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WJR March 2020 Reports

March 31, 2020

The stock algorithms keep trying to figure out when the economy might get back to something resembling normalcy.  As you just discussed with Bill Ford, Ford Motor announced that there is no set date to return to car production.  April 6th had been the re-start date, but the actual re-start date will now be data-dependent.

More data our of New York regarding Covid-19 appears to show how effective social and physical distancing can be.  New hospital admissions in Manhattan, which has been pretty much locked down, are increasing at a much slower rate than predicted.

Package and processed foods produced Conagra reported adjusted fiscal third quarter profit of 46 cents, which was two cents less than expected.  However, it sees a surge in retail sales as people worldwide stuff their freezers and pantries.  Conagra now sees full year profits well above the $2.07 estimate.  Shares are bid more than 5 percent higher pre-market.

Dollar Tree has joined the growing list of companies withdrawing profit guidance for the year, as sales have reportedly dropped almost 20 percent over the past week.

At 9:45 we’ll get the March Chicago Purchasing Managers’ Report. Expect a dismal reading of 40.

Manufacturing activity has begun picking up in China, which gave some overseas markets a little lift overnight. We’re lost several hundred points in the Dow futures over the past four hours.  At this point, adjusted for fair value, S&P 500 futures are lower by 23 points, the Dow futures are down about 188, and the NASDAQ futures are now 64 points below fair value.

March 30, 2020

Stock futures have recovered a good deal of overnight losses.  The news of Covid-19 infection spread and fatalities continues to worsen.  We know that recovery WILL happen, the question is how and when.  The “hows” will be sufficient testing capacity, which may well be achieved within a week or two, effective social distancing enforcement, which is likely a two month issue, a treatment, which is likely three or four months away and a vaccine, which may take nearly another year.  Suffice it to say, we’re making progress, but this “New normal” will be with us for a while. 

Johnson and Johnson shares are higher by more than 4 percent higher this morning.  They announced that they expect to start human clinical trials by September for a potential Covid-19 vaccine that could possible be available by early 2021.

Egg producer Cal-Maine Foods earned 82 cents in last year’s third fiscal quarter.  This year, the profit was only 28 cents, but that was 9 cents better than expected and the stock is a bit higher pre-market.

Oil is more than 5 percent lower again this morning.

Overseas markets are also lower, but we’re looking for an unusually calm open at 9:30. At this point, adjusted for fair value, S&P 500 futures are up 7 point, the Dow futures are down 15, although all of that drop and then some is attributable to a drop in shares of Boeing, but the NASDAQ futures are now 42 points above fair value.

March 27, 2020

It could have been end-of-quarter asset rebalancing, it could have been a short squeeze against those who have been shorting stocks, it could have been that the algorithms just got tired of hitting the “sell” button. Whatever it was, a late surge gave stock prices their third big gain in a row.  Even so, they’re still 20 percent lower than recent levels and the volatility is far from over.

Cheesecake Factory furloughed 41,000 employees yesterday. This morning Build-a-Bear announced that they will be parting with 90 percent of their workers and those that remain will be giving up part of their pay. Of course, pay cuts are not new this week, with GM and Ford both making pay reduction or deferral announcements yesterday.

The report on February personal income and spending comes in 15 minutes, although the expected four-tenths of a percent increase will be the last increase we see for a while.  At 10 o’clock, the University of Michigan’s final verdict on March Consumer Sentiment should be interesting. Expect a reading of 90.

Asian markets generally followed us higher overnight.  Japan closed with a nearly 4 percent gain on the day which gave the Nikkei its best week ever.  European markets are lower, no doubt at least in partial reflection on Boris Johnson being diagnosed with Covid-19 and the failure of European leaders to come up with a fiscal stimulus package.

At this point, adjusted for fair value, S&P 500 futures are lower by about 86 points, the Dow futures are down about 764, and the NASDAQ futures are now 243 points below fair value.

March 26, 2020

It’s only been a month or so, but it seems like forever since the Dow Industrials and the S&P 500 recorded two successive days of gains.  Yesterday was that second day, although stocks lost the majority of their gains late in the day.  That came as Bernie Sanders threatened to slow down the most recent 2 trillion-dollar stimulus package. 

Late last night, that hurdle was cleared on a 96 to nothing vote. The bill now heads to the House where passage is expected tomorrow.  Just how quickly Washington can get the lifeline of cash out to individuals and businesses is a big question now.

That’s the third Covid-19 related aid package, and it likely won’t be the last one.

Traders are on edge this morning as we await the 8:30 announcement of the Weekly Jobless Claims.  The range of estimates on how many people filed claims last week is huge; anywhere from 1½ million to 5 million.

If you are a Men’s Warehouse or Joseph A. Bank customer, it will be a while before you can get that new Spring wardrobe.  Parent Tailored Brands said this morning that all store employees are being laid off and all stores will be closed through May 4th.  Online orders will be filled when stores re-open.

Overseas markets are lower, with Japan’s recent rally hitting the skids by more than 4 percent.  The algorithms that drive our stock prices accelerated to the downside over the past hour.

At this point, adjusted for fair value, S&P 500 futures are lower by about476 points, the Dow futures are down about 440, and the NASDAQ futures are now 117 points below fair value.

March 25, 2020

It took until early this morning, but will have a tentative deal on Capitol Hill.  No matter how much either side wanted to push for their own special add-ons, everybody knew that SOMETHING had to get done.  So, after final approval, fiscal help will be on the way to help the economy, complementing the monetary assistance that the Federal Reserve is constantly providing.

After rising 15 percent yesterday, Nike shares are another 9 percent higher this morning after reporting earnings last night.  Fiscal second quarter adjusted profit came in below estimates, but sales were higher due to strength in online sales.

And even through rising 9 percent yesterday, Winnebago shares are almost 60 percent lower year to date, and are indicated lower today.  Earnings for the fiscal second quarter met estimates, and sales were better than expected.  However, Winnebago production is shut down until at least April 12th.

Asian stocks rose overnight on word of our stimulus package. Japanese stocks rose another 8 percent.  Europe is more of a mixed picture.

Our futures have been all over the place over the past few hours, and are likely move erratically between now and 9:30. At this point, adjusted for fair value, S&P 500 futures are lower by about 24 points, the Dow futures are lower by 19 points, after being higher by over 700 points a few hours ago and lower by about 150 within the past hour, and the NASDAQ futures are now 77 points below fair value.

March 24, 2020

The Federal Reserve rode to the rescue with new liquidity measures about this time yesterday, which led to a sharp rise in stock prices.  Unfortunately, the lack of any action out of Congress to address the major economic problems at hand led the major indexes to losses once again by the end of the day.

This morning, as expected we have a large number of companies, including General Motors, withdrawing earnings guidance for the year as more states enforce stay-at-home orders. More than 80 million Americans are under stay-at-home orders now and U.S. airlines are reportedly making plans to nearly halt domestic air service.

Chevron will cut their capital expenditure budget from 20 billion to 16 billion dollars but will maintain its dividend for now.

We’ll get an earnings report from Nike later today and in the meantime the February Residential Home Sales Report is expected to reflect 740,000 sales versus January’s 764,000.  But make no mistake, stock prices will follow breaking news form Capitol Hill.  Let’s hope that there’s progress there.

Responding to our Federal Reserve action yesterday, Overseas markets are higher. Japanese stocks rose about 7 percent today.

Our stock index futures are off their earlier highs but are still deep in the green.  At this point, adjusted for fair value, S&P 500 futures are higher by about 89 points, the Dow futures are higher by about 800, and the NASDAQ futures are now 270 points above fair value.

March 23, 2020

The hope for improvement in stock prices over the weekend rested on a big relief package out of Congress.  Unfortunately, differences in approach between the Democrats and the Republicans are still unresolved as stock prices twist in the wind.  A relief package will be passed. Both sides know that. Likely, the bigger the better.  And for everyone’s sake, the sooner the better.  It is the time to err on the side of action, not politics.

Unlike Congress, the Federal reserve IS taking action. The Fed just announced that they will purchase Treasuries, corporate bonds, mortgage backed securities “in the amount needed” to make sure that credit markets stabilize.They also indicated that they'll purchase municipal bonds.

Major brokers are estimating a drop of 24 to 30 percent in second quarter Gross Domestic Product.  Meantime, they’re upgrading the outlook for a handful of stocks.  Boeing, for one is a bit higher pre-market on a broker upgrade.

Stocks in Japan rose by a couple percent on hopes that the Olympics will be postponed, not cancelled.  Most Asian markets were sharply lower and Europe is off by 3 to 4 percent. Last night, our stock futures were again locked at limit down, inferring a decline of 5 percent or more. They’ve improved quite a bit after the Fed’s announcement less than a half hour ago. At this point, adjusted for fair value, S&P 500 futures are higher by about 20 points, the Dow futures are higher by about 191, and the NASDAQ futures are now 92 points above fair value.

March 19, 2020

As the Government continues to roll out plans to backstop the economy, social distancing is a term with which we’re all getting more familiar. The FDA has approved Abbott Lab’s Covid-19 test 150,000 of which will be rolled out immediately.

Latest thinking in Washington is for banks to issue loans to distressed companies which would be forgiven if the companies keep all employees on the payroll.  That idea hasn’t been approved but is reportedly getting consideration.

Looking at past performance is nice, but under normal circumstances, the direction of stock prices is heavy influenced by their outlook for future earnings.  That was then and this is now.  One company after another is admitting that they have no idea of how business will be impacted over the next quarter or two at least.  That uncertainty is again leading prices lower this morning.

Lennar, Darden Restaurants and Accenture all reported better than expected results for the quarter gone by, but only Accenture estimated results for the current quarter and even they said that things could change quickly.

Harley Davidson joined the big three automakers is suspending production today.

Australia’s Central Bank cut interest rates again overnight, and the European Central Bank announced a surprise asset purchase program, which has helped European markets a bit this morning.  After the announcement last night, our stock futures rose sharply, but have since dropped into the red again.

Asian markets were lower by anywhere from about one to five percent overnight.  Europe is mixed.At this point, adjusted for fair value, S&P 500 futures are lower by about 35 points, the Dow futures are lower by about 425 points, and the NASDAQ futures and are about 57 points below fair value.

March 18, 2020

Stock prices recovered a chunk of Monday’s decline yesterday after the federal government announced a number of programs to help the economy, including a 90-day extension for most 2019-related tax payments that were to be due April 15th. This morning, however, we’re looking for more selling as stock prices continue their one step-forward-two-steps-back pattern. Expect that before the end of the day we’ll hear about more aid proposals and hopefully, some agreement in Congress to put plans into action.

President Trump has leaked word of a press conference later today, reportedly involving update from the Food & Drug Administration.

Yesterday, FedEx reported a rise in sales, which is only a moderate surprise as more people are having goods shipped to their homes and businesses.  However, more and more retail businesses are shuttering for the time being.  Las Vegas casinos are now shut down, as are stores of Ralph Lauren and Foot Locker.  FedEx did not issue earnings guidance due to the uncertainty of the situation.

General Mills shares are off about 6 percent pre-market.  They reported quarterly earnings that were slightly better than expected, but sales were disappointing and guidance for General Mills, as is the case for most companies, is largely unpredictable due to Covid-19.

Overseas markets are all lower.  Once again this morning, the futures are locked at limit down.  Looking at early trade in the Exchange Traded Funds that track the major indexes, it looks like stocks are likely to open about 5 to 6 percent lower.

March 17, 2020

It’s certainly a different St. Patrick’s Day that we’re used to thanks to Covid-19.  Let’s celebrate in our own individual way and hope that by Memorial Day this will be a memory and we’ll be back to some sort of social normalcy.

Help is reportedly on the way on the long road to a Covid-19 vaccine.  Earlier this morning, Regeneron told us that they have moved up their timeline for clinical trials for a possible vaccine.  Those trial are expected to begin by early summer.  Pfizer has announced an alliance with a German biotech firm that cold lead to trials by the end of next month.  Of course, Moderna’s trial were previously announced to begin by early April. Any vaccine will likely take a year or more for final approval, but therapy drugs may be available much sooner.

The last largely pre-Covid-19 Retail Sales Report comes this morning.  Expect that February retail sales rose two-tenths of a percent, or three tenths of a percent excluding auto sales.  That would be about the same as a year ago.  The January Job Opening and Labor turnover report also comes today.

Asian markets were mixed overnight, but Europe is lower by one or two percent.

The stock futures turned positive around the top of the 6 o’clock hour and have been fluctuating wildly ever since. Adjusted for fair value, S&P futures are higher by about 53 points, the Dow futures are up about 450 and the NASDAQ futures are about 128 points above fair value.

March 16, 2020

Yesterday, the Federal Reserve and major national reserve banks around the world opened the monetary spigots, hoping to ease the damage from Covid-19.  Normally, an easing of monetary policy leads to higher prices in the financial markets.  However, this time the massive easing is casting even more fear into traders whose MO in times of panic is to sell first and ask questions later.  Yesterday’s Fed announcement came in lieu of its normally scheduled meeting this week.

Aside the potential health dangers of the pandemic, global business will suffer a major slowdown for the next three, and possibly six months.  Of course, some industries, such as cruise lines, airlines and entertainment, will be harder hit than others. Most airline stocks are looking about 14 to 20 percent weaker this morning, and it looks like overall stock prices will, at least in the early going, give back their massive gains from Friday’s session.

More retailers are electing to close stores or limit hours for at least the next ten days to two weeks.  Look for Washington to soon follow the Chinese example of providing targeted relief to some industries to cushion the blow.

On Friday, the FDA granted emergency approval of Roche’s Covid-19 infection test, which provides results much sooner than tests currently in use.

European markets are lower by 6 to more than 9 percent.

The futures are once again locked at limit down this morning, so they are not a good indication of prices.  Looking at early trade in shares of the exchange traded funds that track the major indexes, expect about a 9 too 10 percent decline in stock prices at 9:30.

March 13, 2020

Unless you were an investor in 1987, you don’t remember a day that was quite as bad as yesterday for stock prices.  It wasn’t just stocks.  Usually, when stocks are sold in a panic, you’ll see a rise in gold prices as traders and investors look for a “safe haven.”  Yesterday, even gold prices declined.  Perhaps margin calls played a big role as leveraged investors were forced to sell whatever they held.  It felt a lot like a “capitulation day,” but only time will tell. The S&P 500 closed about 27 percent off its all-time high.

Last night, stock futures were lower again until we heard indications that Speaker Pelosi and the Trump Administration were close to a compromise on an economic plan to combat Covid-19.  Hopefully we’ll get word of a big plan and get that news soon.

Overnight, China and Japan announced more economic stimulus and the Bank of Norway cut its short-term interest rate from 1½ percent to 1 percent.

The University of Michigan’s first estimate of March Consumer Sentiment is scheduled to come this morning and is expected to read 95, versus February’s 101 as the mood of the consumer, understandably, is taking a hit.

Asia was lower overnight, but European markets are higher by 7 percent or so.

Both this past Monday and yesterday, our stock futures at this hour were “limit down” which means they couldn’t be down more than 5 percent. Accordingly, there was really no telling how stocks would open. This morning, the futures are “limit up,” which indicates at least a 5 percent rise in prices at 9:30.

March 12, 2020

In normal times, we talk about interest rates and earnings and how they impact financial asset prices.  These are clearly not normal times dur to the spreading Covid-19.  Not only is it a health concern, but the increasingly rapid shutdown of economy activity has removed any dependable forecast regarding earnings, if not rates.

Last night, traders were hoping that we would hear about proposals to aid the economy.  Instead, we heard about a travel ban from Europe, the suspension of the NBA season, March Madness sans fans and the suspension of classes and a bunch of Michigan colleges.

So, we’re in for a period of uncertainty that we haven’t seen since the financial crisis and yesterday’s stock market decline marks the end of the 11-year-old bull market, with stock indexes lower by more than 20 percent from recent highs.

Traffic was apparently still brisk at Dollar General last quarter.  Adjusted earnings of $2.10 was 9 cents better than expected.  In spite of raising its dividend 12½ percent, Dollar General shares are slipping about 2 percent pre-market.

European markets are lower by 5 to a little more than 6 percent on the announcement off the U.S. travel ban.  Asian markets were lower by 1½ to 8 percent overnight.

Our stock futures are not a good indication of how far prices will drop at 9:30, because they have been nearly limit down all morning, and at this point they ARE limit down.  That indicates a drop of at least 5 percent at the market open.

March 11, 2020

Much yesterday’s relief rally of nearly 1,200 points may disappear in the early going this morning as uncertainty continues to shake markets.

Although the White House floated some proposals yesterday to put more funds in taxpayer’s pockets through a possible payroll tax cut, the hope of getting anything significant through Congress has the trading algorithms hitting the “sell” button again this morning.

The act wasn’t a surprise, but the timing was, as the Bank of England cut their target short term interest rate in half this morning.  That’s a quarter-point reduction in the half-point rate.  The interest rate focus now switches to our Federal Reserve.  The next Open Market Committee meeting is scheduled for March 17th and 18th and another rate cut is widely expected.

In the good old days before oil price collapses and Covid19, we used to care a lot about consumer inflation.  The February Consumer Price Index will be announced at 8:30 and is expected to reflect a 2.2 percent annual increase.

Asian markets were a bit lower overnight and Europe is still a little higher, but our futures have been deep in the red all morning.

Adjusted for fair value, the S&P 500 futures are lower by about 94 points. The Dow futures are down about 781 points, and the NASDAQ futures are about 249 points below fair value.

March 10, 2020

It’s not all that unusual to see stock prices drop almost 20 percent.  However, it has never before happened quite so quickly.  Yesterday, a quick seven percent drop triggered a trading halt under exchange circuit breaker rules and that seven percent drop really set the tone for the day after trading resumed.

Prices ended the day sitting right at, but not breaking below a key technical level which could indicate that yesterday’s sell-off was a capitulation that serves as a base for a new rally.  However, coronavirus news is not getting a lot better.  The entire country of Italy is now under travel restriction, and we’re getting reports of new exposures in the U.S.

American Airlines just announced that they are reducing domestic capacity by 7½ percent in April and are slashing trans-Pacific capacity by 55% as well. Air France will cancel 3,600 flights in March. Spirit is cutting 5% of flights in April.

Later today, President Trump will announce proposals to help the economy survive the virus, reportedly to include a payroll tax cut and other measures of direct aid to the stricken.  The promise of that fiscal aid, together with last night’s announcement of some regulatory easing for the banks has prices on the rise this morning.

If anyone is still interested in earnings news, Dick’s Sporting Good s shares are more than 10 percent higher on a good earnings report.

Most markets overseas are higher. Adjusted for fair value, the S&P 500 futures are higher by about 92 points. The Dow futures are up about 919 points, and the NASDAQ futures are about 280 points above fair value.

March 9, 2020

Stock investors always fear what are referred to as “black swan” event.  Those are extremely rare events that can cause market panics.  We haven’t seen one in a while.  However, multiple swans are swimming across the globe this morning.

Northern Italy is now locked down due to the Covid-19 and new clusters are reported in the United States.  The State Department has warned Americans against boarding a cruise ship, indicating that the Government can’t guarantee they’ll come to the rescue in the case of future virus-infected cruise ships.

North Korea decided to fire off more short-range missiles, but that’s not getting any attention compared to the economic war that’s broken out between Saudi Arabia and Russia in the oil trade.

Over the weekend, Russia would not play ball with a Saudi proposal that they both cut oil production to support prices.  In response, Saudi officials say that they will open the spigot wide, slashing prices and raising production.  That had the price of West Texas Intermediate oil below 30 bucks overnight and has all oil stocks under pressure.  Exxon Mobil and Chevron are indicated to open about 12 percent lower, and some oil companies are faring much worse.

The futures aren’t a true indication of how much stock prices will drop at 9:30. That’s because they are locked in a limit-down condition this morning.  That means they’re can’t drop be more than five percent.  It’s likely that prices will drop more than that at the open.  Pre-market, bids on the S&P 500 and Dow Industrials exchange traded funds are indicating a drop of between 6 and 7 percent.  That would imply a drop in the Dow Jones of about 1,500 points or more at the open.

March 6, 2020

It’s one thing when a story goes viral.  It’s another when a virus becomes the story.

It’s been one day way up and one day way down this week for stock prices.  Unfortunately, yesterday’s downer will likely be followed by another one in the early going today as the Covid-19 panic continues.  Hopefully, the near-term future will provide more information, more intervention and less hysteria.

The yield on the 10-year Treasury Note has hit an all-time low, below three-quarters of one percent. That’s good news for prospective borrowers, but lousy news for savers.  Lending your money to the Government for 10 years in return for interest payments of less than three-quarters of one percent (before tax) can’t be a way to preserve your purchasing power. For a little perspective, the 10-year yield at the beginning of this year, just 10 weeks ago, was just under 2 percent.

Last night, Costco reported $3.10 of quarterly profit, six cents better than expected on better than expected sales.  Margins slipped a bit and shares are about 2 percent lower pre-market.

Suddenly, the February Jobs Report doesn’t seem as important as usual. Nevertheless, at 8:30 expect the announcement of an additional 175,000 new jobs and an Unemployment Rate of 3½ percent.

Asian markets were one to three percent lower overnight.  Europe is down 3 to 4 percent.  Adjusted for fair value, the S&P 500 futures are lower by about 104 points. The Dow futures are down about 812 points, and the NASDAQ futures are about 328 points below fair value.

March 5, 2020

You don’t have to go back al that many years to remember when a 50 point move in the Dow Jones Industrials was big news. Well, that was then and this is now, at least for a while.  So far this week two 1,000 point gains sandwiched a 800 point loss. We have a decidedly downbeat direction for the futures this morning as the world tries to adequately assess Covid-19 and the possibility domestic of political upheaval.

On the virus front, California reported its first Covid-19 death yesterday and immediately declared a state of emergency as the virus spread, perhaps to get everyone out there to pay attention and work from home when possible. 

Shares of Zoom Video, a company that allows people to work from home, had zoomed about 70 percent high this year.  They announced more than twice the expected profit for the quarter gone by on better than expected sales.  However, traders had already bid the shares so much higher that they’re looking to open down about 8 percent this morning.

Shares of Inovio Pharmaceuticals looks higher again after a big rise yesterday after announcing the human trials for a Covid-19 vaccine will start in April.

The report in weekly Unemployment Claims comes at 8:30. Expect 215,000 new claims.  We’ll see if the virus is having an impact there.

Asia followed us higher overnight, but European markets are one to two percent lower.   Our futures have been dark red all morning.

Adjusted for fair value, the S&P 500 futures are lower by 75 points. The Dow futures are down 595, and the NASDAQ futures are about 225 points below fair value.

March 4, 2020

We mentioned yesterday morning that monetary stimulus was on the way.  Well, it took a just couple of hours, when the Federal Reserve responded with an emergency half-point interest rate cut.  Interestingly, stock prices rose briefly, and then sold off on the news, leading one to think that maybe interest rates, or even the corona virus wasn’t all that had infected stock prices.

It could be that the fear of facing a virus under “Medicare for All” was a big contributor.  After last night’s Democratic primary election results cast some doubt on a potential Bernie Sanders nomination, stock futures rallied and continue to rise this morning.

Speaking of rising, mortgage brokers were rising early and staying late last week.  Mortgage applications rose 15 percent over the prior week, as refinancing loans rose 26 percent week-over-week and 224 percent from a year ago.  The average rate on a conventional 30-year loan with 20 percent down is now reportedly at 3.57 percent.  If you’ve been around long enough, you might remember the days of 15 and 16 percent mortgages.  We’re living in a bit of a different world.

Truck maker Navistar disappointed this morning with a larger quarterly loss than expected, but also said that they have received a buyout bid. Campbell Soup just reported better than expected profit and sales.

Asian markets were mixed overnight, but European markets are higher by one to two percent. Our futures have been slipping but are still solidly higher. Adjusted for fair value, the S&P 500 futures are higher by 48points. The Dow futures are up 522, and the NASDAQ futures are about 148 points above fair value.

March 3, 2020

After a horrible week for stock prices last week, yesterday gave us the biggest point gain ever for the Dow Jones Industrial Average, picking up almost 1,300 points.

If you expect prices to moderate any time soon, well, forget about it.  The futures have been all over the map again this morning as the algorithms that rule most trading have apparently been paying attention to this morning’s emergency conference call among the economic leaders of the G7 countries. 

The statement issued after the call did not announce any immediate coordinated monetary easing.  That drove futures lower.  However, reading the statement, you can see that stimulus is coming, so stay tuned.  Overnight, Australia cut its short-term, rate to one half of one percent.

Earlier this morning, VISA lowered earnings guidance due to Covid-19 and Uber says that it will have a materially negative impact.

Kohl’s shares are almost 5 percent higher after reporting earnings and raising its dividend.  Target and Autozone reported better than expected adjusted profit but fell short on sales.

Our futures are again indicating a rough start for stocks but they’re still very volatile. Adjusted for fair value, the S&P 500 futures are lower by 22 points. The Dow futures are down about 149, and the NASDAQ futures are about 46 points below fair value.

March 2, 2020

We all know that the stock market hates uncertainty.  The only thing it hates more is panic. The spread, the duration and the longevity of Covid-19 infections are all uncertainties.  The best thing we can all do is be aware, act prudently and not panic.

We’ve had a worrisome virus threat just about every 2 years for many, many years, including the swine flu, the bird flu, SARS and two rounds of ebola.  As in the past, some people will get sick and some will die.  However, with the promise of potential therapeutics and vaccines going into trial, this is more likely to be a temporary issue. 

So, while the fight or flight in all of us suggests a flight from your investments, if you don’t need the cash from your portfolio within six months, it may not be time for drastic action. Nevertheless, significant disruption in near-term economic activity and pressure on corporate profits seems certain.

Gilead Sciences is taking drastic action in the immune-oncology space.  Gilead is buying a company named Forty-Seven for $95.50 per share, which is a 65 percent premium to Friday’s closing price.

Later this morning, the ISM Report on Manufacturing in the U.S. is expected to report only slight expansion at a reading of 50.8.

Overnight, stock futures have been much lower, then much higher, then lower again.  They have dramatically cut losses over the past half-hour but are very, very volatile.

Adjusted for fair value, the S&P 500 futures are lower by 16 points. The Dow futures are down about 93, and the NASDAQ futures are about 20 points below fair value.

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