Your Monday Market Blip 3/16/20

Your Monday Market Blip 3/16/20

Over the weekend the Federal Reserve got a look at economic data out of China and decided to cut rates and open the discount window on Sunday instead of waiting until the regular meeting on Wednesday. This move was in coordination with other central banks and while the suddenness of it was a surprise it shows the extent to which people are fully addressing the issue as healthcare companies, states and everyone else is getting on board with testing, care, and restrictions. Over the weekend the Treasury Sec. mentioned he is talking frequently with Congress and the Fed to continue keeping liquidity in the system.
At the close the Dow was off 2,998 to 20,188 on heavy volume for the Dow but lower volume for the NASDAQ. The only stocks up were shares of Zoom, some gold stocks and the occasional grocery store.
We talked with the good folks at BTS in Lexington, MA today and they said as of now there is a general repricing going on in the bond market. Bonds in oil, restaurants and industrial sectors are expected to see rising default rates but this all depends on the length of the slowdown. The feeling is that if the virus can be contained in the next month or so we should be ok but if this drags on then a recession will most likely happen.
Fidelity is actively reaching out to everyone as well and they figure we might be 4 to 6 weeks behind China which is now seeing a falloff in new cases and deaths coupled with rising recoveries. Like BTS, Fidelity feels that how quickly peak virus is reached will determine market action. They expect a spike in new cases within the US as testing gets ramped up but that this will then lead to quicker containment and resource allocation.
Please reach out to us if you have questions.

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