“Extreme Issues, Rampant Fear & Indiscriminate Selling” Vista Partners Daily Market Recap – March 9, 2020

Monday was a day where the markets were confronted with a number of extreme issues. A shocking oil price & continued interest rate decline led to indiscriminate selling & a resulting precipitous fall in the markets which triggered a trading halt for 15-minutes early on today. This was married to rampant fears of just about everything under the sun that might or could lead to the decline of global growth while the news of the growth of the coronavirus spread throughout the world.

Setting the tone & out of the gate today we saw oil prices crash as Saudi Arabia officially lowered its April delivery prices significantly by approx. $6-$8/bbl. This was an apparent reaction to their failure to come to an arrangement with Russia to control production and prices. They also let it be known that they are prepared to increase oil production well beyond the recent expectations in the market that could result in an oversupply. Oil closed down by -24.8% and ended the day at  $31.09/bbl. Many are speculating oil prices could further drop into the low $20 range and that this would disrupt a number of producers and suppliers in the sector and lead to layoffs, bankruptcies, and a recession.  The S&P 500 energy sector declined by -20.1% and certainly did its weighted part to bring down the indices today. Maybe this will lead to lower prices at the pump sometime soon but the question is “Will anyone travel again anytime soon?”

With increasing fear and concerns of global recession and waning or “halted” global growth triggered by the spread coronavirus and many businesses’ cautionary actions to curtail nonessential travel, we also saw interest rates continue to decline as money fled to safety. The 2-yr yield crashed another 18 basis points to end at .32% while the 10-yr yield crashed by another 21 basis points to end at .50%. The financial sector took a solid hit with declining interest rates as the S&P 500 financial sector was off -10.9%. I have to believe that refinancing of mortgages is continuing to see an increase in activity which is a silver lining.  The market also expects the Fed to cut rates by another .75 points when it meets next week. The U.S. Dollar Index remains relatively strong but declined by -1% today to end at 95.02. 

The S&P 500 was off by -7.6%, the Dow was off by -7.79%, the Nasdaq was off by -7.29% & the Russell lost -9.37%.  

The FAANG stocks fell with the markets again today. Facebook (FB) closed at $169.50/share, -6.4%, Alphabet (GOOG) closed at $1,215.56/share, -6.38%, Amazon (AMZN) closed at $1,800.61/share, -5.29%, Apple (AAPL) closed at $266.17/share off -3.42%  & Netflix (NFLX) closed at $346.49/share, -6.09%. 

Travel-related stocks (airlines and cruise ships) took a massive hit again today as follows: Royal Caribbean (RCL) closed at $48.27/share down -25.75%, Carnival (CCL) closed at $21.74/share down -19.93%, Norwegian Cruise Line Holdings (NCLH) closed at $19.81/share down -26.90%, Alaska Air (ALK) closed at $43.19 off -4.47% & American Airlines (AAL) closed at $14.75/share off -7.64%.

With the negative trading session and the rampant fear, one of the best trades proved once again to be the Velocity Shares Daily 2x VIX Short-Term ETN (TVIX), a leveraged “bet” against the market rising that closed at $254.38/share up a monstrous +49.72% after reaching $302 today.

Gold moved higher today and closed at $ 1,675/oz and silver prices also moved higher and closed at $18.12/oz.

Economic Reports

On Monday, we did not receive any economic data. 

Investing & Inspiration

“The riskiest thing we can do is just maintain the status quo.
I get up at 4:30 in the morning, seven days a week, no matter where I am in the world.
I think it is important for people who are given leadership roles to assume that role immediately.
What I’ve really learned over time is that optimism is a very, very important part of leadership.” Bob Iger, Ceo of Disney

“There are old traders and there are bold traders, but there are very few old, bold traders.”-Ed Seykota

“Let this scenario play out on its own, in its own fashion. As you watch it unfold, you will soon be grateful that you choose the peaceful path. Remember — those who live by the sword, die by the sword.”

“As long as you enjoy investing, you’ll be willing to do the homework and stay in the game.” -Jim Cramer

“I rarely think the market is right. I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” -Mark Cuban

“Michael Marcus taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgment, being wrong, making your next best judgment, being wrong, making your third best judgment, and then doubling your money.” -Bruce Kovner

“The policy of being too cautious is the greatest risk of all.” -Jawaharlal Nehru

“The only true test of whether a stock is “cheap” or “high” is not its current price in relation to some former price, no matter how accustomed we may have become to that former price, but whether the company’s fundamentals are significantly more or less favorable than the current financial-community appraisal of that stock.” -Philip Fisher

“I learned to avoid trying to catch up or double up to recoup losses. I also learned that a certain amount of loss will affect your judgment, so you have to put some time between that loss and the next trade.” -Richard Dennis

“The four most dangerous words in investing are: ‘this time it’s different.” -Sir John Templeton

“Money doesn’t make you happy. I now have $50 million but I was just as happy when I had $48 million.” -Arnold Schwarzenegger

Tomorrow

Tomorrow’s significant economic data report schedule will include the following:

• NFIB Small Business Optimism Index for February