Equity markets took a big hit today after yesterday’s run, continuing a trend of extreme volatility on the exchanges. Money flowed into bonds, other havens, and yields again fell. The week saw large rallies after the Fed’s 50bp cut and Biden’s sweep of Super Tuesday. At the end of the day these were no match for reality — coronavirus will hurt the global economy and valuations are too high.
The major indices were down over 3% in today’s trading
The good news is we are most likely closer to the bottom than we are the top. As earnings come down, valuations will need to drop further. However, at some point, the market will sense a rebound in earnings and stocks will lead the way higher.
The $64,000 question is when that will be.
Medical evidence is confirming that elderly and Asians are most hurt by the pathogen; the American population may escape the brunt of the death rate, but the economy will for sure slow during this uncertainty.
Factory orders showed increased contraction during this reporting period.
Continuing Jobless Claims (Feb 21) printed at 1.729M vs consensus estimate of 1.733M.
Nonfarm Productivity (Q4) printed at 1.2% vs 1.4% consensus estimate.
Initial Jobless Claims (Feb 21) printed at 216K vs 215K estimate.
Unit Labor Costs (Q4) printed at 0.9% vs 1.4% estimate.
Initial Jobless Claims 4-week average (Feb 28) printed at 213K.
Factory Orders (MoM) (Jan) printed at -0.5% vs -0.1% estimate.