Your Monday Market Blip 3/9/20

Your Monday Market Blip 3/9/20

Today’s market action was uglier than 10 miles of dirt road as everyone rushed to buy treasuries. The Dow closed the day off 2,018 at 23,846 , a level last seen in Dec. 2018. Trading volume spiked and for the first time since 2013 circuit breakers halted trading halted briefly to bring calm to the situation. Both BTS and IBD remain on the sidelines. One market guru expects we will not see “peak virus” for another month and there will be volatility until then. He thinks this is the most interesting pullback he has ever seen and expects bargains once it is all over. We shall see.
The “risk off” market action began late Friday when Russia and Saudi Arabia broke off talks on oil production levels and the Saudis responded by dropping prices by $8 per barrel and upping production in a move to take market share from Russia. In the US, WTI crude prices fell 20% and oil drillers began making moves to shut higher cost wells and lay off drilling crews. In a stunning reversal the IEA (International Energy Agency) lowered its global demand growth forecast from positive 850k barrels per day to negative 90K signaling that oil demand is dropping and with the “oil price war” the supply demand equation is out of whack. Other “risk off” items were that Italy put a quarter of its country on lockdown increasing the risk of recession in Europe. The virus continues to spread in the US which is up over 500 cases now while new cases in China continue to drop.
The yield on the US 10 year treasury bond fell to under 0.05% as buyers snapped up the bonds in a bid for safety. Odds makers are now saying the Fed will lower rates again this week when they meet perhaps by as much as 75 basis points.
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