Dow plunged another 744 to the 24Ks (but off earlier lows), decliners over advancers a whopping 11-1 & NAZ sank 166. Last week the NAZ was heading for 10K, now it's heading for 8K. The MLP index sank another 7+ to the 163s (an almost 20 year low) & the REIT index tumbled 12+ to 378 (an almost 1 year low in what has been a strong sector). Junk bond funds sank on more selling & Treasuries were heavily purchased taking the yield on the 10 year Treasury down a huge 12 basis points to 1.17% (another record low). Oil dropped 2+ to the 44s & gold plunged a whopping 52 to 1589 (almost 100 under last week's high).
AMJ (Alerian MLP Index tracking fund)
Dallas Federal Reserve Pres Robert Kaplan warned that economic fallout from the deadly coronavirus outbreak could spill over into the US. "China is a meaningful percentage of global growth. So we know global growth in the first quarter to first half of the year is going to be substantially weaker," he said. "And when that happens, it spills over to the U.S. economy." The virus, which causes a disease called COVID-19, has killed close to 3K, with more than 80K cases reported worldwide, mostly in China. So far, there have been a total of 60 confirmed cases of coronavirus in the US. That figure includes individuals who have been repatriated to the country. It has forced China, the world's 2nd-largest economy, to all but halt its production of consumer goods like phones, clothing & automobiles & institute mass quarantines in some cities & place severe restrictions on an estimated 780M people. Dozens of US companies have temporarily closed their locations in China or limited their hours. "The thing that companies are trying to assess, and what we're trying to assess, is what will be the demand effect," Kaplan added. "We already know that the travel industry is affected in the United States, we know the oil industry is affected already. That's the part that's uncertain, and we're going to have to continue to monitor this." Although hopes for an interest rate cut by the central bank has spiked in recent weeks after coronavirus slammed the stock market & cast a dark cloud over the US economy, Kaplan would not commit to lowering the benchmark federal funds rate at the Fed's Mar 18th meeting. Kaplan is a voting member of the FOMC. "I'll be going into the meeting prepared to make a judgment," he said. "As I sit here today, not going to comment publicly, I've said up to now it's too soon to make a judgment. But I'll be prepared to make a judgment on what we ought to do as we go into the March meeting." Still, James Bullard, Pres of the Federal Reserve Bank of St Louis, noted that coronavirus cases appear to be stabilizing in China & suggested that a rate cut is not necessary. “Further policy rate cuts are a possibility if a global pandemic actually develops with health effects approaching the scale of ordinary influenza, but this is not the baseline case at this time,” he added during a presentation (see below). In 2019, Bullard was one of the most vocal advocates of an interest-rate cut. The Fed cut rates 3 times by 25 basis points last year, setting the rate at 1.5-1.75% .
Fed’s James Bullard says rate cuts only if coronavirus reaches pandemic
World Health Organization officials said they are increasing the risk assessment of the coronavirus, which has spread to at least 49 countries in a matter of weeks, to “very high” across the world. “We have now increased our assessment of the risk of spread and the risk of impact of COVID-19 to very high at global level,” Tedros Adhanom Ghebreyesus, director-general of WHO, said in Geneva. Outside of China, there are over 4300 cases across 48 countries, including 67 deaths as of today Tedros said. He said that health officials are seeing “linked epidemics of COVID-19 in several countries, but most cases can still be traced to known contacts or clusters of cases.” “We do not see evidence as yet that the virus is spreading freely in communities,” he added. Denmark, Estonia, Lithuania, Netherlands & Nigeria all reported their first cases on yesterday. All these cases have links to Italy, he added. Tedros reiterated that the virus could turn into a pandemic. He urged against fear & panic, adding, “our greatest enemy right now is not the virus itself. It’s fear, rumors and stigma.”
WHO raises coronavirus threat assessment, now says virus poses a 'very high' risk at a global
This week has been one of the worst in stock market history (including the 1929 depression period). AT&T (T) is an unexciting, boring, old line stock, a previous member of the Dow. It started the week in the 38s & has fallen to the 34s. The fall raised its yield to 6% while long term 10 year Treasuries under 2%. That's the kind of week it has been. Bargain hunting is drawing the brave. The Volatility Index shot up 9 to the 49s today, about 4X where it was when stocks were in the rally mode. Even with some bargain hunting today, enormous damage has been done the rally that investors become accustomed to in recent years. The outlook for stocks remains gloom!!!
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 44.96 | -2.13 | -4.5% |
| GC=F | Gold | 1,611.10 | -31.40 | -1.9% |
Dallas Federal Reserve Pres Robert Kaplan warned that economic fallout from the deadly coronavirus outbreak could spill over into the US. "China is a meaningful percentage of global growth. So we know global growth in the first quarter to first half of the year is going to be substantially weaker," he said. "And when that happens, it spills over to the U.S. economy." The virus, which causes a disease called COVID-19, has killed close to 3K, with more than 80K cases reported worldwide, mostly in China. So far, there have been a total of 60 confirmed cases of coronavirus in the US. That figure includes individuals who have been repatriated to the country. It has forced China, the world's 2nd-largest economy, to all but halt its production of consumer goods like phones, clothing & automobiles & institute mass quarantines in some cities & place severe restrictions on an estimated 780M people. Dozens of US companies have temporarily closed their locations in China or limited their hours. "The thing that companies are trying to assess, and what we're trying to assess, is what will be the demand effect," Kaplan added. "We already know that the travel industry is affected in the United States, we know the oil industry is affected already. That's the part that's uncertain, and we're going to have to continue to monitor this." Although hopes for an interest rate cut by the central bank has spiked in recent weeks after coronavirus slammed the stock market & cast a dark cloud over the US economy, Kaplan would not commit to lowering the benchmark federal funds rate at the Fed's Mar 18th meeting. Kaplan is a voting member of the FOMC. "I'll be going into the meeting prepared to make a judgment," he said. "As I sit here today, not going to comment publicly, I've said up to now it's too soon to make a judgment. But I'll be prepared to make a judgment on what we ought to do as we go into the March meeting." Still, James Bullard, Pres of the Federal Reserve Bank of St Louis, noted that coronavirus cases appear to be stabilizing in China & suggested that a rate cut is not necessary. “Further policy rate cuts are a possibility if a global pandemic actually develops with health effects approaching the scale of ordinary influenza, but this is not the baseline case at this time,” he added during a presentation (see below). In 2019, Bullard was one of the most vocal advocates of an interest-rate cut. The Fed cut rates 3 times by 25 basis points last year, setting the rate at 1.5-1.75% .
Fed’s Kaplan warns coronavirus fallout could ‘spill over’ to US economy
St Louis Federal Reserve Pres James Bullard
said the coronavirus outbreak would have to reach levels of the
ordinary flu before he would consider cutting interest rates. Markets
are anticipating the Fed will cut rates 4 times this year amid a
scare that the virus would cause a sharp slowdown in global growth. The
coronavirus has not been classified as a pandemic & has seen far fewer
deaths than the flu but its mortality rate is much higher. Bullard
said the COVID-19 spread in China appears to be stabilizing. While he
acknowledged the damage the virus already has done to economic growth
expectations, he added that current Fed policy is “in a good position” as
officials examine the situation. “Further policy rate cuts are a possibility if a global pandemic
actually develops with health effects approaching the scale of ordinary
influenza, but this is not the baseline case at this time,” he said. The
comments come amid a stock market meltdown that continued today.
Major averages have lost more than 10% this week in what has been the
quickest correction in market history. Bullard said the sell-off
has been driven by a “flight to safety” that has pulled down interest
rates, “likely benefiting the U.S. economy.” Indeed, govbond yields continue to hit record lows Fri, with the benchmark
10-year Treasury note dipping to 1.176% & the 30-year bond around
1.7%. The
policymaking FOMC cut its own benchmark rate 3 times last year, down to 1.5-1.75%. Markets
expect at least one rate cut at the Mar meeting. “The FOMC
executed a marked turnaround in U.S. monetary policy during 2019 that
was designed in part to insure the economy against possible negative
shocks to growth,” Bullard said. “This has put the FOMC in a good
position in early 2020 as we closely monitor the evolving coronavirus
impact on the global economy.” He added that the lag effect of
rate moves likely will continue to help the US & pointed out that
the 3 cuts was a bigger monetary boost than the market has
appreciated as the 2-year Treasury saw a slide of 165 basis points,
compared with the actual 75 basis point cut the Fed instituted. The most recent decline in yields is actually “a bullish factor for U.S. economic growth,” Bullard said.
Fed’s James Bullard says rate cuts only if coronavirus reaches pandemic
World Health Organization officials said they are increasing the risk assessment of the coronavirus, which has spread to at least 49 countries in a matter of weeks, to “very high” across the world. “We have now increased our assessment of the risk of spread and the risk of impact of COVID-19 to very high at global level,” Tedros Adhanom Ghebreyesus, director-general of WHO, said in Geneva. Outside of China, there are over 4300 cases across 48 countries, including 67 deaths as of today Tedros said. He said that health officials are seeing “linked epidemics of COVID-19 in several countries, but most cases can still be traced to known contacts or clusters of cases.” “We do not see evidence as yet that the virus is spreading freely in communities,” he added. Denmark, Estonia, Lithuania, Netherlands & Nigeria all reported their first cases on yesterday. All these cases have links to Italy, he added. Tedros reiterated that the virus could turn into a pandemic. He urged against fear & panic, adding, “our greatest enemy right now is not the virus itself. It’s fear, rumors and stigma.”
WHO raises coronavirus threat assessment, now says virus poses a 'very high' risk at a global
This week has been one of the worst in stock market history (including the 1929 depression period). AT&T (T) is an unexciting, boring, old line stock, a previous member of the Dow. It started the week in the 38s & has fallen to the 34s. The fall raised its yield to 6% while long term 10 year Treasuries under 2%. That's the kind of week it has been. Bargain hunting is drawing the brave. The Volatility Index shot up 9 to the 49s today, about 4X where it was when stocks were in the rally mode. Even with some bargain hunting today, enormous damage has been done the rally that investors become accustomed to in recent years. The outlook for stocks remains gloom!!!
Dow Jones Industrials
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