Your Thursday Market Blip 3/12/20

Your Thursday Market Blip 3/12/20

The bottom line for today’s situation seems similar to what happened back on 9/11 when trading, travel and business was suddenly shuttered for 4 days. This time however the shutdown will be more wide spread and for a longer period of time. Back then we were told to get out there and spend money and today we are told to stay home and avoid contact.
As the epicenter of the outbreak shifts from Asia to Europe the US shut air travel to and from Europe. Markets reacted harshly as investors and traders are going through the price discovery process trying to figure out what it all means in terms of earnings, cash flows, debt payments etc. In light of all this, US banks are saying they have plenty of liquidity and the Federal Reserve took more action today to coordinate with banks to keep liquidity in the system. Companies like Microsoft and Amazon are pledging money to help support staff, flex workers and communities where they have large employee counts.
It was another nasty day for the Dow which closed down 2,352 to 21,200 which was a 10% drop. The bottom line is that the 11 year bull run is over and we have now posted the fastest-ever bear market. Stocks have gone from full valuation to undervaluation and today's Fed action is designed to allow people to go to cash if they want to.
IBD had an article that Gilead Sciences is conducting tests in China for its remdesivir drug making it the first biotech to take this step. Reports indicate that over 230 patients are involved in the study at a Chinese hospital and within 28 days officials should have a better idea on the viability of this treatment. An article in The New England Journal of Medicine highlighted a 35 year old man who received the drug and recovered quickly and in France one patient recovered while another did not.