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TWELVE o'clock TUESDAY – 3/3/2020 - Stock Market Report


Still slightly bearish, for now … rating of 4 (0 - 4 is bearish, 5 is neutral, 6 - 10 is bullish).


Sometimes, it seems the whole story with the markets is either Coronavirus or the Federal Reserve, doesn’t it? No one is really sure how much earnings and economic growth will be affected by COVID-19 (coronavirus). But it those stats will be pulled downward, for sure. The favorite Wall Street term for this situation currently seems to be a “growth scare.”


It may be the case that this downturn was started by hedge fund selling, once they discovered from disclosure reports that as a group, they were in crowded trades (all the hedge funds owning the same stocks) and need to de-risk and diversify their holdings.


By some measures, this virus is not all that bad, it is just fast spreading, and the US population is panicking. Deaths are occurring among the infirm, as is typical with any virus, and in a very small percentage of healthy people. The article I emailed you highlighted that.


Bolstering investor confidence (somewhat) is the 50bp rate cut by the Fed today. That hope sent the market up 1200 points Monday, but down 800 points today. Apparently, the market wanted the Fed to do more (I’ve heard some were looking for a 1% cut) but that didn’t happen, so the market sold off.


Really, sometimes I think Wall Street is just nuts. Everyone knows you can’t use up your ammunition in the first battle. Hopefully, level-thinking heads will prevail tomorrow and throughout the remainder of next week. The Fed can still cut 2 - 4 more times if necessary.


To see prior editions of this blog letter, go to http://www.defensiveadvisor.com


Opinions voiced in this post are for general information only and are not intended to provide specific advice or recommendations for any individual, without complete knowledge of that individual’s total financial profile. To determine what is appropriate for you, consult a qualified professional financial advisor. No strategy assures success or protects against loss.



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