Your Wednesday Market Blip 3/25/20

Your Wednesday Market Blip 3/25/20

Shares of Boeing jumped on the possibility of a 737 Max production restart in May and benefits from the stimulus package. Markets continued to power higher and the Dow was up another 1,100 points until just before the close when it faded and finished up 495 at 21,200. Trading volume was higher on the day. Two up days in a row is nice but caution is still advised. This thing ain’t over.
The good folks at BTS are still in cash and watching bond markets for discernable trends before making a move into either treasuries or high yield. When markets first tanked they noticed a bigger percentage selloff in higher quality bonds than in lower rated CCC paper. They are waiting to see if the price of lower rated paper sells off to the level of quality paper which could signal a washout and possible time to buy or if prices stay firm and show lower volatility and a more discernable trend.
People are asking what the difference is between the stimulus package passed today and the one passed back in 2008. What I saw back in 2008 was the Fed and congress acted slower to begin with but then once the stimulus was passed it was smaller and went mostly to targeted groups like state and federal union jobs. I recall talking to one owner of an electrical contracting business and he said the stimulus bill did not benefit him at all because his jobs were private and nonunion. The stimulus passed today is much larger, came sooner and seems like it will go to a wider range of workers and businesses to include small and large, union and nonunion.
Things in the muni bond market are starting to thaw from the indiscriminate selling that occurred two weeks ago. Kyle “Baby” Gerberding at Asset Preservation Advisors noted that buying investment grade paper at steep discounts right now is a no brainer. Wilmington Trust is also moving to overweight high quality muni bonds.

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