Wall Street Clawed Back Some Losses As Investors Bet On Stimulus Measures

Thursday was the market’s worst day since 1987, with all sectors and assets selling off, including the previous safe havens, such as gold and muni’s.

“Wall Street clawed back some of the losses on Friday from its biggest declines in three decades, as investors bet on more fiscal stimulus to thwart a coronavirus-driven global recession. The indexes were still 25% below their record highs hit mid-February and were on track for their biggest weekly declines since the 2008 financial crisis.” (Reuters)

“The US administration declared a national emergency on Friday, which freed up $50B to tackle the novel coronavirus pandemic. Markets had been disappointed in the initial US response to the coronavirus outbreak. Two weeks ago, Trump had called the now-pandemic a “hoax” meant to damage his presidency.” (Reuters)

Trading was halted on Monday am after the market fell -7% in the opening minutes, via an automatic 15-minute timeout put in place after the 2008-9 financial crisis.

“As far as economic impact, you have to lower your U.S. GDP estimates by at least a half a percentage point for the whole year and it could be more. We were expecting 2-2.5% before the year started. Now best case its 1.5-2% for the year.” (Reuters)

“U.S. Treasury Secretary Steven Mnuchin on Friday said the government would use all its tools to support financial market functioning. 'There will be liquidity available. Whatever we need to do, whatever the Fed needs to do, whatever Congress needs to do, we will provide liquidity,' Mnuchin said during an interview on CNBC. The Treasury Secretary said that a deal was close with House Democrats on a coronavirus relief measure.

Once this legislation was approved, Mnuchin said the White House would press for a broader fiscal stimulus. Mnuchin said he had been in close contact with Fed Chairman Jerome Powell and said that specific programs to aid the financial markets would be rolled out soon.” (MarketWatch)

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Volatility: The VIX rose 37.92% this week, ending the week at $57.83.

High Dividend Stocks: These high yield stocks go ex-dividend next week: AJX, TCPC, AIMC, BANX, NEWT, SLRC, AINV, GAIN, GLAD, GOOD, CPTA.

Market Breadth: 0 out of 30 DOW stocks rose this week, vs. 17 last week. 3% of the S&P 500 rose, vs. 45% last week. Market breadth continued to post lows not seen in years.

FOREX: The USD rose vs. most major currencies this week.

Economic News: The Producer Price Index fell -.6% in February. The Consumer Sentiment Index fell to 95.9, vs. the previous 101.

Week Ahead Highlights: The FED will announce its rate decision on Wednesday. There will be several Housing reports out next week.

Next Week’s US Economic Reports:

Sectors: All sectors fell this week, Tech holding up the best, and Energy lagging.

Futures: WTI Crude fell -22.75% this week, from the double whammy of the coronavirus, and the Russian/Saudi price war.

“Oil titans Russia and Saudi Arabia have accumulated vast financial cushions that will help them weather a lengthy price war. It’s a battle of nerves – so who will blink first? Global oil prices crashed by a third after Riyadh discounted its crude and signalled it would raise output. Shares in national oil champions Saudi Aramco (SE:2222) and Rosneft tanked.

The world’s top two oil exporters each have war chests of around $500 billion to weather economic shocks and are making bullish noises about their stamina as they square up. Moscow said on Monday it could withstand oil prices of $25-$30 per barrel for 6-10 years. Riyadh, meanwhile, can afford oil at $30 a barrel, but would have to sell more crude to soften the hit to its revenue, according to sources familiar with the matter. Chris Weafer, director at Macro-Advisory consultancy, said it was still possible Moscow could decide to return to cooperating with OPEC by autumn if prices remained very low.”

“Saudi Arabia is snapping up more and more oil tankers as the kingdom prepares to flood the world with crude. The world’s largest exporter, which began hiring extra ships almost as soon as a pact with Russia to limit oil supplies fell apart, has now provisionally hired 25-30 giant oil carriers to load late this month or early next, according to six shipbrokers and executives involved in the market. It’s rare for Saudi Arabia’s state tanker company to book other companies’ ships as it’s doing now. The cargoes in question would be enough to supply France for about a month.” (Reuters)

Written By: Double Dividend Stocks