“Markets Rebound With Massive Stimulus Measures” – Vista’s Weekly – March 27, 2020

This week, the world has seen the coronavirus cases number grow to more than 576,800 across the planet. We have also seen more than 26,800 worldwide deaths while more than 129,800 people have recovered from coronavirus. 86,012 cases are now in the U.S with 4,588 in my home state of California, including 1,583 in the Bay Area which includes my hometown of San Francisco as of Friday afternoon. In response & as we all well know, we in the US continue to rollout social distancing, lockdown and shutdown initiatives to contain and hopefully win against the coronavirus. However, these same measures have also shut down our economy in many respects which was glaringly evidenced with the surge of jobless claims that came in this week where it jumped over by 3 million to 3,283,000. In response, the Fed and the White House have rolled out several stimulus measures to keep the economy going and hopefully provide a stable foundation to lift off from once we kick the coronavirus to the curbside. Today, we even saw that the $2.2 trillion economic rescue package was signed into action that could even grow to a figure greater than $6 trillion that is based on need. The Fed also has tried to give us and the markets the “warm and fuzzies” this week when Fed Chair Jerome Powell stated they won’t run out of “ammunition” to keep the credit system and markets going.

With all of this in mind and in a review of the markets, we saw double-digit wins across the board when looking at the results week/week.  The Dow ended the week at 21,636.78, up by +12.8% and is now down -24.2% YTD. The S&P 500 ended the week at 2,541.47, representing a +10.3% weekly gain and is now down -21.3% YTD. The Nasdaq Composite closed at 7,502.38 on Friday, representing a weekly +10.3% upward move and is now down -16.4% YTD. The Russell 2000 moved higher closing at 1,131.99 representing a weekly +11.6% increase and is now down a -32.1% YTD. 

Oil prices dropped again this week to end at $21.65/bbl down -8.8% from last week’s close of $23,73/bbl. Global growth concerns, a production glut, and a continued price war between Russian and Saudia Arabia have directly caused the pain as of late.

The FAANG stocks all rebounded this week.  Facebook (FB) closed at $156.79/share, -4.01% Friday, ($149.73/share a week ago), Amazon (AMZN) closed at $1,900.10/share, -2.83% Friday, ($1,846.09/share a week ago), Apple, Inc. (AAPL) closed at $247.74/share, -4.14% Friday, ($229.24/share a week ago), Netflix (NFLX) closed at $357.12/share, -1.62% Friday, ($332.83/share a week ago) & Alphabet (GOOG) closed at $1,110.71/share, -4.39%, ($1,072.32/share a week ago.)

Gold prices rebounded this week closing at $1,643/0z. up from $1,484/oz & silver prices closed higher at $14.61/oz up from $12.49/oz last Friday. 

The U.S. Dollar Index weakened to end the week at 98.36 down from 102.74 last week.  US Treasury yields were down week over week. The 2-yr Treasury yield closed at .23% down from .37%, the 10-yr yield closed at .75% down from .94%, & the 30-yr yield ended at 1.244% down from 1.424%. 

Here’s a summary of this week’s economic reports: On Monday, nothing of significance was reported. On Tuesday, we received the New Home Sales Report for February that confirmed that it dropped -4.4% month/month in February to a seasonally adjusted annual rate of 765k units. On Wednesday, we received the February durable goods orders report which showed a rise of +1.2% and when you exclude transportation, durable goods orders dropped by -.6%. The FHFA Housing Price Index report showed a rise by +.3% in March while the weekly MBA Mortgage Applications Index decreased by -29.4%. On Thursday, US Initial job claims for the week ending March 21 increased by over +3 million to 3,283,000. The third estimate for Q4 GDP confirmed a 2.1% annualized rate of growth while the GDP Price Deflator was flat at 1.3%. The advance goods trade deficit came in at $59.89B in February while advance retail inventories dropped -.3% in February. Advance wholesale inventories dropped -.5% in February. On Friday, the personal income report was confirmed to have risen +.6% month/month in February. Personal spending also increased by +.2%. The PCE Price Index was confirmed to have risen by +.1% & the core PCE Price Index that excludes food & energy increased by +.2%. The final reading for the University of Michigan Index of Consumer Sentiment for March was lowered to 89.1.

I believe that we will continue to see abnormally high and significant volatility in the markets next week. Remember even though we saw it rise this week we saw significant volatility. With this point of view in mind, I will continue to seek to use measured “bets” by investing in The Velocity Shares Daily 2x VIX Short-Term ETN (TVIX), a leveraged bet against the market, to hedge and/or increase the returns of my portfolio when the markets significantly rebound or swing in the 6-10% range and then us the ProShares UltraPro QQQ (TQQQ), an ETF whose objective is to o deliver triple the daily returns of Nasdaq-100 when the markets have dropped in the 6-10% range. Also, keep an eye on our healthcare plays next week as breast cancer-focused Atossa Therapeutics (ATOS), INVO Bioscience (INVO) and Neubase Therapeutics (NBSE) all rebounded this week and are due for additional news about their respective programs and milestones in the near term. 

In the meantime, please enjoy the weekend at home with the family, appreciate what you have, stay flexible in the markets to strike when the opportunity appears attractive, and plan and dream of what life may bring all of us in we can move forward safely through this period together. We will find a way in this world that is currently inhabited by more than +7.7B people to survive and thrive once more. Also, please enjoy the balance of the weekly newsletter’s videos, quotes, updates.

Investing & Inspiration

“I believe the returns on investment in the poor are just as exciting as successes achieved in the business arena, and they are even more meaningful!” -Bill Gates

“Every portfolio benefits from bonds; they provide a cushion when the stock market hits a rough patch. But avoiding stocks completely could mean your investment won’t grow any faster than the rate of inflation.” – Suze Orman

“The tax on capital gains directly affects investment decisions, the mobility and flow of risk capital… the ease or difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.” – John F. Kennedy

“If all the economists were laid end to end, they’d never reach a conclusion.
-George Bernard Shaw

“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, Former Ceo of Disney

“In the short run, the market is a voting machine. But in the long run, it is a weighing machine.” – Ben Graham

“In investing, what is comfortable is rarely profitable.” -Robert Arnott

“The fundamental law of investing is the uncertainty of the future.” -Peter Bernstein

“How many millionaires do you know who have become wealthy by investing in savings accounts?” -Robert G Allen

“Greed is all right, by the way. I think greed is healthy. You can be greedy and still feel good about yourself.”-Ivan Boesky

“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

“I talk about macro themes a lot because they are fun to talk about, but it is the risk management that is the most important thing. The risk control is all bottom-up. I structured the business right from the get-go so that we would have lots of diversification.” -Michael Platt

“Blaming speculators as a response to financial crisis goes back at least to the Greeks. It’s almost always the wrong response.” -Larry Summers

Tomorrow

We have a full week of trading next week and are due to receive the following significant economic data:

• The consumer confidence report on Tuesday
• The manufacturing Purchasing Managers’ Index on Wednesday
• The March jobs report on Friday