SA's Wall Street Breakfast: Worst week since the financial crisis

Money bag with up and down arrows. A sharp change in prices. Destabilization of stock markets. Speculation, speculators. Monopolization of the market and interruptions in the supply of goods, services

28/02/2020

SEEKING ALPHA‘s Wall Street Breakfast out today:

“The path of this scourge is unknown, therefore you can’t know the economic impact. You can roll the dice but it’s a guess,” said Brian Battle, director of trading at Performance Trust Capital Partners. On that note, stock sentiment swung wildly overnight, with DJIA futures plunging as much as 600 points only to recover those losses, and are now off 0.9%. It’s been an overall wild week: The Dow, S&P 500 and Nasdaq all entered correction territory on Thursday, as well as European stocks and seven major Asia-Pacific markets. Crude prices are down around 14% since Monday, while the benchmark U.S. 10-year Treasury yield just hit another all-time low of 1.19%.
Go deeper: The equity carnage is bonds’ good fortune, writes Mark Grant.

What’s driving the plunge?

Besides risks to global supply chains, travel restrictions and profit warnings, many are seeing other dangers as part of a worsening economic picture. “The risk to the global consumer is the real problem. Starbucks (NASDAQ:SBUX) and Apple (NASDAQ:AAPL) can reopen their stores in China, but few people will go into them,” said Michael O’Rourke, chief market strategist at JonesTrading. Uncertainty about the U.S. presidential election’s outcome is also starting to drive markets, while even before the selloff this week, equities were being measured at lofty valuations.
Go deeper: ‘Quantitatively Combining 7 Ways To Beat The Market’ by Ploutos.

To read the full daily wrap, please click here.