Your Monday Market Blip 3/23/20

Your Monday Market Blip 3/23/20

Even though it was another down day there were pockets of buying across several sectors. Banks and utilities were lower but some tech, airlines, gold and material stocks were up. The Dow traded back and forth during the day depending on leaks and news tidbits over the Senate stimulus package but at this time no deal has been made. At the close the Dow was hunkered down at 18,591 off 582 points. Trading volume was down significantly from Fridays level which had been elevated due to options expirations.
Indications are that last week, hedge funds and quant traders eliminated leverage and went to zero allocation in stocks and might now be short the market. ETF’s in high quality bonds were sold with reckless abandon as hedge funds went to cash at any price. The thinking is that with this de-levering out of the way volatility in stocks might lessen however we will have to wait and see. Managers in traditional actively managed mutual funds are developing lists of possible purchases and in our conversations with them the feeling seems to be they are waiting for the rollout of the fiscal stimulus plan from the Senate and for some type of indications that the virus is being contained.
Airline related stocks were not all down today. General Electric announced it was laying off 10% of its aircraft division workforce which will be about 2,600 workers. The move was in response to a slowdown in the aircraft maintenance business. CEO Larry Culp said he will forego his $24 million salary for the rest of the year. Boeing will temporarily halt production at its Puget Sound operations for 14 days, suspend its dividend until further notice and CEO Dave Calhoun said he will stop his salary as well . Airline stocks were generally higher with Alaska, Delta and Southwest all trading green in what might be bargain hunting in anticipation of financial assistance from Uncle Sugar.

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