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Stock-Buying Follows 9.99% Selloff

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Friday, March 13, 2020

Well, here we go again. Following the worst sell-off day in the stock market since the crash in October 1987 — meaning worse than any trading day during the housing market crash of 2008; September 11th or the tech bubble popping in 2001 (when markets were shut down early) — pre-market futures are back up around 6% on major indexes. Apparently, yesterday’s declines have triggered some algorithmical price points, and buyers are getting busy.

Of course, we’re far from out of the woods regarding this coronavirus-led down-market. Not only health and workspace concerns, but loss of Leisure & Hospitality spending and tributaries throughout a wide swath of industries confirm that Q1 will be a bust, and beyond this is uncertain (although many analysts are proclaiming our current situation to be a true recession, meaning Q2 and beyond would also be negative). In any case, we do see the end of our bull run of the last 11 years, which was of unprecedented length in modern U.S. history.

The sequestration is creating massive inconveniences for family units across the country, and everything near-term is taking a bath. What analysts are looking toward now is whether we see a V-shaped bounce-back once this crisis is behind us, based on pent-up demand and better-than-expected realities on the ground. For sure it’s too early to expect this, but at some point we will see light at the end of the tunnel.

The Import Price Index for February fell 0.5%, about as expected in light of recent conditions, down from the downwardly revised +0.1% for January. This amounts to a year-over-year read of -1.2%, which also includes complications from our year-plus trade war with China. Exports came in a -1.1% last month, well off the +0.4% expected and +0.4% revision for January. Year over year, Exports are in at -1.3%.

That these reports come in consistently are important for the relative normalcy of our economic understanding, but they are far from pulling the apple cart this morning. Hopefulness regarding the Federal government issuing financial stimuli to help small businesses and households through this time.

With any luck, we’ll also see some expediency regarding test kits being available for a sufficient amount of Americans who may be infected with coronavirus. After all, until we know the breadth and depth of the crisis, there is scarcely a way to plan for a brighter day.

Mark Vickery
Senior Editor

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