Todd’s Take on the Market
Today, we stand at the precipice of a historic challenge. Nothing in our collective experiences compares to the circumstances that we now face. The soundness and safety of our lives and those of our friends and families are threatened in a fashion which is uncommon in our history, though not unprecedented.
We are in…
A blizzard with no snow.
A hurricane with no wind.
A tsunami with no water.
A forest fire with no flame.
A flight without a compass.
This is new territory for all of us—all of us.
Last week, volatility continued to dominate equity markets with the Dow, S&P 500 and NASDAQ hitting their 7% circuit breaker twice, halting U.S. trading for 15 minutes and at the end of the week, the Dow finished down 10.24%, the S&P 500 was down 8.73% and the NASDAQ finished down 8.14%.
Some asked when I think it will be “priced in”, and my response is/was that it’s hard to price this kind of stuff in when it keeps coming and coming. We have gone from FOMO—the fear of missing out to FOBI—the fear of being in.
In the oil market, oil prices have dropped around 50% this year on a combination of severe demand reductions and escalating supply-side conflicts. WTI and Brent crude oil ended last week at $31.73 and $33.85 per barrel. It would cost you more to go to KFC and get a 12-piece bucket meal than to buy a 50-gallon drum of oil. The Saudis slashed prices the previous weekend, and on the demand side, coronavirus prevention measures taken by governments and businesses restricting travel and other activity exacerbated the sell-off.
In the fixed income markets, the 10-year U.S. Treasury yield finished the week at 0.95% after a flight to safety saw yields hit 0.34% on Monday. The FED stepped in and cut rates, essentially to zero, over this past weekend.
On the economic front—none of that matters now, no matter how good or bad.
The coronavirus is likely to continue to wreak havoc on the markets and the economy until the spread of cases stabilize and diminishes, but until that happens, we will continue in unchartered waters. We remain committed to keeping you posted and we encourage any that have concerns about their specific situation to please reach out and let’s talk.
Todd Day, MBA
Portfolio Manager
Horizon Financial Services, LLC
