Vista Partners Daily Market Recap – February 25, 2020

We experienced another sobering day in the broad markets as we gave back another ~3% across the board today after a quick reactionary bounce this morning. As they say, selling begets more selling and this snowball is definitely rolling downhill. At the same time, this flushing is quickly getting us closer to a 10% correction that many technical analysts have been predicting.

The coronavirus fears continue to spread along with the concern that global growth will continue to suffer as supply and corporate spending may slow as well as consumption from consumers. The growth warnings from some top companies like The Home Depot (HD) & United Airlines (UAL) have jumped on the coronavirus related issues already.

The flattening and declining treasury yield curve is also feeding fear. Today the 2-yr yield dropped another six basis points ending at 1.2%, & the 10-yr yield dropped another five basis points to end at 1.33%. The U.S. Dollar Index which has been strengthening dropped -.4% ending at 98.96. Oil prices dropped -2.7% to close at $49.89/bbl.

The S&P 500 closed at 3,128.21, -3.03%. The energy sector was off -4.3% to lead the pack of 11 sectors into the red today. The tech-heavy Nasdaq closed at 8,965.61, -2.77% & the Dow Jones Industrial Average closed at 27,081.36, -3.15%. The Russell 2000 declined -3.45% to close at 1,571.90. The “fear gauge” Vix (TVIX) surged again ending at $76.43/share jumping another solid +19.16% and it traded in $59.12 – $80 range.

The beloved FAANG stocks experienced a red day again today. Facebook (FB) closed at $196.77/share, -1.97%, Alphabet (GOOG) closed at $1,388.45/share, -2.33%, Amazon (AMZN) closed at $1,972.74/share, -1.82%, Apple (AAPL) closed at $288.08/share, -3.39% & Netflix (NFLX) closed at $360.09/share, -2.34%.

Both gold and silver prices dropped today a usual defensive position.

A few bright spots in the markets today came out of the healthcare sector as Moderna (MRNA) ($23.76/share, +27.81%) (coronavirus related move), Iovance Biotherapeutics (IOVA) ($31.46/share, +27.41%) (“talking with potential buyers”), & Vir Biotechnology (VIR) ($21.73/share, 14.61%) (another coronavirus related move) all faired well. 

Economic Reports

On Monday, we did not receive any significant macroeconomic data.

On Tuesday, we received the Conference Board’s Consumer Confidence Index which moved up to 130.7 in February The S&P Case-Shiller Home Price Index moved up by +2.9% in December. The FHFA Housing Price Index moved up by +.6% in December.

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:

• New Home Sales for January

• The weekly MBA Mortgage Applications Index