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The Best of What They Said and I Read Week Ending 3/29/2020

Short excerpts from articles I found interesting.  I may not agree with the author and the following material is not intended as investment advice.

Barron’s – March 27, 2020 – The Dow Just Had Its Best Week Since 1938.  It’s Time to Go Shopping for Beaten-up Stocks. – Nicholas Jasinski

  • “The fiscal and monetary policy fire hose is blasting with all its might. The Federal Reserve has dropped interest rates to near zero and is purchasing limitless quantities of Treasuries and other securities. Congress is taking advantage of the practically free money, having passed a $2 trillion spending package worth about 9% of U.S. gross domestic product.”
  • “Those new fiscal and monetary measures and signs of improving liquidity in several markets helped ignite a three-day megarally spanning Tuesday to Thursday this past week. The Dow Jones Industrial Average rose over 21% in that span, signifying the beginning of a new bull market after just 11 trading days in a bear market.  After the index’s eighth losing Friday in nine weeks, the Dow ended the week up 2,462.80 points, or 12.84%, to 21,636.78—its best week since 1938. The S&P 500 index gained 10.26%, to 2,541.47, and the Nasdaq Composite rose 9.05%, to 7502.38.”
  • “The strict “20% up from a low point” definition of a bull market can be deceptive. Large and fast rallies are frequent characteristics of longer-term bearish periods in the market. The last time the Dow went from its bear-market low to a bull market in just three days was from Oct. 6 to Oct. 8, 1931.  Then, as now, trading was extremely volatile, with big daily moves both to the upside and the downside. And that bull market didn’t last long. By November 1931, the Dow was in a bear market again, down more than 20%. It didn’t bottom out until mid-1932, down an additional 60%-plus.”
  • “Others don’t declare a new bull market until the index surpasses its previous high, and would call last week’s action just a bear-market rally. But semantics aside, there are signs to suggest that for the stock market, the worst may be behind us thanks to the Fed and Congress. Calling their moves “stimulus” might be using the wrong term because the package isn’t designed to lift economic activity, but to preserve as much of what already exists as possible while the nation shuts down. The recession is likely already here, but the probability of the coronavirus crisis setting off a 1930s-style multiyear depression is low.”

U.S. Global Investors - Investor Alert – March 27, 2020 – Frank Holmes 

  • “…The major market indices finished up this week. The Dow Jones Industrial Average gained 12.84 percent. The S&P 500 Stock Index rose 10.26 percent, while the Nasdaq Composite climbed 9.05 percent. The Russell 2000 small capitalization index gained 11.65 percent this week…The 10-year Treasury bond yield fell 16 basis points to 0.686 percent…Boeing was the best performing S&P 500 stock for the week, increasing 70.51 percent.”
  • “U.S. stocks weathered a late Friday plunge to post their best week in over 10 years, buoyed by an unprecedented stimulus package meant to blunt the economic impact of the coronavirus pandemic. The S&P 500 Index climbed 10 percent this week, its biggest gain since March 2009, on the strength of a record three-day rally. Nonetheless, the index remains 25 percent below its February record.”
  • “…Walmart upped its minimum wage in e-commerce warehouses by $2 as orders surge on virus worries. The hike boosts entry-level pay to between $15 and $19 an hour from now through May 25…Facebook's ad business is being hurt by coronavirus even though the lockdown has caused unprecedented usage. Much of the activity is on unmonetized services, while advertisers are pulling back due to the pandemic.”

The Kiplinger Letter – March 27, 2020 

  • “One thing about the coronavirus is certain: It’ll have far-reaching effects that last years. The way folks live and work, the way businesses run,etc.  Many changes will be technological in nature, as the virus sparks usage of new products and services. Here’s a preview of some of the changes to expect. Even more of daily life will take place online, an acceleration of a well-established trend. After a period of being forced to work remotely and shop online, consumers and businesses alike will have a new appreciation for vital online tools. Even former skeptics will embrace online banking, videoconferencing and other web-based services. Businesses will double down on e-commerce, preparing their websites for higher traffic and orders. Expect a big uptick in telehealth services...virtual doctor visits and other forms of remote tracking can mitigate the crunch at hospitals in a viral outbreak.” 

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