Your Thursday Market Blip 2/13/20

Your Thursday Market Blip 2/13/20

Stocks took a breather after a spike in coronavirus infections. The Dow opened lower by triple digits but then rallied a bit before closing with a 127 point loss at 29,423 on lower trading volume. IBD indicators remain in rally mode and the good folks at BTS (not the Korean boy band called BTS) has also upgraded its stance to “risk on” and is back into high yield with 80% exposure and a near term favorable outlook as US indicators power through the coronavirus scare.
Shares of Seattle based online real estate firm Redfin reported an 88% increase in revenue. The company, along with Zillow, is a leader in the new “ibuy” movement where they buy property directly, fix it up and sell it direct to a buyer. They are getting into the house flipping business. Their mascot is Flipper the dolphin! Anyway the company said the program is gaining traction as revenue growth is accelerating plus margins are improving. Gurus loved the news and jumped on the stock like hens on a worm pile.
Heads rolled in China after the gubment changed how it screened for the virus which resulted in the number of reported infections jumping by 15,000 bringing the total to over 60,000. The CCP sacked several health officials in Wuhan and elsewhere as it tries to restore confidence in its ability to deal with public health issues. The virus death toll in China topped 1,355 and analysts are lowering China’s GDP growth estimates to 4%. The slowdown in China is also affecting Germany which is now projected to be in a recession following a drop in the value of the euro to its lowest level in over 3 years. A slump in German industrial output and fears of layoffs in the auto industry coupled with disruption from rising populism make the entire euro zone a hotbed of uncertainty these days. NATO member Turkey is also now trading tank fire with Russian backed Syrian forces on its southern boarder as a new wave or refugees streams north to seek safety. Will this conflict draw NATO into a fight with the Russia/Syria coalition?
The US debt hit $23.3 trillion and is up 25% over this time last year. Tax receipts are up but spending and federal outlays are way up which is adding to the shortfall. Politicians love that red ink! 90% of congress thinks spending cuts are a good idea for the other guy. Core inflation in the US increased to 2.5% from 2.3% but economists think it will most likely fall in the coming months thanks to corona and the drop in oil prices.

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