Friday, March 20, 2020
For the second straight day we see pre-market futures up, and for the first time in six weeks we may see consecutive days in the green at the close. This feels like some sort of victory, considering the turbulent down-swing we’ve experienced over the past two weeks. We’ve seen an historic long-term bull market come to an abrupt end, and in just these two weeks given back nearly all the gains we’d enjoyed throughout President Trump’s tenure.
With coronavirus news progressing mostly in a favorable direction — no new reported cases in China for a second straight day, suitable testing facilities here in the U.S. finally arriving, and more — the mentality of a growing number of individuals is beginning to cool, leading to an easing of tensions even as COVID-19 continues to rip through every state in the Union. Moves by the Fed and Congress to increase liquidity is helping traders clear their heads about access to capital, near-term. Equities having sold off at break-neck speed have opened up valuation opportunities in various industries.
As Americans across the nation stay home from work and school, cancel trips and opt out of congregating at their favorite bars and restaurants — to say nothing of the NCAA Tournament being cancelled, which would have kicked off yesterday — the contagion of the coronavirus looks to be thwarted to a certain extent. With success being shown in other countries due to social distancing and sequestration, there indeed appears to be something resembling a light at the end of this long tunnel.
Q1 earnings season is already slowly coming into the picture, with results being posted by sector leaders like FedEx FDX and Nike NKE. Yet once companies absorb all of the month of March into their statements, which we expect around the first full week of April and beyond, the results will no doubt be dismal. This is why no one on Wall Street is cheering this morning, even with buying opportunities abounding, because everyone knows our current situation is likely to get worse.
One good thing about getting bad news, though — once it’s over, there’s only one way to go: up. Yes, our totals of citizens infected with coronavirus will go up, way up. Yes, the news from companies reporting earnings over the next two months will be terrible — some may not even make it. But only when we can truly surmise a calamity will we be able to get beyond it. We’re closer now than we have been since before this crisis started.
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