion shares. 

Succinct Summation of Week’s Events 2.28.20 (plus The Market's Response To Crisis)

I took some amusement this weekend from the usual summation, posted below, as you may note that Item #1 under "Positives" is exactly the same as Item 1 under "Negatives."  "Worst week since 2008 as markets shed > 10%" which is what we've all been reading since Friday.  Then there's "Orderly 10% repricing of markets has yet to turn into full-blown panic" listed under Positives, which I'm sure is the perspective our brokers would prefer us to have.  Both are completely factual statements, both valid.  One is just glass half-empty, the other glass half-full.  The other positives sort of pale by comparison as do the other negatives except for the one about Amateur Hour.  It does seem that the people in charge don't seem to know what they're doing, and that is where most of the fear is really coming from.  It doesn't inspire much confidence at all that the emergency response team was disbanded two years and has never been replaced.