It was another day for record books and trivia fans, but more importantly, it was a reminder to investors that extreme moves are usually countered with extreme moves when the underlying driver is panic (fear of missing out or fear of big losses). Still, there was a mountain of 52-week losers, and the market remains oversold. And there remains a mountain of anxiety casting a shadow over the markets.
Meanwhile, the market held at big test after a higher death toll in the U.S. was reported during the session. Those deaths are all from same Washington state nursing home, which underscores the elderly’s vulnerability, but it also reminded folks that the mortality rates are much lower with young adults.
Market Valuations
Valuations | Trailing PE | Year ago | Forward PE |
S&P 500 | 22.75 | 20.77 | 16.82 |
NASDAQ 100 | 25.63 | 22.55 | 21.15 |
DJIA | 19.75 | 18.11 | 15.84 |
Dow Transportation | 16.30 | 16.20 | 12.74 |
Dow Utilities | 22.44 | 24.46 | 19.78 |
Market Emotions
Many market watchers say the selloff still has to continue because individual investors still haven’t expressed enough fear, including discouragement and dismay. I don’t buy that, although there is no doubt the near term is going to be rocky.
Where is your emotional state?
Overnight, there has been central bank action from Australia and Malaysia. Considering the loss of faith in central banks, this could be the last chance to convince Main Street Earth they don't only exist for billionaires.
This morning, the G7 conference call was everything.
Recommended
The group still doesn't see need for swift movement. I cannot see the G7 fumbling this like. They funded the 2008 reaction allowing a worst case to evolve. Yet, the statement from them, was just that, a statement.
"We, G7 Finance Ministers and Central Bank Governors, are closely monitoring the spread of the coronavirus disease 2019 (COVID-19) and its impact on markets and economic conditions. Given the potential impacts of COVID-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks. Alongside strengthening efforts to expand health services, G7 finance ministers are ready to take actions, including fiscal measures where appropriate, to aid in the response to the virus and support the economy during this phase. G7 central banks will continue to fulfill their mandates, thus supporting price stability and economic growth while maintaining the resilience of the financial system. We welcome that the International Monetary Fund, the World Bank, and other international financial institutions stand ready to help member countries address the human tragedy and economic challenge posed by COVID-19 through the use of their available instruments to the fullest extent possible. G7 Finance Ministers and Central Bank Governors stand ready to cooperate further on timely and effective measures."
Portfolio Approach
Today’s Session
The futures were positive ahead of the G7 statement. However, the major indices have now reversed, and are firmly in the red, after the G7 statement did not give any terms or any specific action.
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