What’s going on in the world…
Market opens lower, effectively erasing yesterday’s explosive gains. Yesterday’s explosive gain was another 1,000 point move on the Dow, which erased half of the previous day’s 2,000 point decline. The S&P was up 100 after declining 225. It was the biggest daily gainer for the S&P since December 2018. These are Bear Market rallies. They can be explosive. There had not been a 1% move for months in the Stock Market. The last two weeks have seen an average 3.5% daily move. That is hyper-volatility. There are no signs of it abating, with the VIX remaining above 50. Goldman Sachs came out today and said the Bull Market is over, and rolled out a mid-year S&P target of 2450 followed by a year-end target of 3200. They had previously modeled a 3400 year-end, with no significant mid-year decline. Coronavirus fears and the economic impact remains front and center of investor psyche. President Trump suggested a 0% payroll tax rate that could last until the end of the year, and said cruise and airline industries would be getting aid. He also suggested bailing out the Energy industry. The details remain unclear. U.S. coronavirus cases have also topped 1,000 nationwide, according to Johns Hopkins University data, and at least 28 people have died from the disease. German Chancellor Angela Merkel said 70% of Germans could be exposed to the virus before all is said and done. That would put tremendous pressure on health care facilities. The Bank of England cut rates in an emergency move. The White House is considering delaying tax day. Talks of delaying the Olympics in Tokyo are back on. March Madness might be played with no fans in the stands. Wall Street executives and Silicon Valley executives are meeting with President Trump at the White House today. Vice President Joe Biden had another good night, racking up more delegates, and is looking more and more likely to be the Democratic candidate to go up against President Trump in November. Stocks are lower. Bonds are higher, with another decline in rates. The VIX remains above 50. Gold continues to be a safe-haven. The volatility continues. We bought back MSFT near the lows yesterday and then put hedges back on as the rally commenced. The daily moves are outrageous, but normal for this type of environment. We have been very active and this will continue. Keep those belts buckled.
Have a great morning,