“Fear & Interest Rates Torpedo Markets” Vista Partners Daily Market Recap – March 5, 2020

Fear soared again throughout the lands and the markets sold off sharply once more! We continued to follow the up and down pattern swings that seem to happen daily and be normal these days. Today’s Newsline included stories of treasury yields being pushed down to historically low levels married with the new understanding that we can expect another half-point cut out of the Fed when they meet on March 18th. The 10-year Treasury note yield dropped to .9% an all-time low. We also saw the spread of the coronavirus news seem to come out to of every outlet that you could imagine. Not to mention that almost every conversation I had today from Seattle to NYC to Sydney seemed to involve concern about the coronavirus uncertainty & stories that panic-like reactions from the public in their areas are stocking up on up toilet paper and other “essentials” which are clearing the shelves of available products. Amazingly, today we found out that we are in a “State of Emergency” in California as we have a cruise ship with approx. 2.5k passengers stranded out in the San Francisco Bay as they were ordered not to dock after news of that one of their passengers had died from the coronavirus. Many others on the ship may have been exposed, so the state is apparently flying in tests to the ship that has been ordered by the Governor to see if they have the virus. I wonder how this will play out and/or if they will be allowed to dock anytime soon. It is pretty strange to have it floating basically in my back yard and it is most definitely causing fear to grow as it looms in the Bay. I will now go wash my hands again just to feel like I am doing my part and pray that we might swing back n the markets tomorrow on better hopes, sentiment & fundamental progress on all fronts.

As for the markets today, the major indices all seemed to selloff holding hands as they all dropped in the 3% range together giving back most of what they gained yesterday. The S&P 500 was off -3.39%, the Dow was off -3.58%, The Nasdaq was off -3.10% & the Russell lost -3.42%.  The beloved FAANG stocks fell with the markets today. Facebook (FB) closed at $185.17/share, -3.44%, Alphabet (GOOG) closed at $1,319.04/share, -4.87%, Amazon (AMZN) closed at $1,924.03/share, -2.62%, Apple (AAPL) closed at $292.92/share off -3.42%  & Netflix (NFLX) closed at $372.78/share, -2.87%. The financials down -4.9% & energy sector down -3.6%  led all sectors on the downside today. Oil prices also moved lower another -1.9% to close at $45.89/bbl as the global growth picture dims.

Travel-related stocks like airlines and cruise ships, of course, took another bath today down in double-double digit range as travel plans continue to get altered i.e Royal Caribbean (RCL) down -16.3%, Carnival (CCL) down -14.1%, Norwegian Cruise Line Holdings (NCLH) down -13.4%, Alaska Air (ALK) off -12.5% & American Airlines (AAL) off -13.4%.

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 $139.39/share up a monstrous +31.69%. It actually was up higher today hitting $148.36.

A name that I own in the healthcare space has continued to perform well is Neubase Therapeutics (NBSE), a biotechnology company developing next-generation antisense therapies using its scalable PATrOL™ platform to address genetic diseases. NBSE moved up another +3.26% closing at $8.23/share near its all-time high of $8.30/share as we wait for the company to surface with trial data hopefully yet in March.

Somewhat positive economic reports surfaced again today. The Nonfarm business sector labor productivity report showed a move higher by +1.2% in Q4. However, factory orders went down -.5% month/month in January while shipments dropped -.5% month/month in January. Initial claims for the week ending February 29 also went down by 3k to 216k while continuing claims for the week ending February 22 rose by 7k to 1.729M.

Gold jumped up today and closed at $ 1,672/oz up $34/oz and silver prices also moved higher and closed at $17.55/oz up $.01/oz.

Economic Reports

On Monday, we received the following: The ISM Manufacturing Index Report for February confirmed an expansion reading of 50.1, Total construction spending report also confirmed an increase of +1.8% month/month in January, The Residential spending report confirmed an upward move of +2.0% month/month, & The nonresidential spending reports showed an increase of +1.6% month/month.

On Tuesday, we did not receive any economic reports.

On Wednesday, we received the ISM Non-Manufacturing Index report for February which came in at a 57.3% reading. The ADP Employment Change Report confirmed an increase of 183k nonfarm payrolls in February. The weekly MBA Mortgage Index Report jumped +15.1% while the Refinance Index Report jumped even higher by +26%. However, the Purchase Index dropped by  -2.7%. The Federal Reserve’s March Beige Book stated that activity expanded at a modest to moderate pace during the survey period. 

On Thursday, we received somewhat positive economic reports that surfaced again today. The Nonfarm business sector labor productivity report showed a move higher by +1.2% in Q4. However, Factory orders went down -.5% month/month in January while shipments dropped -.5% month/month in January. Initial claims for the week ending February 29 also went down by 3k to 216k while continuing claims for the week ending February 22 rose by 7k to 1.729M.

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:

• February Nonfarm Payrolls

• Nonfarm Private Payrolls

• Average Hourly Earnings

•  Average Workweek 

• Unemployment Rate

• January Trade Balance

•  January Wholesale Inventories

• January Consumer Credit