Fluent Financial Market Update as of April 21st, 2020
- US 10-Year Treasury Rates are yielding around 0.626%
Results through Monday, April 21st, 2020
“Investors cannot invest directly in an index. These unmanaged indexes do not reflect management fees and transaction costs that are associated with some investments. Past performance is no guarantee of future results.”
- On March 11, 2020, the Dow fell by -1,465 points, down approximately -5.9%, breaching the -20% marker off the high. This ended the longest running bull market in modern history. A 3-day rally in the Dow of 21%, by the same definition, flipped the market into a bull market. That amounted to an 11-day bear market for the Dow.
- According to St. Louis Fed President Bullard, the contraction in GDP for Q2 is estimated to be -30% up to -50%.
- Oil had a major decline this past week with the May Futures contracts turning negative for the first time in history, meaning buyers are requiring sellers to pay them for oil (due to a lack of storage capacity). Despite this, the “Oil Majors” have held up relatively well.
- Measures being implemented to slow the spread of COVID-19 are grinding the global economy to a halt, leading some to question if the cure is worse than the ailment.
- The good news for the US is that the growth of Coronavirus infections has flattened dramatically, pressuring states to ease restrictions.
- Novartis will conduct a randomized Phase III (late-stage) Hydroxychloroquine trial on 440 hospitalized patients after getting the green light from the FDA (Emergency use authorization was granted earlier this month). Meanwhile, another 70 companies are actively working towards vaccines and treatments according to the FOX Business Network.
- The Paycheck Protection Program (PPP) portion of the CARES Act received a $484 Billion additional funding from Congress this week for small businesses, hospitals and testing.
- Funding for the CARES act along with State by State lockdown decisions may be used as a political weapon and cause continued financial relief delays for all Americans.
- Since mid-March, 22 million displaced workers have filed for unemployment benefits. In the latest week, the pace dipped from 6.6 million to 5.2 million… an encouraging signal that the flood of applicants and backlog is finally beginning to ebb.
- A harsher, longer lockdown in the second quarter could enable a faster rebound in the third quarter, even though it would presumably leave growth for the full year on a weaker footing.
- Facebook is practicing censorship by banning posts and groups that promote anti-lockdown protests that don’t comply with government health directives like social distancing. This is scary because large tech companies can control the narrative.
- It is going to take courage to take advantage of historically attractive stock valuations but waiting for clear skies means missing premium buying opportunities.
Coronavirus Impact on the S&P 500 as of April 14th, 2020
Sincerely,
Mitch Kramer and the Fluent Financial Team