Dow nosedived 1031 (to session lows), decliners over advancers a very big 8-1 & NAZ sank 355. The MLP index fell 5+ to the 191s & the REIT index gave back 4+ to 430. Junk bond funds traded lower & Treasuries rose in price from worried stock investors, bringing near record low yields. Oil fell almost 2 to the 51s & gold shot up 10 to 1659 (more on both below).
AMJ (Alerian MLP Index tracking fund)
![Live 24 hours gold chart [Kitco Inc.]](https://www.kitco.com/images/live/gold.gif?0.2180338269244485)
Gold futures surged to their highest finish since Feb 2013, as the spread of COVID-19 to Italy & other parts of the globe injected a fresh bout of nervousness into the markets, lifting demand for assets perceived as havens like gold. Gold futures advanced $27 (1.7%) to settle at $1676 an ounce, lifting the precious metal nearer to a psychologically significant level at $1700 that it hasn't breached since 2012. The metal marked its highest most-active contract settlement since Feb 2013. On Sat, the IMF said China's coronavirus epidemic will likely cut 0.1% from global economic growth & drag down China's economic growth to 5.6% this year. Italy has shut down schools, universities & museums across the country's north as the southern European country reported its 5th death from COVID-19, the disease caused by the strain of coronavirus that reportedly originated in Wuhan, China last year, & has claimed thousands of lives globally & sickened tens of thousands. The outbreak touching down in Europe comes as Ms have been in lockdown in China due to the outbreak & fears that it could hurt the global economy. But since the virus was identified last year, it has rapidly spread to Japan, South Korea & other parts of the world. The Federal Reserve is more likely to be forced to cut interest rates to respond to economic growth concerns, partly driven by the spread of the coronavirus outside of China. Precious metals like gold tend to attract buyers in a low interest-rate climate.
10-year Treasury yield falls to three-year low on coronavirus fears, 30-year rate hits record low
As cases of the new coronavirus surge outside of China, world health officials said that other countries should start preparing for epidemic outbreaks of COVID-19 to cross their borders. “It is time to do everything you would do in preparing for a pandemic,” Dr Mike Ryan, executive director of the World Health Organization's (WHO) health emergencies program, told reporters. “In declaring something a pandemic, it is too early. We’re still trying to avoid that eventuality.” In the past week, the virus has spread substantially outside of China. In Italy, the virus has infected more than 220 & killed at least 7. South Korea confirmed another 231 cases today, which brings the total in the country to more than 830. And health officials in Iran have confirmed 61 total cases in the country, with 12 deaths nationwide. The localized outbreaks outside of China are fueling concerns among infectious disease experts & scientists that the virus has become a pandemic. However, WHO officials declined to declare it as one, saying that it is still too early to say. “Pandemos is a concept where there’s a belief that the whole world’s population would likely be exposed to this infection and potentially a proportion of them fall sick and we’ve seen that in influenza,” Ryan said, citing the Greek root of the word pandemic. He said influenza pandemics can be called much earlier & easier because they know how that virus spreads. World health officials don't entirely understand how COVID-19 spreads, Ryan said, but the fact that new cases in China have dropped “goes against the logic of pandemic.” A WHO-led team just concluded a research trip to several provinces in China, including the epicenter of the outbreak, Wuhan in Hubei province. WHO's director-general, Tedros Adhanom Ghebreyesus, said the team reported that cases “peaked and plateaued” between Jan 23 & Feb 2 & have been “declining steadily since then.” “Yet we see, in contrast to that, an acceleration of cases in places like Korea and therefore we’re still in the balance,” Ryan added. Globally, the outbreak has now infected more than 79K & killed at least 2600 so far.
WHO says it’s too early to declare a coronavirus pandemic: ‘Now is the time to prepare’
IMF lowers global growth forecast, cases surge in South Korea
The COVID-19 outbreak is a risk to the US economy but it is likely that the economy will continue to perform well this year, said Cleveland Fed Pres Loretta Mester. “At this point, it is difficult to assess the magnitude of the economic effects [from the outbreak of COVID-19], but this new source of uncertainty is something I will be carefully monitoring,” Mester said in a speech. “I’ve incorporated it as a downside risk to my modal forecast, which calls for growth to continue at trend, slightly slower than the pace of last year, with continued healthy consumption growth and some pickup in investment spending,” she added. Mester is a voting member of the FOMC this year & the rate-setting group will meet Mar 17-18. Many economists say pace of growth of COVID-19 cases outside of China makes it more likely the Fed will have to cut interest rates in coming months from a 1.50%-1.75% range. Many see a move as soon as Apr. In her speech, Mester discussed calls for further easing that have come from economists who have separately argued it might help to boost inflation up to the Fed's 2% annual target. “We have been undershooting our inflation goal for some time, so a natural question is whether policymakers should add even further accommodation to spur a faster return of inflation to our goal. I would not favor that at this time,” Mester said. “I am comfortable with our current stance of policy,” she added. “A patient approach to policy changes is appropriate unless there is a material change to the outlook,” she continued.Further easing has some risks, the Cleveland Fed pres said, in the form of potential asset bubbles. Easing policy “would raise the risk of generating imbalances that would threaten the expansion,” she said. “Even given the low level of interest rates, equity prices & commercial real estate valuations are elevated; corporate debt levels are high; and underwriting standards on leveraged loans are weak,” she said, adding this called for the Fed to remain attuned to financial market developments.
Oil futures suffered a drop of almost 4% as the spread of COVID-19 outside China underlines worries about a potential hit to crude demand. West Texas Intermediate crude for Apr, the US benchmark, fell $1.95 (3.7%) to settle at $51.43 a barrel. That was the lowest front-month contract settlement since Feb 13. Apr Brent crude, the global benchmark, lost $2.20 (3.8%) to end at $56.30 a barrel, for the lowest finish since Feb 12. The drop for oil accompanied a selloff in global equities & other assets perceived as risky, triggered by a rise in the number of COVID-19 cases outside of China. The spread of disease caused by a coronavirus that emerged near Wuhan, China, late last year has sparked fears of a hit to supply chains & global economic activity. The Dow was down more than 800 (3%) as oil futures settled. The moves for oil come ahead of the Mar 5-6 meeting in Vienna of OPEC & their allies, collectively known as OPEC+. There have been reports of a potential break in Saudi Arabia's alliance with non-OPEC Russia, but Saudi Energy Minister Prince Abdulaziz bin Salman said the media reports were “absurd and utter nonsense.”
In terms of the point loss, stocks had one of heir worst day in history. There are growing fears about the spreading coronavirus with no relief in sight. The chaos brings opportunity for long term investors. Low stock prices raise div yields. Double Dividend Aristocrats become more attractive, especially for those who want to buy quality companies that have raised annual divs for more than 50 consecutive years. That track record includes the troubled 1980 era when most economic indicators were in double digits. This time can be used to identify attractive stock candidates & set buying prices with high yields. Of course, over the short time, with the Dow under 28K, caution is in order.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
Gold futures surged to their highest finish since Feb 2013, as the spread of COVID-19 to Italy & other parts of the globe injected a fresh bout of nervousness into the markets, lifting demand for assets perceived as havens like gold. Gold futures advanced $27 (1.7%) to settle at $1676 an ounce, lifting the precious metal nearer to a psychologically significant level at $1700 that it hasn't breached since 2012. The metal marked its highest most-active contract settlement since Feb 2013. On Sat, the IMF said China's coronavirus epidemic will likely cut 0.1% from global economic growth & drag down China's economic growth to 5.6% this year. Italy has shut down schools, universities & museums across the country's north as the southern European country reported its 5th death from COVID-19, the disease caused by the strain of coronavirus that reportedly originated in Wuhan, China last year, & has claimed thousands of lives globally & sickened tens of thousands. The outbreak touching down in Europe comes as Ms have been in lockdown in China due to the outbreak & fears that it could hurt the global economy. But since the virus was identified last year, it has rapidly spread to Japan, South Korea & other parts of the world. The Federal Reserve is more likely to be forced to cut interest rates to respond to economic growth concerns, partly driven by the spread of the coronavirus outside of China. Precious metals like gold tend to attract buyers in a low interest-rate climate.
Gold ends nearly 2% higher as coronavirus fears set up test of $1,700
Treasury yields tumbled as investors ran
for cover amid fears the coronavirus is spreading globally & will
slow the world economy. The 10-year Treasury yield hit its lowest
level since Jul 2016 & the 30-year Treasury yield hit a record low. The
move into bonds came as stocks plunged with the Dow down more than 1000
points. The yield on the benchmark 10-year Treasury note,
which moves inversely to price, plunged 11 basis points to 1.3563%. The
10-year yield reached an intraday all-time low of 1.325% on Jul 6,
2016. The yield on the 30-year Treasury bond plummeted to 1.8142%. Meanwhile, 2-year yield hit a low of 1.243% today, its lowest level since May 2017. Spiking
coronavirus cases in Italy, South Korea & the Middle East sparked
fears of further spread beyond China. South Korea put the country on its
highest alert level as infections surpassed 760 & deaths
rose to 7. Meanwhile, a 7th person in Italy has died from the virus with the
number of cases surging to more than 150. As of yesterday, confirmed cases
of the infection has surged over 79K globally & the death toll has
risen to 2621. Both the 10-year & 30-year yields are down nearly 60 basis points
so far this year. Coronavirus fears, coupled with the lack of inflation,
pushed bond yields to record lows once again. Investors also attributed
the moves in yields to global central banks' easing measures. Amid
the escalated coronavirus fears, traders are now pricing in a
better-than-even – 53% – chance of an interest rate cut at the Federal
Reserve's Apr meeting. The market also assigns a
40% of 3 cuts before the end of 2020. The bond
market has been flashing its recession signal for a while now. Last
summer, the benchmark 10-year yields dipped below the 2-year rate,
inverting a key part of the yield curve. The inversion has been a
reliable recession indicator as the phenomenon has preceded every
recession over the past 50 years. While the 2-year 10-year yield
curve is no longer inverted, the 10-year yield remains lower than the
3-month rate. This part of the yield curve is also closely watched by
the Fed for signs of a downturn.
10-year Treasury yield falls to three-year low on coronavirus fears, 30-year rate hits record low
As cases of the new coronavirus surge outside of China, world health officials said that other countries should start preparing for epidemic outbreaks of COVID-19 to cross their borders. “It is time to do everything you would do in preparing for a pandemic,” Dr Mike Ryan, executive director of the World Health Organization's (WHO) health emergencies program, told reporters. “In declaring something a pandemic, it is too early. We’re still trying to avoid that eventuality.” In the past week, the virus has spread substantially outside of China. In Italy, the virus has infected more than 220 & killed at least 7. South Korea confirmed another 231 cases today, which brings the total in the country to more than 830. And health officials in Iran have confirmed 61 total cases in the country, with 12 deaths nationwide. The localized outbreaks outside of China are fueling concerns among infectious disease experts & scientists that the virus has become a pandemic. However, WHO officials declined to declare it as one, saying that it is still too early to say. “Pandemos is a concept where there’s a belief that the whole world’s population would likely be exposed to this infection and potentially a proportion of them fall sick and we’ve seen that in influenza,” Ryan said, citing the Greek root of the word pandemic. He said influenza pandemics can be called much earlier & easier because they know how that virus spreads. World health officials don't entirely understand how COVID-19 spreads, Ryan said, but the fact that new cases in China have dropped “goes against the logic of pandemic.” A WHO-led team just concluded a research trip to several provinces in China, including the epicenter of the outbreak, Wuhan in Hubei province. WHO's director-general, Tedros Adhanom Ghebreyesus, said the team reported that cases “peaked and plateaued” between Jan 23 & Feb 2 & have been “declining steadily since then.” “Yet we see, in contrast to that, an acceleration of cases in places like Korea and therefore we’re still in the balance,” Ryan added. Globally, the outbreak has now infected more than 79K & killed at least 2600 so far.
WHO says it’s too early to declare a coronavirus pandemic: ‘Now is the time to prepare’
The International Monetary Fund (IMF) said on Sat that the virus will likely cut off 0.1% from global growth, & drag
down growth for China's economy to 5.6%, which is 0.4% lower from its
Jan outlook. “But we are also looking at more dire scenarios
where the spread of the virus continues for longer and more globally,
and the growth consequences are more protracted,” said Managing Director Kristalina Georgieva at the G20 Finance
Ministers & Central Bank Governors Meeting.
IMF lowers global growth forecast, cases surge in South Korea
The COVID-19 outbreak is a risk to the US economy but it is likely that the economy will continue to perform well this year, said Cleveland Fed Pres Loretta Mester. “At this point, it is difficult to assess the magnitude of the economic effects [from the outbreak of COVID-19], but this new source of uncertainty is something I will be carefully monitoring,” Mester said in a speech. “I’ve incorporated it as a downside risk to my modal forecast, which calls for growth to continue at trend, slightly slower than the pace of last year, with continued healthy consumption growth and some pickup in investment spending,” she added. Mester is a voting member of the FOMC this year & the rate-setting group will meet Mar 17-18. Many economists say pace of growth of COVID-19 cases outside of China makes it more likely the Fed will have to cut interest rates in coming months from a 1.50%-1.75% range. Many see a move as soon as Apr. In her speech, Mester discussed calls for further easing that have come from economists who have separately argued it might help to boost inflation up to the Fed's 2% annual target. “We have been undershooting our inflation goal for some time, so a natural question is whether policymakers should add even further accommodation to spur a faster return of inflation to our goal. I would not favor that at this time,” Mester said. “I am comfortable with our current stance of policy,” she added. “A patient approach to policy changes is appropriate unless there is a material change to the outlook,” she continued.Further easing has some risks, the Cleveland Fed pres said, in the form of potential asset bubbles. Easing policy “would raise the risk of generating imbalances that would threaten the expansion,” she said. “Even given the low level of interest rates, equity prices & commercial real estate valuations are elevated; corporate debt levels are high; and underwriting standards on leveraged loans are weak,” she said, adding this called for the Fed to remain attuned to financial market developments.
Fed’s Mester sees coronavirus as a risk but says she doesn’t support additional interest rate cuts
Oil futures suffered a drop of almost 4% as the spread of COVID-19 outside China underlines worries about a potential hit to crude demand. West Texas Intermediate crude for Apr, the US benchmark, fell $1.95 (3.7%) to settle at $51.43 a barrel. That was the lowest front-month contract settlement since Feb 13. Apr Brent crude, the global benchmark, lost $2.20 (3.8%) to end at $56.30 a barrel, for the lowest finish since Feb 12. The drop for oil accompanied a selloff in global equities & other assets perceived as risky, triggered by a rise in the number of COVID-19 cases outside of China. The spread of disease caused by a coronavirus that emerged near Wuhan, China, late last year has sparked fears of a hit to supply chains & global economic activity. The Dow was down more than 800 (3%) as oil futures settled. The moves for oil come ahead of the Mar 5-6 meeting in Vienna of OPEC & their allies, collectively known as OPEC+. There have been reports of a potential break in Saudi Arabia's alliance with non-OPEC Russia, but Saudi Energy Minister Prince Abdulaziz bin Salman said the media reports were “absurd and utter nonsense.”
Oil drops nearly 4% as viral outbreak stokes worries about crude demand
In terms of the point loss, stocks had one of heir worst day in history. There are growing fears about the spreading coronavirus with no relief in sight. The chaos brings opportunity for long term investors. Low stock prices raise div yields. Double Dividend Aristocrats become more attractive, especially for those who want to buy quality companies that have raised annual divs for more than 50 consecutive years. That track record includes the troubled 1980 era when most economic indicators were in double digits. This time can be used to identify attractive stock candidates & set buying prices with high yields. Of course, over the short time, with the Dow under 28K, caution is in order.
Dow Jones Industrials
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