Financial Markets – Investors Jittery About Potential Actions From The U.S. Or China

International stocks wavered, as investors braced for President Trump’s response to China’s push for tighter security controls on Hong Kong.


By early Friday afternoon in Hong Kong, the benchmark Hang Seng Index had declined 0.6%. Japan’s Nikkei 225 closed 0.2% lower, while Australia’s S&P/ASX 200 retreated 0.8%.

Indexes in South Korea and Shanghai recouped earlier losses to turn slightly positive, rising 0.3% or less. S&P 500 futures were down 0.2%.

Colin Low, senior macro analyst at in Singapore, said optimism over the reopening of economies could be overriding concerns over heightened U.S.-China tensions, helping markets pare earlier losses.

“Markets will be watching what Trump will do or say in his press conference later today,” he said, as investors are concerned about potential concrete actions by either the U.S. or China.

Any U.S. measures on trade or against Chinese companies, and any Chinese retaliation, could have a greater impact than previous actions taken before the new coronavirus battered both economies, he added.

U.S. stock indexes closed lower Thursday after President Trump said he would hold a press conference about China on Friday. The three major gauges fell between 0.2% and 0.6%.

On Thursday, China’s legislature approved a resolution to impose national-security laws on Hong Kong. That sets the country on a collision course with the U.S., which has accused Beijing of reneging on its pledge to respect the city’s self-governance.

Weakness in the Chinese yuan has reflected heightened tensions between the world’s two largest economies. A weaker yuan could help China’s economy by making its exports more competitive, but risks provoking U.S. criticism that Beijing is manipulating its currency.

The People’s Bank of China set a daily midpoint for trading of the onshore yuan at 7.1316 to the dollar, fixing this level at a fresh 12-year low for the third time this week.

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By early afternoon in Hong Kong, the less tightly controlled offshore yuan strengthened slightly to 7.1659 to the dollar, while the onshore yuan stood at 7.1478. Earlier this week, the offshore yuan, which started trading in 2010, came close to the all-time weak levels that it hit in September.

The yield on the benchmark 10-year U.S. Treasury note fell to 0.664%, from 0.703%. Bond yields fall as prices rise.

Brent crude, the global gauge of crude-oil prices, fell 0.8% to $35.73 a barrel.




Stocks Surge As Oil Prices Rally

Stocks have their biggest gain in weeks as Wall Street is encouraged by a vaccine prospectvaccine prospect. Many of the world’s economies have begun to loosen restrictions on commerce, the Federal Reserve chair on Sunday signaled that the central bank has more firepower to lend to recovery efforts, and a drugmaker reported positive developments in an early trial of a coronavirus vaccine.


Taken together, the developments set off a surge in global stock prices and Wall Street had its best day in about six weeks.

The S&P 500 rose more than 3 percent Monday, while stock benchmarks in Europe were 4 percent to 6 percent higher.

Before trading began in the United States, the drugmaker Moderna said its coronavirus vaccine showed promising early results in tests on humans. The early-stage tests were on just eight people, but the hope that a vaccine might be quickly developed was enough to give stock prices a lift.

Also bolstering markets was a pledge from Jerome H. Powell, the Fed chair, that there was “really no limit” to what the central bank could do with its emergency lending facilities.

“The one thing I can absolutely guarantee is that the Federal Reserve will be doing everything we can to support the people we serve,” Mr. Powell said during a television interview broadcast on Sunday.

The Fed chair also suggested that the worst economic readings were yet to come, even as states begin to gradually reopen. He said that he expected “a couple more months” of job losses and acknowledged that the unemployment rate, which hit 14.7 percent in April, could peak at 20 percent or even 25 percent.

Still, investors were looking for silver linings as the world grapples with lockdowns and other restrictions. Japan released economic figures on Monday that showed its economy formally fell into recession, but Tokyo has begun easing some of its containment efforts. Some restrictions have also been lifted in parts of Europe and the United States.

And trading on Monday had all the characteristics of a rally focused on the prospects for a return to normal. Shares of companies that stand to gain the most, like United Airlines, Expedia Group and Marriott International, were among the best performers in the S&P 500.

Businesses that have benefited as Americans stockpiled food and cleaning supplies, like Campbell Soup and Clorox, were among a small number of decliners.

Oil prices also reflected optimism about the economy, with West Texas Intermediate, the U.S. benchmark, rising above $30 a barrel for the first time since March. Shares of energy companies like Chevron and Exxon were also sharply higher.


Financial Markets – Top 5 Things To Watch This Week

This Tuesday will see Federal Reserve Chairman Jerome Powell testify to Congress on the economic stimulus measures put in place so far. A day later the minutes of the Fed’s April meeting are scheduled to be released.


Investors will be looking at the weekly jobless claims data as the reopening of the economy gathers pace. Retail earnings will shine a light on consumer spending amid the coronavirus pandemic, while Tuesday brings the monthly expiration of U.S. West Texas Intermediate crude futures contract. Meanwhile, central banks in South Africa and Turkey are expected to cut interest rates again.

Here’s what you need to know to start your week.

Powell testimony, FOMC minutes
The Fed chairman is to testify on Tuesday before the Senate Banking Committee alongside Treasury Secretary Steven Mnuchin to update government officials on the economic stimulus programs approved so far.

In a speech last week Powell gave a sober assessment of the long-term risks to the U.S. economic outlook and the possible need for elected officials to approve more spending programs to keep the economy afloat.

On Wednesday, the Fed is to publish the minutes of it is April meeting. In its rate statement last month, the Fed said it will keep interest rates at near-zero until officials are “confident that the economy has weathered recent events.”

Economic data
In the U.S., the main datapoint continues to be the weekly report on initial jobless claims. With the reopening of the economy gaining momentum economists are hoping for a reading of below 2.5 million, which would indicate that the rate of layoffs is slowing somewhat.

There is a packed economic calendar in the U.K. this week, with updates on March employment, retail sales and inflation. Given that the lockdown in the U.K. didn’t start until late March it may be too early to see the impact of the pandemic on the employment figures.

The retail sales data for April could show at least a 15% decline in spending, while plunging oil prices are expected to have sent inflation tumbling last month.

Retail earnings
While the U.S. first-quarter earnings season is almost over the retail sector is just getting started. This week will see results from big U.S. retailers including Walmart (NYSE:WMT), Home Depot (NYSE:HD), Lowe’s (NYSE:LOW), Target (NYSE:TGT), Kohl’s (NYSE:KSS) and Best Buy (NYSE:BBY). Their figures will show whether U.S. consumers are still spending money despite the widespread coronavirus lockdowns.

The retailers are reporting in the shadow of online shopping giant Amazon (NASDAQ:AMZN), which is among the “stay-at-home” stocks benefiting from the lockdown. Its shares have soared some 28% this year.

Repeat performance of oil plunge?
The monthly expiration of U.S. West Texas Intermediate crude futures contract is coming up on Tuesday and many energy traders are worried about a repeat performance of the oil price slump last month which saw prices drop into negative territory for the first time ever.

Normally uneventful, the expiry turned dramatic in April as brimming storage tanks discouraged traders from taking delivery of oil.

The U.S. Commodities Futures Trading Commission has warned market participants they should be prepared for volatility and negative pricing again, with oil storage still tight and the demand outlook still severely depressed.

But oil prices have recently rebounded on hopes that the easing of lockdown restrictions will boost the energy demand outlook. In another hopeful sign, U.S. crude inventories fell in the most recent week for the first time since January.

Yet some traders seem to be heeding the CFTC’s warning. Volumes in the July futures contract, which expires in a month’s time, are outpacing the June contract by nearly 50%.

Emerging market rate cuts
Central banks in Turkey and South Africa are both to hold policy meetings on Thursday and both are expected to cut rates again despite heavy losses their currencies’ have recently endured.

Analyst polls predict South Africa will cut its 4.25% main rate by another 50 basis points. Economists stress any policy easing must be sizeable if it is to offer any help to the suffering economy.

Turkey’s meeting will be even more interesting. The lira has plunged to record lows, hard currency reserves are dwindling and inflation is in the double digits, yet all that probably won’t deter the central bank from chopping another 50-100 basis points off its 8.75% repo rate


Financial Markets – Top 5 Things To Watch This Week

This week’s economic calendar is packed with data which will further demonstrate the extent to which the coronavirus pandemic has hit global growth. The U.S. is set to publish figures on retail sales and industrial production for April, while the UK and Germany are to release data on first quarter GDP.

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The data will fuel the debate on whether a rebound in the U.S. stock market is justified amid an unprecedented slowdown. Trade threats by U.S. President Donald Trump against China continue to be a source of worry for investors at a time when large swathes of the economy are at a near-standstill. Meanwhile, bitcoin is due to undergo the third halving in its 11-year history this week. Here’s what you need to know to start your week.

U.S. data to underline steep drop-off in economic activity
Data on U.S. retail sales and industrial production for April due on Friday will further highlight the effect of closures on sales and factory output. Economists are expecting retail sales to have tumbled 11.6%, surpassing the record drop of 8.4% in March. Industrial production, which slipped 5.4% in March, is forecast to fall 11.5%.

There will also be numbers related to consumer sentiment and inflation while Thursday’s weekly report on initial jobless claims will cover the eighth week since widespread lockdowns came into effect. Last Thursday’s report showed that claims topped 3 million for a seventh straight week, but were off the peaks of 6.8 million seen in the week ended March 28.

Investors will also be watching a speech on Wednesday by Federal Reserve Chairman Jerome Powell on current economic issues at a webinar organized by the Peterson Institute for International Economics.

Trump’s trade threats
U.S.- China trade tensions look set to continue to simmer after Trump told Fox News Channel on Friday that he was “very torn” about whether to end the Phase-1 trade deal with China.

Trump’s administration is weighing punitive actions against Beijing over its early handling of the coronavirus outbreak, including possible tariffs and shifting supply chains away from China.

Trump has said he would terminate the trade deal if China fails to meet its purchase commitments. He said on Wednesday that he would know within a week or two whether that was possible.

The deal, which calls for Beijing to boost its purchases of U.S. goods by $200 billion over two years, only took effect on Feb. 15 as the coronavirus pandemic was unfolding. Lockdowns aimed at stemming the spread of the virus dealt a sharp blow to the Chinese economy and it is just now starting to recover.

UK and German GDP to show initial virus impact
First quarter GDP numbers from the UK and Germany will give investors an initial sense of the economic fallout from the lockdowns which began in late March.

The UK economy is expected to contract 2.5%, but the full damage, taking in the second quarter, will be much worse. The Bank of England said last week it expects the UK economy to fall by 14% this year, its worst annual slump for more than 300 years, and the unemployment rate to reach 8% as the coronavirus crisis ravages the economy.

Meanwhile, the euro zone’s largest economy Germany is expected to shrink 2.1% in the three months to March and the government has said it expects an annual contraction of 6.3% this year, which would be the most since World War II.

Divide between U.S. stock market, economy to widen
Recent economic data pointing to historic drops in activity is concerning to investors who worry that unprecedented stimulus from the Federal Reserve and U.S. government have led markets to shrug off the economy’s massive slowdown.

The Labor Department reported Friday that the U.S. economy lost a staggering 20.5 million jobs that month, the steepest plunge since the Great Depression.

If economic data this week is worse than the already awful forecasts it could bolster the argument that the rally in stocks has gone too far. But it is too early to say whether it will derail a surge which saw stocks post their best monthly gain in three decades in April, despite weak economic data from the previous month.

Recent gains could fade if U.S. states need to unwind efforts to reopen their economies and unemployment fails to decline in coming months.

Bitcoin’s third ‘halving’
Investors are widely anticipating Tuesday’s bitcoin halving, the third in the digital currency’s 11-year history. The previous two bitcoin halvings propelled massive rallies in bitcoin’s market value, but there is a wildcard this time in the form of the coronavirus pandemic, some analysts said.

“From an efficient market perspective, any fundamental reaction to the halving should be heavily priced in at this point; after all, it’s hard to imagine a more predictable event than an unalterable supply reduction that has been scheduled for more than a decade in a liquid, heavily-traded … asset,” said Matt Weller, global head of market research at GAIN Capital.

Bitcoin’s technology was designed in such a way that it cuts the reward for miners in half every four years, a move meant to keep a lid on inflation.

In the run-up to this week’s halving, bitcoin had surged almost 40% since the beginning of the year and climbed more than 80% from its lows.



Global Stocks Rise As Countries Begin To Reopen Economies

Global stocks rose Monday, with investors anticipating that stimulus measures and the easing of coronavirus-lockdown measures in the U.S. and Europe may help kick-start economic activity.

Futures tied to the Dow Jones Industrial Average advanced 0.9%. Last week, the benchmark for U.S. blue-chip stocks posted modest losses, dropping 1.9% after a massive rally from late March to mid-April.

Japan’s Nikkei 225 stock index ended the day up 2.7%. The Bank of Japan scrapped its target for government-bond purchases and said it would nearly triple its holdings of corporate debt to aid fundraising by companies affected by the coronavirus pandemic.

European markets climbed as countries including Italy and Spain signaled that they may loosen restrictions in the coming weeks. The pan-continental Stoxx Europe 600 gauge rose 1.7%.

Italy announced a timetable for reopening its economy and restoring daily life beginning on May 4, but warned that a resurgence in cases could lead to a return of restrictions. Spain allowed children to leave their homes after six weeks under one of the strictest lockdowns in the world.

In the U.S., some states allowed retailers, salons and other businesses to reopen over the weekend as new infections appeared to slow.

“We don’t yet know the full scale and the pace of lockdowns being eased, but it’s important for confidence,” said Edward Park, deputy chief investment officer at Brooks Macdonald. “Suggestions that factories will restart sooner rather than later suggests that the pressure on economic output in the data we’ve seen will be a shorter-lived phenomenon.”

Concerns about sovereign debt from Europe’s most debt-laden countries also showed signs of easing. Italian, Spanish and Greek bonds rallied after S&P Global Ratings on Friday held off on downgrading Italy’s credit rating. The yield on Italy’s 10-year bond fell to 1.754% Monday, from 1.903% Friday.

Markets at the tail end of last week were fixated on European political risk, and a run on debt markets triggered by a downgrade for Italy,” said Mr. Park. “The lack of a downgrade offers some breathing space.”

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Oil prices dropped sharply as energy markets remain volatile at the start of a week that will test the world’s ability to house a glut of crude. West Texas Intermediate futures, considered the benchmark for U.S. crude prices, fell over 24% to $12.59 a barrel. Brent crude, the global benchmark, fell 5.3%.

The yield on the benchmark 10-year U.S. Treasury rose to 0.630%, from 0.594% Friday.

Investors will also be closely focused on the outcome from the U.S. Federal Reserve and the European Central Bank’s meetings this week. Recent economic data and forecasts from many countries have been weak, prompting policy makers to take unprecedented steps and allocate huge sums to support businesses and individuals whose finances have taken a hit.

“Normally when you have a recession, there are a number of factors that are reining in credit and stimulus and that’s not the case here,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Later in the week, a flood of U.S. companies—including, Apple and Facebook— are scheduled to report first quarter earnings. They are likely to provide insights on how leaders of the biggest American businesses view prospects for the rest of the year. But the pandemic has made earnings forecasts even less reliable than normal, analysts and investors said.

“Most investors are looking through the earnings reports as somewhat meaningless because we’ve never had this mix of fall-off in demand and central bank, government stimulus support before,” Mr. Haefele said.

Among major European equities, Deutsche Bank AG was the best performer. The stock rose over 10% after the German bank said late Sunday that it will beat analyst expectations and report a first-quarter profit. Higher revenue and lower expenses have helped it offset provisions for credit losses triggered by the coronavirus outbreak.
Across Asia, South Korea’s Kospi Composite advanced 1.8% while Hong Kong’s Hang Seng Index gained 1.9%. The stocks benchmark in Australia climbed around 1.5%.

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China’s statistics bureau Monday released data showing that industrial companies’ profits in March were down 34.9% from a year earlier, a slight improvement from the 38.3% pace of decline in January-February. The country last month began reopening some industrial hubs after closing most factories and companies to curb the coronavirus’s spread. The Shanghai Composite Index closed 0.3% higher.

Central banks’ stimulus policies and other government measures to subsidize wages are all helping to buoy markets and asset prices, said Iris Pang, chief economist for Greater China at ING Bank NV in Hong Kong. “They will take a while to reach the real economy,” she said, adding that the path to increasing consumption is unlikely to be smooth.





Financial Markets – Top 5 Things To Watch This Week

While dozens of earnings reports are expected in the coming week and economic data will bring more insights into the impact of the coronavirus the main focus will still be on developments relating to the virus and how soon the economy can reopen.

Around 20% of S&P 500 companies are expected to report results in the coming week and there are also some important economic reports, including U.S. jobless claims, durable goods and existing home sales. The euro zone is to release PMI data for April along with reports from Germany’s ZEW and Ifo, while the U.K. is set to publish figures on unemployment, inflation and retail sales. Here’s what you need to know to start your week.

Some states to begin lifting coronavirus restrictions
U.S. President Donald Trump said on Saturday that Texas and Vermont will allow certain businesses to reopen on Monday while still observing coronavirus-related precautions.

Demonstrations to demand an end to stay-at-home measures spread to Texas on Saturday. Trump appeared to encourage protesters with a series of Twitter posts on Friday calling for them to “LIBERATE” Michigan, Minnesota and Virginia, all run by Democratic governors.

Trump has touted a thriving economy as the best case for his re-election in November.

Several states, including Ohio, Michigan, Texas and Florida, have said they aim to reopen parts of their economies, perhaps by May 1 or even sooner, but appeared to be staying cautious.

Vice President Mike Pence said on Friday the U.S. had the capacity to do a sufficient amount of testing for states to move into a phase one of reopening, but Governors and state health officials say there is nowhere near enough test kits and equipment available.

The U.S. has by far the world’s largest number of confirmed coronavirus cases, with more than 720,000 infections and over 37,000 deaths.

Earnings deluge
Around one hundred S&P 500 companies are expected to report results this week, as investors digest a market surge that has lifted the S&P index 25% from its March lows as of Thursday. Those include major industrial, tech and consumer products companies, as well as streaming company Netflix (NASDAQ:NFLX), whose shares rose to a record high in the past week as widespread stay-at-home orders drove demand for online streaming services.

Some of the companies also reporting are among those worst hit by the pandemic’s fallout, including airlines such as Delta Air Lines (NYSE:DAL) and Southwest Airlines (NYSE:LUV).

Investors are bracing for brutal first-quarter earnings but will also be on the lookout for indications of how soon business can get back on track.

U.S. initial jobless claims may ease
Initial jobless claims could slow again this week as the initial reaction to shutdowns starts to ease. More than 22 million Americans have filed for unemployment benefits in the past month as closures of businesses and schools and severe travel restrictions have hammered the economy.

Durable goods orders are expected to plunge, given recent weakness in manufacturing data and the collapse in the oil and gas sector caused by tumbling commodity prices.

The calendar also features updates on new and existing home sales and PMI data, which is expected to drop further.

Meanwhile, the Federal Reserve is in blackout mode ahead of its next scheduled policy meeting on April 29th.

Euro zone PMI pain
Thursday’s advance readings of euro zone PMIs for April are likely to make for painful reading.

Composite euro zone PMIs, comprising services and manufacturing, dropped to a record low of 29.7 last month, the biggest monthly drop since the survey began in July 1998.

In addition to the PMI data reports from Germany’s ZEW and Ifo Institutes will shed more light on the health of the bloc’s largest economy as it prepares to ease virus lockdown measures.

Euro zone finance ministers are to meet on Thursday to continue discussions about an EU fund to boost the recovery. The issue of joint European debt, or corona bonds, is likely to come up again, but the chance they will ever see the light of day remains slim.

UK data to give first real look at economic hit
The scale of the economic fallout from coronavirus pandemic in the UK is likely to be both larger, and much more rapid, than that of the Global Financial Crisis.

With that in mind, some economists expect Thursday’s retail sales figures to show a decline of around 10%, but this number could be much larger based on other spending indicators already released. PMI data is also expected to point to a steep slowdown in activity.

The week will also bring what will be closely watched updates on unemployment and inflation.





Financial Markets – Top 5 Things to Watch This Week

Investors will be awaiting the International Monetary Fund’s updated forecasts for the global economy this week, which are expected to show a steep downward revision amid the impact of restrictions aimed at containing the spread of the coronavirus pandemic.

U.S. figures on weekly initial jobless claims have been the key indicator to watch and will continue to be in focus this week, while March U.S. retail sales figures are expected to show an unprecedented slowdown.

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A flurry of appearances by Federal Reserve policymakers along with first quarter earnings reports will be an important barometer of the economy. Meanwhile, the biggest supply cut ever contemplated by the world’s top oil producers continues to hang in the balance. Here’s what you need to know to start your week.

IMF forecasts
The IMF will release its detailed World Economic Outlook forecasts on Tuesday after the IMF and World Bank Spring Meetings, which will be held by video conference as a result of the pandemic.

IMF Managing Director Kristalina Georgieva warned last Thursday that the pandemic will turn global economic growth “sharply negative” in 2020, triggering the worst fallout since the 1930s Great Depression, with only a partial recovery seen in 2021.

In remarks prepared for delivery ahead of the Spring meetings, Georgieva said the “bleak outlook” applied to advanced and developing economies alike. “Everybody hurts. Given the necessary containment measures to slow the spread of the virus, the world economy is taking a substantial hit.”

Her speech also underlined the need for the meeting to offer debt relief and to agree an increase in the IMF’s financial firepower so it could help the world’s poorest countries through the crisis.

Economic data to show depth of fallout
Investors will once again be focusing on Thursday’s report on weekly jobless claims, which are expected to be in the millions again. The number of Americans seeking unemployment benefits in the last three weeks has topped 15 million.

“In its first month alone, the coronavirus crisis is poised to exceed any comparison to the Great Recession,” said Daniel Zhao, senior economist at Glassdoor. “The new normal for unemployment insurance claims will be the canary in the coal mine for how long effects of the crisis will linger for the millions of newly unemployed Americans.”

But this week’s calendar also features data on March retail sales and industrial production, giving markets a broader range of figures to quantify the economic impact of the virus. Retail sales are expected to post the largest drop at least three decades, after city and state shutdowns spread across the country and millions lost their jobs. Industrial production data could show the largest decline in the post-World War 2 era.

Fed speakers
Chicago Fed President Charles Evans, St. Louis Fed President James Bullard and Atlanta Fed President Raphael Bostic are all scheduled to make appearances this week, with investors keen to hear how policymakers view the scale of the economic downturn.

The Fed has slashed rates to zero, launched open-ended bond purchases and introduced a suite of emergency lending tools in response to the economic shockwaves unleashed by the virus.

Last week’s Fed minutes indicated that officials expect current ultra-loose monetary policy measures will remain in place against a “profoundly uncertain” backdrop, with the economy expected to enter a recession this year and not recover until next year in a worst-case scenario

The Fed is also to publish its Beige Book on Wednesday.

Earnings season
First quarter earnings season kicks off with the six largest banks in the U.S., including JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) set to report.

Investors will be watching for any indications that banks are scaling back on lending, which could be a sign of a prolonged recession. Also, the Federal Reserve said Thursday it will be working directly with banks to deliver much of its financial support to businesses.

Pharmaceutical giant Johnson & Johnson (NYSE:JNJ) is due to report on Tuesday, while Abbott Laboratories (NYSE:ABT) is set to report on Thursday.

Earnings reports will also give an insight into just how badly retailers such as Bed Bath & Beyond (NASDAQ:BBBY), which is due to report on Wednesday, have been hit.

Oil output cut deal hangs in the balance
The biggest supply cut ever contemplated by the world’s top oil producers is hanging in the balance with Mexico resisting pressure from Saudi Arabia to sign up to global cuts worth nearly a quarter of output for participating countries.

The cuts are aimed at boosting prices from their lowest level in decades. Oil prices have collapsed as the coronavirus epidemic locked down economies around the world, decimating fuel demand and Saudi Arabia and Russia flooded the market in a price war.

The refusal by Mexican President Andres Manuel Lopez Obrador to compromise his plan to revive state oil company Pemex by agreeing to the cuts has shone the global spotlight on Mexico and angered Saudi Arabia.

In a compromise hammered out with U.S. President Donald Trump, Lopez Obrador said on Friday the United States had offered to cut an additional 250,000 bpd on Mexico’s behalf, bringing them close to the target.

However, Saudi Arabia – the heavyweight of global oil diplomacy – has balked at that and dug in its heels, despite some other producers from the group of OPEC nations and their allies – known as OPEC+ – calling for the cuts to go ahead regardless.

OPEC+ made its commitment to cut a record 10 million barrels a day conditional on Mexico’s agreement.


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Stocks Climb, Trying To Extend Winning Streak

U.S. stocks rose sharply Tuesday, buoyed by early indications that the spread of the coronavirus pandemic was slowing in some hot spots around the world.

The Dow Jones Industrial Average rallied 2.8% in midday trading, a day after rising almost 8%. The S&P 500 and the Nasdaq Composite also jumped, climbing 2.3% and 1.5% respectively. All three indexes are attempting to rally for the third time in four sessions, though they remain down about 20% from their mid-February highs.

New York Gov. Andrew Cuomo said Tuesday that the state’s hospitalization rate has showed signs of slowing, and other hard-hit countries in Europe, including Italy and Spain, have reported a slowdown in new infections following strict containment measures.

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“It’s hard to reject the view that things are improving,” said Paul O’Connor, head of multiasset at Janus Henderson. “Markets have been celebrating this in the last couple of days.”

Still, the trends are preliminary and authorities have warned that the coronavirus infections in the U.S. and U.K. are likely to worsen in the coming week. Even as demand for intensive care units has flattened in New York, Mr. Cuomo said Tuesday that deaths related to the virus hit a record Monday. So far, nearly 5,500 people have died from the virus in the state, representing almost half of all U.S. deaths.

Even more, economic indicators have shown that a deep recession may be looming. The Mortgage Bankers Association said Tuesday that mortgage forbearance requests grew 1,896% between the weeks of March 16 to March 30. The spike comes as millions of Americans have sought unemployment benefits after the pandemic shuttered businesses.

Markets have swung sharply in recent weeks as investors have tried to make sense of a fast-spreading pandemic that has warranted unprecedented responses by the Federal Reserve and U.S. government. Monday’s gain marked the 12th consecutive trading day that the Dow moved up or down at least 1%.

All 11 sectors of the S&P 500 marched higher Tuesday. Only two of the 30 stocks in the Dow Jones Industrial Average, Merck and Pfizer, ticked lower.

Travel and leisure stocks were again among the best performers in the U.S. and Europe. United Airlines Holdings jumped 8.3%, American Airlines Group rose 15% and Delta Air Lines added 4.2%. Among cruise stocks, Royal Caribbean Cruises gained 21% and Carnival rose 17%. All five stocks remain down more than 50% for the year.

Meanwhile, in London, EasyJet soared 20% after the carrier tapped a U.K. government-aid program for short-term credit. The company’s ability to access the funding suggests that it could withstand the economic downturn, provided that the spread of the coronavirus continues to slow, according to Michael Hewson, chief market analyst at brokerage CMC Markets.

“Markets are pricing in a return to normality for airlines sooner rather than later,” Mr. Hewson said. That optimism is also driving hotel stocks higher, he added.
The rise in risk appetite led some investors to sell the safest government bonds. The yield on the 10-year U.S. Treasury note rose to 0.749%, from 0.675% Monday. Yields rise as bond prices fall.

Oil prices also ticked higher, with the global benchmark Brent crude advancing 0.3% to $33.15 a barrel.


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In currency markets, the ICE Dollar Index slipped 0.7%. The greenback has been wavering amid renewed risk appetite, according to Jordan Rochester, a currency strategist at Nomura.

“It’s definitely a risk-on day,’’ leading some investors to sell the dollar, he said.


Oil Production Cut: OPEC+ Meeting Delayed

OPEC and Russia have postponed a Monday meeting to discuss oil output cuts until April 9, OPEC sources said on Saturday, as a dispute between Moscow and Saudi Arabia over who is to blame for plunging crude prices intensified.

The delay came amid pressure from U.S. President Donald Trump for the Organization of the Petroleum Exporting Countries led by Saudi Arabia and its allies, a group collectively known as OPEC+, to urgently stabilise global oil markets.

Oil prices hit an 18-year low on March 30 due to a slump in demand caused by lockdowns to contain the coronavirus outbreak and the failure of OPEC and other producers led by Russia to extend a deal on output curbs that expired on March 31.

OPEC+ is working on a deal to cut the production of oil equivalent by about 10% of world supply, or 10 million barrels per day, in what member states expect to be an unprecedented global effort including the United States.

Washington, however, has yet to make a commitment to join the effort and Russian President Vladimir Putin on Friday put the blame for the collapse in prices on Saudi Arabia – prompting a firm response from Riyadh on Saturday.

“The Russian Minister of Energy was the first to declare to the media that all the participating countries are absolved of their commitments starting from the first of April, leading to the decision that the countries have taken to raise their production,” Saudi Energy Minister Prince Abdulaziz bin Salman said in a statement reported by state news agency SPA.

Putin, speaking on Friday during a video conference with government officials and the heads of major Russian oil producers, said the first reason for the fall in prices was the impact of the coronavirus on demand.

“The second reason behind the collapse of prices is the withdrawal of our partners from Saudi Arabia from the OPEC+ deal, their production increase and information, which came out at the same time, about the readiness of our partners to even provide a discount for oil,” Putin said.

The Saudi Foreign Minister Prince Faisal bin Farhan Al Saud disputed Putin’s claims, saying Russia had withdrawn and that statements about the kingdom’s withdrawal from the OPEC+ deal was devoid of truth, state agency (SPA) reported on Saturday.

OPEC sources, who asked not be identified, said the emergency virtual meeting planned for Monday would likely now be postponed until April 9 to allow more time for negotiations.

OPEC sources later downplayed the Saudi-Russia row, saying the atmosphere was still positive, although there was no draft deal yet nor agreement on details such as a reference level from which to make the production cuts.

“The first problem is that we have to cut from the current production level now, not to go back to the one before the crisis,” one of the OPEC sources said. “The second issue is the Americans, they have to play a part.”


Oil recovered from this week’s lows of $20 per barrel with Brent settling at $34.11 on Friday, still far below the $66 level at the end of 2019. Prices had their biggest one-day gain ever on Thursday when Trump said he expected Russia and Saudi Arabia to announce a major production cut.

The United States is not part of OPEC+ and the idea of Washington curbing production has long been seen as impossible, not least because of U.S. antitrust laws.

Still, the oil price crash has spurred regulators in Texas, the heart of U.S. oil production, to consider regulating output for the first time in nearly 50 years.

But U.S. Energy Secretary Dan Brouillette, in a call with oil industry leaders on Friday, did not mention the possibility of U.S. production cuts, a source who listened to the call said.

On Saturday, U.S. President Donald Trump focused instead on tariffs as a response to the oil price crash.

“If I have to do tariffs on oil coming from outside or if I have to do something to protect our … tens of thousands of energy workers and our great companies that produce all these jobs, I’ll do whatever I have to do,” Trump told reporters in a briefing about the coronavirus outbreak.

“The President has now told us what Plan B is: tariffs,” said Robert McNally, president of Rapidan Energy Group in Bethesda, Maryland.

Russian Energy Minister Alexander Novak told Russian state media he understood that the United States had legal restrictions on output cuts but it should still be flexible.

Other oil producers that do not belong to OPEC+ have indicated a willingness to help. Canada’s Alberta province, home to the world’s third-largest oil reserves, is open to joining any potential global pact.

Norway, Western Europe’s largest oil and gas producer, said on Saturday it would consider cuts to its oil output if a wide global deal is agreed.

Mexican President Andres Manuel Lopez Obrador on Saturday called on Russia and Saudi Arabia to reach a deal soon to end their price war.

The International Energy Agency warned on Friday that a cut of 10 million bpd would not be enough to counter the huge fall in oil demand. Even with such a cut, inventories would increase by 15 million bpd in the second quarter.



European Markets Mixed As Coronavirus Cases Top 1 Million

Global stock markets have experienced a shaky start to the second quarter this week as investors to assess the potential economic ramifications of widespread lockdowns and the persistent spread of the coronavirus.

European markets were searching for direction on Friday morning as another rocky week of trading draws to a close amid the deepening coronavirus crisis.

The pan-European Stoxx 600 hovered around 0.2% below the flatline in early deals, with insurance stocks sliding 2.3% to lead losses while media stocks added 1%.

The number of confirmed cases of the coronavirus worldwide surpassed 1 million on Thursday night, resulting in more than 53,000 deaths so far. Italy and Spain have reported over 115,000 and 112,000 cases, respectively, while Germany now has more than 84,000 cases, according to Johns Hopkins University.

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Global stock markets have experienced a shaky start to the second quarter this week as investors continue to assess the potential economic ramifications of widespread lockdowns and the persistent spread of the virus, along with the fiscal and monetary measures being deployed by governments and central banks to mitigate the crisis.

Asian markets were muted on Friday after an initial gain in momentum after oil prices experienced their biggest one-day surge on record, but crude futures retraced some of their gains by Asian afternoon trade.

The sharp moves in crude futures came after U.S. President Donald Trump told CNBC’s Joe Kernen that he expected Russian President Vladimir Putin and Saudi Crown Prince Mohammad Bin Salman to agree to an oil production cut of 10 million to 15 million barrels, potentially halting a bruising price war between the two oil powerhouses.

On the data front, individual and collective final euro zone Markit composite and services PMI (purchasing managers’ index) readings for March are due at 9 a.m. London time, before February’s retail sales numbers at 10 a.m.

U.K. Markit/CIPS composite and services PMIs are expected at 9:30 a.m.





Stock Market: U.S. Futures And Global Stocks Fall, Investors Rush To Safe-Haven Assets

“In the U.S., we’re at the beginning of a downturn,” said Steven Englander

U.S. stock futures declined Wednesday, after leading benchmarks closed out their worst quarter since the global financial crisis.

Futures tied to the Dow Jones Industrial Average and S&P 500 ticked down 2.6% early Wednesday.

European stocks also declined. The pan-continental Stoxx Europe 600 index dropped 2.9% with Germany’s DAX benchmark down 3.2% and the FTSE 100 down 3.5%.

As investors rushed to safe-haven assets, the yield on the 10-year U.S. Treasury note fell about 0.02 percentage point to 0.661%. Bond yields fall as prices rise. The ICE Dollar Index, which tracks the dollar against a basket of currencies, rose 0.4%.

“In the U.S., we’re at the beginning of a downturn,” said Steven Englander, global head of G-10 foreign-exchange research and North America macro strategy at Standard Chartered Bank. “We’re likely to see more unemployment, and the early bottom could come in May, but that is very speculative. For that to happen, we need a lot of good luck and serious implementation of economic and health-care policy.”

Mr. Englander said stimulus packages were positive for the economy, and would help American employees get through the next two months but that there might be a need for “trillions more.” On Tuesday, President Trump called for a new infrastructure-focused spending bill worth $2 trillion.

The Federal Reserve said Tuesday that it would launch a temporary lending facility that for the first time would allow foreign central banks to convert their holdings of Treasury securities into dollars, its new bid to alleviate strains in global markets.

Mr. Englander said the program would improve international access to dollar-based funding.

“Investors will take it seriously,” he said.

The S&P 500 dropped 1.6% Tuesday, taking its year-to-date losses to 20%, the biggest quarterly decline since 2008. The Dow Jones Industrial Average fell 1.8%. It slid 23% over the quarter, its worst showing since 1987.

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In Asia, markets were mixed Wednesday. Japan’s Nikkei 225 lost 4.5% and Hong Kong’s Hang Seng was 2.2% lower. Meanwhile, Australia’s ASX 200 gained 3.6%.

In Hong Kong, shares in HSBC Holdings PLC tumbled more than 9% to their lowest since 2009, while stock in rival Standard Chartered PLC also fell. The two lenders, which also have U.K. listings, were among four banks that said Tuesday they would cancel unpaid 2019 dividends at the Bank of England’s request.



Economic Indicators: Consumer Sentiment in U.S. Slumps by Most Since October 2008

U.S. consumer sentiment plummeted in March by the most since October 2008 as mounting Covid-19 cases nationwide and business closures elevated concerns about the economy.

The University of Michigan’s final sentiment index for the month slumped 11.9 points to a three-year low of 89.1, data Friday showed. The median forecast in a Bloomberg survey of economists called for a decline to 90 after a preliminary March reading of 95.9.

Ratings for current conditions also decreased by the most since 2008, and a measure of the economic outlook dropped to the lowest level in more than three years. Stocks fell and Treasuries advanced as investors assessed the pandemic’s impact on the economy.

“The outlook for the national economy for the year ahead changed dramatically in March, with the majority now expecting bad times financially in the entire country,” Richard Curtin, director of the Michigan sentiment survey, said in a statement. “Perhaps the most important takeaway is that the largest proportion of consumers in nearly 10 years anticipated that the national unemployment rate will increase in the year ahead.”

The report provides one of the more-sobering pictures yet of how the widespread economic halt, amid efforts to help contain the virus, is impacting consumers’ attitudes. The March figures represent a drastic departure from just a month earlier, when a strong job market and cheap fuel contributed to the second-highest sentiment reading since 2004.

The university’s final survey for the month included responses through March 24, a stretch that includes significant upheaval and uncertainty in day-to-day living and the labor market, as well as in financial markets. A report yesterday showed initial claims for unemployment benefits soared to a record 3.28 million last week.

“Stabilizing confidence at its month’s end level will be difficult given surging unemployment and falling household incomes,” Curtin said. “Mitigating the negative impacts on health and finances may curb rising pessimism, but it will not produce optimism.”

April consumer sentiment data will reflect the surge in dismissals and growing Covid-19 cases, as well as progress on Capitol Hill toward a $2 trillion economic-relief package that includes direct payments to many Americans.

Most notably, the number of confirmed cases nationwide continues to rise. There are currently more than 85,000 with the disease in the U.S., the most in the world, compared with 62 people at the end of February.

The Michigan data showed an index of buying conditions for durable goods dropped in March to the lowest level since 2014.

Year-ahead financial prospects declined across all age and income subgroups, though modestly as respondents anticipated the negative effects from the pandemic would be short-lived.

The impact of the virus on consumer sentiment are likely to become more evident as monthly reports capture the tectonic shift in economic and market conditions seen over the last month. The Conference Board will publish its March confidence reading on Tuesday. Meanwhile, Bloomberg’s weekly index fell to a four-month low.



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Financial Markets: European Shares Jump Again On Stimulus Bump

European shares rose on Wednesday following a strong rally in the previous session, as investors bet on unprecedented stimulus measures to ease the economic pain on businesses and households from the coronavirus pandemic.

The pan-European STOXX 600 index (STOXX) was up 2.1% at 0804 GMT, with energy (SXEP), industrials (SXNP), financials (SXFP) and miners (SXPP) leading gains for a second straight day.

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The benchmark index has now recovered its losses from mid March on the back of extraordinary fiscal and monetary stimulus from Europe and the United States. On Wednesday, U.S. officials agreed on a whopping $2 trillion stimulus package.

Still, the European bourse is down more than 25% from its record high last month in the biggest rout since the financial crisis, with another global recession looming in the face of a collapse in business activity in March.

German conglomerate Thyssenkrupp (DE:TKAG) rose 12.6% after saying it would cut 3,000 jobs at its steel unit by 2026, with no forced layoffs until March 31, 2026, as part of a wage deal struck with powerful labor union IG Metall.



Financial Markets – Top 5 Things to Watch This Week

This week market watchers will be looking at economic data releases for early indications of the scale of the impact from the coronavirus pandemic, but the main focus will continue to be on the response from governments and central banks who are ramping up stimulus measures amid market fears over whether steps announced so far will be adequate. Here’s what you need to know to start your week.

Data to show early economic hit from virus
Few doubt that the global economy will tip into recession as countries around the globe go into lockdown amid ongoing virus containment efforts. It goes without saying that large drops are likely in PMI data coming out this week in the U.S., Eurozone and the U.K.

The PMI surveys are typically conducted in the second half of a month and the data in the “flash” survey is usually collected in the week or so before the data is released, so economists reckon next week’s PMIs will provide the most comprehensive overview so far of the coronavirus impact.

Meanwhile, Thursday’s figures on initial jobless claims will be the first to show the full extent of the impact on the U.S. labor market. Economists at Goldman Sachs have estimated claims are set to jump to a record 2.25 million, according to an analysis of preliminary reports across 30 states.

U.S. government response awaited
Republicans and Democrats in the U.S. Senate on Saturday continued with efforts to reach a deal on a $1 trillion-plus bill aimed at mitigating the coronavirus pandemic’s economic fallout for workers and businesses.

White House economic adviser Larry Kudlow said he expects the final legislative package to be worth $1.3 trillion to $1.4 trillion.

Taken together with steps already taken by the U.S. Federal Reserve and the administration, the prospective bill would have a $2 trillion net impact on a U.S. economy, according to White House officials.

Liquidity squeeze to ease?
A liquidity squeeze prompted the Federal Reserve on Friday to enhance the dollar liquidity swap line arrangements it has with the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank.

To see if that does the trick, watch for dollar exchange rates to stabilize.

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Demand for the world’s reserve currency had jumped amid a rush for cash in anticipation of a prolonged pandemic, with there being a substantial liquidity mismatch between global demand for U.S. dollars and those on offer.

U.S stock valuation picture may become clearer
As the U.S. stock market has tumbled, valuations have also come down sharply.

The S&P 500’s price-to-earnings ratio, based on earnings estimates for the next year, has dropped from over 19 times in late February to 14.2 times as of last Wednesday, according to Refinitiv data, taking the valuation below its historical average.

But the picture is complicated by the fact that earnings estimates may have not come down enough to account for the coronavirus fallout.

The picture may become clearer in the coming weeks, as the first quarter comes to an end and companies start preparing their results. Last week, FedEx (NYSE:FDX) and Marriott (NASDAQ:MAR) withdrew their 2020 financial forecasts because of the outbreak.

Nike (NYSE:NKE), Micron Technology (NASDAQ:MU), and KB Home (NYSE:KBH) are among the U.S. companies due to report results this week.

Emerging markets
Emerging market assets have been hammered, with currencies plunging to fresh record lows, bonds plunging and stocks down nearly 10% last week. Several factors have contributed – the strong dollar, a darkening economic outlook, tumbling oil prices as well as rising borrowing costs.

Investors piling into the greenback have seen enduring stresses in dollar funding markets, with hurried swap lines between central banks earlier in the week doing little to alleviate the credit strains at the heart of the problem.

Central banks in the United States, the euro zone, Canada, Britain, Japan and Switzerland stepped in again on Friday, agreeing to increase the frequency of their one-week U.S. dollar credit facility.

In emerging markets, policymakers that lack the firepower to support currencies or face challenges to cut rates, will be keeping their fingers crossed that steps taken by major central banks will be enough to end the crisis.

Stock Market Today: Technology Sector Leads A Turnaround

Stocks turned higher Thursday, erasing losses from earlier in the day as sharp gains in tech shares led to a turnaround. The Dow was up more than 400 points, or 2.1%. The S&P 500 was up 1.5%, while the Nasdaq outperformed with a 3.2% surge. Shares of Netflix and Facebook rose 7.6% and 5.8%, respectively. Amazon gained 4.1%.

Earlier in the session, the Dow was down 721 points, or more than 3%. The S&P 500 briefly fell more than 3% as well.

“This is a day trader’s market,” said Christian Fromhertz, CEO of Tribeca Trade Group. “That’s not my favorite type of trading, but the day-to-day swings and the overnight moves are pretty insane.”

Among the industries trading in positive territory Thursday morning was energy, with the S&P sector up more than 0.5%. Big oil producers like Diamondback Energy and Apache rose more than 8% each as futures contracts tied to the price of West Texas Intermediate crude rallied more than 15% to $23.47, on pace for its fourth-best day ever.

The moves followed yet another violent day on Wall Street on Wednesday. The Dow dropped 1,338.46 points, or 6.3%, on Wednesday and clinched its first close below 20,000 since February 2017. The Dow was down more than 2,300 points at the lows of the session. The S&P 500 dropped 5.2% to 2,398.10 and closed nearly 30% below a record set last month as both indexes sank further into bear markets.

Markets are clearly in a state of panic and forced liquidations – but risks remain skewed to the upside and this should become much more apparent once some of the solvency issues are addressed,” Adam Crisafulli, founder of Vital Knowledge, said in a note.

Wall Street has been on an unprecedented roller-coaster ride amid the coronavirus turmoil, with the S&P 500 swinging 4% or more in either direction for eight consecutive sessions.

An eye-watering spike in Treasury yields has also kept investors anxious. The 10-year Treasury rate hovered at 1.1% after jumping more than 50 basis points in two sessions as it rebounded from record lows.

Gregory Faranello, head of U.S. rates trading at AmeriVet Securities said swift reversal in yields comes amid strong dollar demand amid the coronavirus crisis.

“There’s a dollar strain on the system, globally,” said Faranello. “Whether it’s Asia, Brazil, emerging markets, Europe or here in the U.S., the dollar is in demand right now.”

“If you look at everything across the board, it’s all going down together. The one thing that’s going up that’s dollar denominated is the U.S. dollar,” he added.

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The dollar index, which tracks the greenback’s performance against a basket of other currencies, jumped to its highest level since January 2017 on Thursday. It last traded up 0.7% at 101.83 after breaking above 102.

More central bank stimulus

On Wednesday evening, the European Central Bank (ECB) announced a new Pandemic Emergency Purchase Program that will deploy €750 billion ($819 billion) to purchase securities to help support the European economy. The central bank said purchases will be conducted until the end of 2020 and include a variety of assets including government debt.

The ECB’s action follows similar initiatives by the Federal Reserve, its U.S. counterpart. The Fed announced earlier this month plans to pump an additional $1 trillion into the U.S. economy through asset purchases and cut the federal funds rate to zero. The Fed also said Wednesday night it will create a backstop for prime money market funds.

Those announcements came as the number of confirmed coronavirus cases around the world topped 200,000, according to Johns Hopkins University. In the U.S. alone, more than 9,400 cases have been confirmed along with over 100 deaths.

U.S. lawmakers appeared to inch closer to implementing fiscal stimulus measures. The Senate had enough votes to pass a bill expanding paid leave and unemployment benefits in response to the virus as part of what’s expected to be a whopping governmental response to avoid a downturn.

Senate Majority Leader Mitch McConnell said Wednesday he would vote for the plan despite what he called “real shortcomings.” With the urgent need to take action, “I do not believe we should let perfection be the enemy of something that will help even a subset of workers,” he said.



World Leaders Rush In To Shore Up Panic-Hit Global Financial System

World leaders raced to shore up panic-stricken global markets on Thursday, pouring liquidity into the financial system as investors everywhere dumped assets, switching to dollars in cash amid the escalating coronavirus pandemic.

Policymakers in the United States, Europe and Asia resorted to emergency action as the pandemic left their economies virtually comatose, with quarantined consumers, broken supply chains, paralyzed transportation and depleted shops.

There were almost 219,000 cases of coronavirus reported globally, including over 8,900 deaths linked to the virus. Over 20,000 of those cases were reported in the past 24 hours, a new daily record.

The European Central Bank launched new bond purchases worth 750 billion euros ($817 billion) at an emergency meeting late on Wednesday, in a bid to prevent a deep recession that threatened to outdo the 2008-09 global financial crisis.

“Extraordinary times require extraordinary action,” ECB President Christine Lagarde said, amid concerns that the strains from burgeoning crisis could eventually tear apart the euro zone as a single currency bloc.

In the United States, the Federal Reserve rolled out its third emergency credit program in two days, aimed at keeping the $3.8 trillion money market mutual fund industry functioning if investors made rapid withdrawals.

On Sunday, the Fed slashed interest rates to near zero and pledged hundreds of billions of dollars in asset purchases, while President Donald Trump’s administration drew up a $1 trillion stimulus and rescue proposal.

The desperate state of industry was writ large in Detroit, where the big three automakers – Ford Motor Co (N:F), General Motors Co (N:GM) and Fiat Chrysler Automobiles NV (MI:FCHA) (N:FCAU) – confirmed they would be shutting U.S. plants, as well as factories in Canada and Mexico.

The British pound plunged to its lowest level against the dollar since 1985, as Bank of England Governor Andrew Bailey said he would not rule anything out when asked about printing money to give to individuals. Britain ordered all schools to close from Friday as the number of confirmed coronavirus cases rose 48% on Wednesday. Australia made a historic foray into quantitative easing after an out-of-schedule meeting on Thursday and cut interest rates for the second time in a month.

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South Korea warned of a global credit crunch and said it was setting up crisis funds to stabilize its financial markets.

Central banks in emerging countries from Brazil to India have stepped in this week to buy government bonds to prevent a jump in borrowing costs that would put more pressure on their economies.

Despite those moves, which together with other liquidity injections and stimulus announced in recent weeks reached levels unseen since World War Two, nearly every stock market in Asia was in the red, with Seoul, Jakarta and Manila hitting daily loss limits that trigger the suspension of trade.

At one point the Philippines bourse was down 24%. In currency markets, everything except the dollar and the euro collapsed.

J.P. Morgan economists forecast the U.S. economy to shrink 14% in the next quarter, and the Chinese economy to drop more than 40% in the current one, one of the most dire calls yet on the potential scale of the fallout.

“We’re in this phase where investors are just looking to liquidate,” said Prashant Newnaha, senior interest rate strategist at TD Securities in Singapore.


It was not just the dire state of the economy that panicked investors. Tensions between the world’s two biggest superpowers reached some of their most elevated levels and other powers were locking heads over their reactions to the outbreak.

U.S. President Donald Trump on Wednesday ratcheted up his rhetoric against China over the coronavirus, saying Beijing should have acted faster to warn the world and dismissing criticism that his labeling it the “Chinese virus” was racist.

Trump’s tougher language marked an escalation in a bitter war of words between the world’s top two economies that has widened to include the global pandemic and media freedoms.

A European Union document seen by Reuters said Russian media have deployed a “significant disinformation campaign” against the West to worsen the impact of the coronavirus, generate panic and sow distrust.

U.S. infections were closing in on 8,000, with the death toll climbing to at least 151. Millions of Americans were staying at home.

In contrast, China, which has been the first country to lock down large swathes of its territory, was slowly coming back to life. Chinese scientists and health experts involved in the fight against the virus believed the worst was over, downplaying warnings that the disease could become seasonal or that a deadlier “second wave” could hit later in the year.

They were wary, however, of new cases from overseas.

New local transmissions in China fell to zero, while imported cases surged by a record, accounting for all 34 new cases on Wednesday.

Germany, Iran and Spain reported over 12,000 cases each, while 12 other countries confirmed between 1,000-10,000 cases each. The virus has reached 172 countries and territories.

Governments around the globe, from the United States and Britain to the emerging world have been criticized for acting too slowly to stop the spread.

In Brazil, where President Jair Bolsonaro initially labeled the virus “a fantasy”, more members of the country’s political elite fell ill. On Wednesday night, housebound protesters banged pots and pans, shouting “Bolsonaro out!” from their windows.



Financial Markets Tumbles Again On Recession Fears

Trading in U.S. stock was again suspended almost immediately after the opening on Wednesday, after another huge wave of selling driven by fears of a coronavirus-induced recession.

By 10 AM ET (1400 GMT), the Dow Jones Industrial Average was down 980 points, or 4.6% at 20,257 points, having tried and failed to break through the 20,000 psychological support level at the opening. The S&P 500 was down 3.7% and the Nasdaq Composite was down 2.9%.

The indices had risen by between 5.2% and 6.2% on Tuesday in response to outlines of a $1.2 trillion package of government stimulus measures.

Analysts at Deutsche Bank (DE:DBKGn) said Wednesday they still expected the U.S. economy to contract by annualized 12.9% in the second quarter as the pandemic hits its expected peak.

Newswires reported New York City Mayor Bill de Blasio as calling for military assistance, saying that the number of confirmed cases in the city would top 1,000 by the end of the day. It had stood at 923 on Tuesday.

Globally, the number of confirmed cases has now topped 204,000, with some 6,500 of those in the U.S., according to Johns Hopkins data. The number of deaths globally has risen to 8,241, with the virus still accelerating in the U.S. and much of Europe.

Among individual stocks, Boeing (NYSE:BA) was among the biggest losers, falling 16.4% after the company said it would ask the government for up to $60 billion in support for the aerospace sector.

Boeing has spent $43 billion on share buybacks since 2013, a figure that may put pressure on the government to dilute current shareholders heavily as part of any taxpayer-funded bailout.

Crude oil was also sharply lower as traders priced in an increasingly severe hit to demand for fuel due to lockdown measures. U.S. crude futures fell 9.7% to $24.77 a barrel, their lowest since 2002.




Amazon Stops Receiving Nonessential Products From Sellers

Amazon is suspending sellers from sending nonessential products to its U.S. and U.K. warehouses until April 5 in the latest move to free up inventory space for much-needed supplies that are in shortage as a result of the coronavirus outbreak.

In a note sent to sellers Tuesday, Amazon said it is seeing increasing online shopping demand from consumers. As its household staples and medical supplies are running out of stock, it will prioritize certain categories in order to “quickly receive, restock, and ship these products to customers.”

Amazon defined five categories as essential products that can continue shipping, including Baby Product, Health & Household, Beauty & Personal Care, Grocery, Industrial & Scientific, Pet Supplies.

The move follows Amazon’s announcement it will hire 100,000 workers for its warehouses on Monday, as the Seattle-based giant is trying to meet growing online shopping need from people who stay home amid the coronavirus outbreak.

Third-party sellers account for over half of the sales on Amazon. Amazon has been courting sellers to use its own fulfillment system, enabling many of them with faster delivery without the risks of sitting on inventories.

It is especially popular for sellers who use a dropping shipping method, meaning sellers import products from manufacturers in countries including China and directly send them to an Amazon warehouse. Amazon earns fees from managing the storage and delivery process.

Sellers supplying products that are deemed nonessential could see their products run out of stock and they will be unable to restock as a result of the measure. Still, they can use other fulfillment methods to directly mail products to customers.

Amazon did not immediately replied to request for comment.




Traders Bet On Falling ‘Fear Gauge’

The volatility gauge tends to rise when markets fall and investors reach for stock protection through the options market. The VIX climbed to 82.69 Monday, topping its high of about 80 in 2008. After the financial crisis, trading derivatives tied to the VIX took off as people sought to profit from its swings.

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Many are wagering its recent jump won’t be long-lived. Betting on its fall through what is known as the short volatility trade has been particularly popular in recent years. This can be a risky tactic that backfires when stocks slide as sharply as they have in recent weeks as the spread of coronavirus has raised the risk of a recession.

As stock markets staged a modest rebound Tuesday, some of the most popular contracts were tied to VIX falling to 27 or 20, Trade Alert data show, closer to levels hit earlier this year when major indexes hit records.

Still, turbulence in markets has been high, triggering diverging views on the gauge’s path. Analysts at Credit Suisse Group AG said another steep selloff similar to Monday’s could push the VIX above 100. The S&P 500 fell 12% that day, one of the worst sessions in its history.

Some options traders have already been positioning for that, scooping up contracts tied to the VIX jumping as high as 100 or even 130, Trade Alert data show. Those are among the smaller positions outstanding but were some of Monday’s most popular trades, according to Trade Alert.

“While this is surely possible, we believe it is highly improbable,” wrote Jonathan Golub, an analyst at Credit Suisse.

Cboe Global Markets Inc., the exchange operator that oversees VIX options trading has added new strike prices—or levels at which options can be exercised—during the recent market tumult. Cboe added options with a strike of 100 on March 2 and more strikes were added the following week, a spokeswoman for the exchange said.



Virus Fears Push Stocks Closer To A Bear Market

The Dow Jones Industrial Average suffered its worst decline since 2008 and at one point came within 65 points of touching a bear market.

For the day, the Dow sank 2,013.76 points, or 7.8%, to 23851.02. It was the first time the Dow lost more than 2,000 points in a session. The S&P 500 fell 225.81 points, or 7.6%, to 2746.56, also its worst day since 2008. And the Nasdaq Composite slid 624.94 points, or 7.3%, to 7950.68.

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All 11 sectors in the S&P 500 were down, led by energy, which slid 20%. Financials were down 11%. Industrials and materials both fell 9.2%.

By day’s end, the Dow, S&P and Nasdaq were all down roughly 19% from record highs set earlier this year. A drop of 20% from those highs would halt a bull-market run that began after the financial crisis. Stocks bottomed out 11 years ago, on March 9, 2009.

The 11-year bull market is over,“ said Peter Cecchini, the chief market strategist at Cantor Fitzgerald, noting that it isn’t just about an official 20% drop.

Mr. Cecchini said central banks suppressed interest rates over the years, and that became a big narrative investors used to justify buying stocks. Meanwhile, signs have emerged that global growth was slowing, like the inverted yield curve late year, but were ignored, he said.

“That underlying backdrop of fragility is one of the reasons why this has unwound so quickly,” he said. “When a bubble extends this far, it doesn’t take much to prick it.”

Saudi Arabia’s decision over the weekend to instigate a price war as it escalates a clash with Russia sent oil prices down by the most since the Gulf War in January 1991. Crude prices, along with U.S. government bond yields, are typically viewed as key barometers of economic health and confidence, said Gregory Perdon, co-chief investment officer at private bankers Arbuthnot Latham.

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“There has always been an assumption that when the oil price collapses the world is going to become a darker place, whether that is driven by the demand side or supply side,” Mr. Perdon said. The latest tensions put the oil market in somewhat uncharted territory with pressure in terms of both supply and demand as the coronavirus epidemic threatens to sap businesses’ appetite for energy.

The plunge in crude added to two weeks of turmoil in equity and credit markets as investors have grown increasingly concerned about economic growth stalling. It also raised fresh concerns about the risks tied to heavily indebted energy companies in the high-yield market, and the fallout for other companies if broader credit markets tighten.

U.S. government bonds, which have already rallied to unprecedented highs, extended gains. The yield on the 10-year Treasury, which moves inversely to bond prices, dropped to 0.577%. The 30-year yield fell below 1%, and more recently was at 1.003%.

“The fear today is about a global recession,” said Thomas Hayes, chairman of Great Hill Capital, a hedge fund-management firm based in New York. “If Russia does not come back to the table soon, investors worry the default risk and credit spreads widening will lead to tighter credit and even a recession.”

Public-health authorities are escalating efforts to contain the coronavirus outbreak, leading to a drop in business activity and curtailing global trade. The number of confirmed coronavirus cases has exceeded 110,000, with over 3,800 fatalities globally. At least eight American states including New York have declared states of emergency as infections spread to new parts of the U.S., and Italy quarantined some 17 million people.

Brent crude, the global gauge of oil prices, shed 18% to $37.19 a barrel, while U.S. crude futures dropped 17% to $34.37 a barrel.

U.S. energy producers were among the hardest hit. Chevron dropped 13% and Exxon Mobil fell 8.3%. Occidental Petroleum slid 33%.

Rising defaults among U.S. energy producers may make it harder for companies in other sectors to access credit markets, analysts said. “That ultimately is the negative aspect to lower oil,” said Viktor Hjort, head of credit strategy at BNP Paribas. “There is a real risk, and that is tighter credit conditions.”

The price war between major oil producers is “throwing petrol on the fire” at a time when investors are struggling to understand how deeply the outbreak will impact global supply chains and consumer spending, according to Lyn Graham-Taylor, a rates strategist at Rabobank.

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“We have got a massive demand decline brought about by the virus and now you’ve got headline inflation going through the floor: all combinations that say we need to do more easing,” Mr. Graham-Taylor said.

Stocks in the European energy sector led markets lower in the region, with BP plummeting 18% in London. Anglo-Dutch firm Royal Dutch Shell, Norway’s Equinor, Italy’s Eni, the U.K.’s BHP Group and France’s Total were also among the big decliners. That led the pan-continental Stoxx Europe 600 index down 6.3% with key equity benchmarks in the U.K. and France entering bear-market territory.

Foreign-exchange markets also faced renewed volatility on Monday, as steep drops in oil sparked a flight from commodity-linked currencies. The Russian ruble lost 7.2%, while the Norwegian Krone dropped 2.5%.

In the Asia-Pacific region, the S&P/ASX 200 index in Australia dropped 7.3%, suffering its worst day since October 2008, during the depths of the global financial crisis. That puts the gauge close to bear-market territory, which is typically defined as a peak-to-trough decline of more than 20%. Japan’s Nikkei 225 index closed down 5.1%, its biggest daily drop since 2016, while the benchmark stock index in Shanghai dropped more than 3%.

The Japanese yen, which often rallies in times of market stress, surged 2.8% to trade below 103 to the dollar, at its strongest levels since 2016. Gold, which is also normally considered a haven asset during times of turmoil, slipped 0.3%.

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“We are in uncharted territory now,” according to Hubert de Barochez, markets economist at Capital Economics. “Up until last week, what we were seeing was bond yields lower, stocks hurt and riskier currencies getting hit, but the idea was that if good news were to come all these moves would revert.”

The question now is where markets—and especially interest rates—go from here, said Dan Alpert, an investment banker and managing partner of advisory firm Westwood Capital.

“I cannot believe, that now that confidence in the market has been destroyed, that interest rates remain at 0.4%,” he said, referring to the rate on the 10-year yield. What’s more likely, he said, is a period of disinflation, or even outright deflation, that would ripple across markets and economies.

That will hurt companies, he said, especially those that are suffering in the current selloff. Firms will be talking about conserving resources, which could affect factors ranging from buybacks to wages, he said. That would cut into employment and consumer demand, he said.

“This is going to change the entire inflationary outlook,” he said.


Financial Markets – Investors Retreat From Stocks

Investors continued to pile into safe-haven assets Friday, pushing the yield on long-term U.S. government bonds to unprecedented levels and setting gold up for its best week in over a decade.


The yield on the benchmark 10-year Treasury sank below 0.8% for the first time. Stock futures also retreated, with contracts linked to the Dow Jones Industrial Average declining 2.3%, pointing to a decline of over 600 points when the blue-chips index opens for trading in New York. On Thursday, all three major U.S. stock indexes had retreated more than 3%.

Oil prices added to the market turmoil Friday, with the global benchmark, Brent crude, declining 3.8% to $48.09 a barrel. Russia disagrees with OPEC’s preliminary agreement Thursday to cut output by 1 million barrels a day, The Wall Street Journal reported. OPEC members and their allies, led by Russia, are continuing to meet Friday in Vienna. Brent has declined 27% since the beginning of the year as the coronavirus has hammered demand.

The pan-continental Stoxx Europe 600 gauge also dropped 3.4% to its lowest level since August. Asia’s major equity benchmarks closed lower Friday, with the Shanghai Composite Index losing 1.2%.

“People are accepting the size of the crisis: they know the governments are doing the right thing but what your brain tells you logically isn’t always how you feel about something emotionally,’’ said Sebastien Galy, a senior macro strategist at Nordea Asset Management. NDA.FI -4.02% “We’re seeing the market’s emotional brain leading today.”

Investors sought out assets that are considered low in risk — such as government bonds and gold — on worries about the economic impact of the coronavirus. The yield on 10-year Treasurys slipped to 0.755%, after earlier notching a record intraday level of 0.701%. It had closed Thursday at 0.924%. The yield on the 30-year benchmark dropped to 1.352%.

The continued market jitters — even after the Federal Reserve unexpectedly cut rates and U.S. lawmakers approved roughly $8 billion in emergency spending — is focusing attention now on potential government measures to counteract the economic impacts of the coronavirus. But President Trump and White House officials have said they don’t see an immediate need to craft a broader fiscal-policy response because the economy has been faring well.


Futures markets suggest the Fed’s key rate is likely to be in a range of just 0.25% to 0.5% by the end of April. That would be just 0.25 percentage points higher than the near-zero level that held from the depths of the global financial crisis until December 2015.

Investors are expecting rate cuts now and they are expecting [the cuts] to persist in the next two to three years,” said Homin Lee, Asia macro strategist at Lombard Odier. He said markets were pricing two to three further interest-rate reductions this year, and that these moves would only be partially reversed in the next three years.

Safe-haven assets gained, with the Japanese yen rising 0.9% against the dollar. Gold also rose 0.9%, and is on track for its best one-week performance since December 2008.

The ICE Dollar Index, which tracks the U.S. dollar against a basket of six major currencies, dropped 0.9% Friday.

Later in the day, the U.S. jobs report for February will offer fresh insights into the health of the U.S. economy before the coronavirus epidemic started to affect business activity. Economists surveyed by The Wall Street Journal are expecting 175,000 jobs to have been added last month and for the unemployment rate to be at 3.5%, a 50-year low.

The U.S. Commerce Department will also release data on the trade deficit, which is expected to have fallen to $46 billion in January from $48.88 billion the previous month.

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OPEC Agrees To Drastic Oil Cuts

The plan approved Thursday by the Organization of the Petroleum Exporting Countries would involve production cuts of 1 million barrels a day through the end of June to be shared among its 13 member nations. It also calls for another 500,000 barrels of daily cuts to be divided among the cartel’s 10 Russia-led oil-producing allies.

OPEC earlier in the day had agreed to only a three-month cut. But Saudi Arabia decided it wanted to force Russia into a more ambitious effort. Other OPEC members worried that the plan announced earlier in the day had failed to stimulate flagging prices, cartel delegates said.

“It’s a gamble,” one delegate said.

Brent crude, the global benchmark oil price, ended the day down 2.2%.

The production cuts would come on top of 500,000 barrels a day of existing curbs, which OPEC has agreed to carry through the end of the year, the cartel said. Saudi Arabia and other Persian Gulf producers are also considering additional production cuts outside the group, delegates said.

The coronavirus’s impact on oil demand has weighed heavily on recent talks among members of the so-called OPEC+ alliance led by Saudi Arabia and Russia. Brent is down 23% so far this year, as the virus outbreak hammers global demand.

The epidemic is expected to diminish global crude demand by as much as 2.1 million barrels a day in the first half of 2020, according to an estimate from Goldman Sachs. Meanwhile, IHS Markit and Standard Chartered forecast a decline in demand for 2020’s first two quarters by around 2 million barrels a day from the same period a year earlier. Gulf nations’ additional cuts would take OPEC+’s cuts to 2.1 million barrels a day.

“It’s not just about bleeding demand growth,” said Mohammad Darwazah, director for geopolitics and energy at Medley Global Advisors. “We’ve had inventories building through this whole period and it’s about cleaning up the market and 2.1 [million barrels in cuts] would go a long way to reversing these builds.”


The OPEC plan needs the approval of Russia and other non-OPEC allies, which are set to weigh the proposal on Friday. Russia has agreed in principle to reduce its output but hasn’t approved any production figure, OPEC officials said.

“Tomorrow, everything depends on a non-OPEC agreement,” Iran’s oil minister, Bijan Zanganeh, told reporters as he exited the meeting. “If [Russia] doesn’t accept it, we have no deal…We have no plan.”

Russian Energy Minister Alexander Novak refused to endorse the Saudi-backed plan at a technical meeting Wednesday and flew back to Moscow to consult with President Vladimir Putin, according to OPEC delegates. Mr. Novak also wants Russia to increase output this summer, a move that contradicts the cartel’s nine-months plan, according to one delegate.

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An OPEC official who attended Wednesday’s gathering said Moscow’s delays are negotiation tactics aimed at securing a deal that would have Russia cut relatively little. Russia is now seeking cuts of about 100,000 barrels a day, leaving Saudi Arabia to bear the brunt of the reduction effort, OPEC officials said.

Russia’s hard bargaining is increasingly wearing down Saudi Arabia and its Gulf allies, casting a cloud on the future of their four-year alliance. “Maybe it’s time to consider the whole point of non-OPEC,” said one Persian Gulf official.

The Saudis’ commitment to carry the bulk of the cuts on their own could lead to further complacency among OPEC nations, some of which have historically flouted production cut agreements.

“The Saudis want collective action, and going above and beyond means they may only encourage more free-riding,” said Medley Global Advisors’ Mr. Darwazah.

Oil prices swung higher following the news that Saudi and its Gulf neighbors were considering their own additional cuts, before quickly reversing those gains.



U.S. Stocks And Bond Yields Dropped As Anxiety About Virus Fallout Returns

The Dow Jones Industrial Average fell more than 650 points, or 2.5%, erasing much of the gains notched Wednesday. A strong Super Tuesday performance by former Vice President Joe Biden and growing signs of a coordinated response to the coronavirus had led to a sharp rally in U.S. stocks.

That enthusiasm quickly dissipated Thursday. The S&P 500 fell 2.3%. The Nasdaq Composite shed 1.8%. Losses in the stock market were broad, with all 11 of the S&P 500’s sectors falling in early trading Thursday.

It has been a dizzying week on Wall Street. Sharp stock swings up and down have dominated the week, continuing a bout of volatility that led to the worst selloff since the financial crisis last week.

“I know that these wild swings are overwhelming for all of us,” said Amy Kong, chief investment officer at Barrett Asset Management. “The situation is still unfolding.”

Still, some investors said they expected the stock market gyrations to continue, with much remaining unknown about how far the coronavirus will spread and its ramifications on economic growth around the globe.

In recent days, the outlook for corporate earnings and economic growth this year has darkened, weighing on the stock market. Many have been worried that the virus will harm consumer sentiment and business investment around the world.

Investors will analyze fresh economic data this week for signs of wilting growth. Data on Thursday showed that U.S. factory orders fell in January. New orders for manufactured goods decreased 0.5%, the Commerce department said, more than what economists surveyed by The Wall Street Journal had expected.

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On Friday, investors will be parsing the monthly jobs report to see if U.S. hiring remained strong in February. The number of Americans applying for first-time unemployment benefits fell last week, the Labor Department said Thursday, suggesting anxiety about the spread of the coronavirus haven’t yet affected layoffs.

The early stock decline Thursday suggests that steps by the Federal Reserve and U.S. lawmakers this week to bolster economic growth are failing to assuage investors.

Health authorities are warning that it may be impossible to fully contain the pathogen as infections are spreading within many communities. Meanwhile, steps taken to halt the outbreak have curtailed travel and business activity in the epicenters of the disease.

“There is a sense that there is only so much monetary policy can do, given markets have priced that in already,” said Jonas Goltermann, senior markets economist at Capital Economics. “Even with all the stimulus measures, those are not going to stop the virus and until there are signs the rate of infection is slowing we don’t think there will be a sustained rally.”

Investors are betting on more interest-rate cuts later this year, CME Group data show.

As stocks fell, investors sought the relative safety of government bonds, pushing the yield on the benchmark 10-year U.S. Treasury note down to 0.930%, from 0.994% at the close on Wednesday. Yields fall as bond prices rise.

The falling yields reflect high anxiety in markets as investors seek traditionally safer investments. They also have wide-ranging effects on borrowing costs and bank profitability. Shares of financial companies were some of the hardest hit in the stock market Thursday. Falling yields can crimp profits for big banks.

Meanwhile, mortgage rates fell to their lowest level on record Thursday as yields fell.

European stocks also fell, with the pan-continental Stoxx Europe 600 index down 1.6%. The basic resources sector and aerospace and defense companies were among the hardest hit.

U.S. stocks are poised to remain turbulent with the Cboe Volatility Index, or VIX, climbing to over 35. The index, sometimes known as Wall Street’s fear gauge, last week topped 40 to hit its highest level since 2011.
With volatility elevated and gauges of investor confidence low, markets are likely to keep swinging, according to Olivier d’Assier, head of applied research for the Asia-Pacific region at financial analytics firm Qontigo.

“We are going to be stuck in this for a while” Mr. d’Assier said. “You’ve got short-term traders buying on the stimulus and then you have medium- and long-term investors de-risking.”

Investor sentiment had shown signs of improvement Wednesday after U.S. lawmakers passed an $8 billion-emergency spending package on Wednesday to combat the coronavirus. Meanwhile, the International Monetary Fund detailed the $50 billion in lending programs it has that could help countries grappling with the virus.

Travel and leisure stocks continued to take a beating. Cruise line operator Norwegian Cruise Line Holdings fell about 9.8%, while Royal Caribbean Cruises dropped 12% as travelers continue to back out of planned cruises because of virus fears. American Airlines retreated 8.4%.

In contrast, most Asian markets rose Thursday, with the Shanghai Composite Index and Hong Kong’s Hang Seng Index both closing up around 2%.
Eli Lee, head of investment strategy at Bank of Singapore, said he viewed recent market action as noise. “The rebound is the latest in a series of gyrations we’ve seen, and reflects the fact equities were likely oversold,” he said.

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Mr. Lee said a coordinated international monetary and fiscal response would help boost financial conditions and investor sentiment, but added: “These are ultimately very blunt tools against a medical crisis that is poised to cause a sharp shock to consumer demand and production.”

In commodities, Brent crude, the global oil benchmark, wavered between gains and losses before edging down 0.6% in recent trading. OPEC has reached a preliminary agreement to cut crude output amid a global glut and eroding demand, The Wall Street Journal reported, as members of the oil-exporting group and their allies gather for a two-day meeting in Vienna. The collective plan, in response to the virus outbreak, still needs to be approved by Russia.

“In order for this to succeed, they need Russia to be onboard or they would just pass over market share to a major competitor,” said Ole Hansen, head of commodity strategy at Saxo Bank.



Australian Economic Growth Picks Up But Outlook Cloudy On Virus Fears

Australia’s economy expanded by more than expected last quarter, erasing the risk of a recession even as raging bushfires and the coronavirus crisis wreaked havoc with tourism and travel at the start of the new year.

Wednesday’s data from the Australian Bureau of Statistics (ABS) showed the A$2 trillion ($1.3 trillion) economy accelerated by 0.5% last quarter. Encouragingly, the previous quarter was revised upwards to show 0.6% increase from 0.4% earlier.

That took the annual pace to 2.3%, still well below the 2.75% that policy makers consider “trend”.

Economists had predicted a quarterly rate of 0.3%, according to a median of 16 economists polled by Reuters.

The stronger-than-expected data sent the local dollar rising 0.4% to $0.6611 from $0.6577 before.

The outlook is murkier though, as the coronavirus epidemic is seen dealing a greater blow to world economies than earlier expected.

Such are the risks that the Reserve Bank of Australia (RBA) cut interest rates to an historic low of 0.5% this week, just part of an urgent global response to the virus that saw the Federal Reserve spring an emergency policy easing.

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Prime Minster Scott Morrison has also flagged an imminent burst of targeted fiscal stimulus, a major u-turn for the conservative government that has long scorned such action.

“We view this shift in fiscal policy as a very positive development, but still expect further support from the RBA will be required given the extent of the shock and since the economy was underperforming prior to the outbreak,” said Alan Oster, chief economist at NAB.

He sees another quarter point rate cut in April and suspects the central bank would then have to consider quantitative easing including buying government bonds.



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World Finance Officials To Consider How To Cushion Economies Against Coronavirus

G7 finance officials will on Tuesday discuss ways to bolster their economies against the impact of the spreading coronavirus outbreak, but are not expected to specifically call for new spending or coordinated interest rate cuts, a G7 official said.

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Finance ministers and central bank governors from the group will hold a conference call at 1200 GMT to discuss the outbreak. But according to the official, who declined to be identified, a statement they are crafting does not detail any fiscal or monetary steps

Global stocks and oil prices have made some recovery afters policymakers indicated willingness to help ease the economic fallout from the coronavirus, while worries about the outcome of the Group of Seven heads’ discussion kept a lid on gains.

“This is a tug of war between hope and fear. Central banks are giving hopes with their potential stimulus,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.

“The question is what they will do? Monetary policy is already very loose and interest rates are very low,” he said.

Global stocks suffered a rout last week on growing fears that the disruption to supply chains, factory output and global travel caused by the epidemic could deal a serious blow to a world economy trying to recover from the U.S.-China trade war.

The G7 official, who has direct knowledge of the deliberations, told Reuters the officials would pledge to work together to mitigate the damage to their economies from the fast-spreading epidemic.

The language of an expected statement was subject to change as it was under discussion, the official said.


The coronavirus, which emerged in the central Chinese city of Wuhan late last year, has spread rapidly around the world over the past week, with more new cases now appearing outside China than within.

There are more than 90,000 cases globally, with more than 80,000 of them in China, and infections appearing in 77 other countries and territories, with Ukraine the latest country to report its first case.

China’s death toll is at 2,943 with more than 75 deaths elsewhere.

New cases in China have been falling sharply, with 125 reported on Tuesday, thanks to its aggressive measures to stop the spread of the disease.

After what critics said was an initially hesitant response to the virus, China imposed sweeping restrictions, including suspensions of transport, sealing off communities affecting tens of millions of people, and extending a Lunar New Year holiday across the country.


Now China is increasingly concerned about the virus being brought back into the country by its citizens returning from new hot spots elsewhere, and authorities on Tuesday asked overseas Chinese to reconsider or minimize their plans to travel home.

All travelers entering Beijing from the hot spots of South Korea, Japan, Iran and Italy would have to be quarantined for 14 days, a top city official said. Shanghai has introduced a similar quarantine order.

The most serious outbreak outside China is in South Korea where President Moon Jae-in declared war on the virus, ordering additional hospital beds and more face masks as cases rose by 600 to nearly 5,000. Thirty-four people have died in South Korea.

In the United States, the virus is now believed to be present in at least four communities in the Pacific Northwest – two in northern California, one in Oregon and one in Washington state – and authorities there are having to go well beyond the quarantine of infected travelers and tracing of close contacts, which until now had been the response.

Six people have died in the Seattle outbreak. The U.S. Centers for Disease Control and Prevention lists more than 90 cases across the United States, a large bulk of them patients who were repatriated from the Diamond Princess cruise liner that had been quarantined in Japan.

Iran, another badly hit country, reported infections rising to 1,501, with 66 deaths, including a senior official.

The death toll in Italy jumped to 52 on Monday from 34 the day before and the total number of confirmed cases in Europe’s worst-affected country climbed past the 2,000 mark.

Germany reported 31 new infections, taking its tally to 188.

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Wall Street Tries To Recover From Massive Sell-Off

Stocks rose sharply on Monday in volatile trading as Wall Street attempted to pare losses incurred during the worst week since the financial crisis amid fears of the coronavirus outbreak.

The Dow Jones Industrial Average traded 576 points higher, or 2.3%. The S&P 500 and the Nasdaq Composite climbed 2% each.

“The market has been conditioned to buy on any weakness,” said Keith Buchanan, portfolio manager at GLOBALT. “I think we’ll look back at these past few years at some point as some level of complacency.”

“Buying the dip takes more bravery now,” Buchanan said.

Stocks briefly came off their highs after a key measure on the U.S. manufacturing showed a slowdown last month. The ISM manufacturing index fell to 50.1 in February, the lowest level since the end of 2019. It also came below an estimate of 50.8.

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Apple shares led the Dow higher with a 7% jump; Merck and Walmart gained 4.6% and 6.5%, respectively. Consumer staples, utilities and real estate were the best-performing S&P 500 sectors, advancing more than 3% each. Tech, meanwhile, jumped 2.9%.

Monday’s moves mirrored the volatile overnight session where Dow futures traded in a range of more than 1,000 points, indicating this week may be as volatile as last week as well.

The Dow, S&P 500, and Nasdaq Composite all fell more than 10% last week, their biggest weekly declines since October 2008. They also entered correction territory, down more than 10% from all-time highs notched earlier in February. Both the Dow and S&P 500 have fallen for seven straight days.

Those declines came after a sharp increase in coronavirus cases outside of China. The number of cases continued to increase over the weekend, including in the U.S.

“The outbreak of Covid-19 has certainly changed the near-term narrative,” said Chetan Ahya, global head of economics at Morgan Stanley, in a note to clients Sunday. “It is an untimely shock, considering that the starting point of global growth was weak, and the recovery was very nascent.”

As of Sunday, more than 89,000 cases have been confirmed around the world along with more than 3,000 virus-related deaths. Australia, Thailand and the U.S. reported over the weekend their first coronavirus-related deaths. Rhode Island was the first U.S. state on the East Coast to report a coronavirus case. The number of cases in England rose to 35 after 12 new cases were confirmed on Sunday. Cases in China also reported more than 500 new cases on Saturday. New York Gov. Andrew Cuomo confirmed Sunday night the state’s first positive coronavirus case.


Horrible China economic data
Wall Street got its first look over the weekend at the economic toll the virus has taken on China, the epicenter of the outbreak.

A private survey on Chinese manufacturing activity released during Asian trading hours on Monday came in at its weakest level ever. The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) came in at 40.3 for February, far below expectations of a reading of 45.7 by economists in a Reuters poll. PMI readings above 50 indicate expansion, while those below that level signify a contraction.

That came after an official data released Saturday showed China’s official manufacturing PMI plunging to 35.7 in February, a record low, from 50 in January. A reading below 50 indicates contraction in a sector.

The plunge “shows the extent to which an outbreak can hit an economy,” said Ed Hyman, a widely followed economist on Wall Street and Evercore ISI chairman, in a note to clients. “All this is quite uncertain, and we may be overreacting. But we also don’t want to underreact.”

Gaming revenues in Macau also plunged nearly 88% last month.

Worries over the coronavirus’ impact on corporate profits and the global economy led investors to seek safer alternatives to stocks, pushing U.S. Treasury yields to all-time lows. On Sunday night, the benchmark 10-year rate broke below 1.04% for the first time ever. It was last at 1.07%.

“Global investors will be prone to panic as the virus arrives at their doorstep, underscoring the need for near-run prudence and patience before augmenting favored holdings,” strategists at MRB Partners wrote in a note. “The outlook is uncertain, or rather certainly bearish in the near term as quarantining spreads around the world, but with considerable doubt as to the duration and depth of the economic fallout.”

The virus’ quick spread has raised expectations for easier monetary policy from global central banks, including the Federal Reserve.

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CME Group’s FedWatch tool shows traders have priced in a 100% probability of a 50 basis-point rate cut later this month. Expectations for another rate cut in April are around 70%.

“The ultimate risk factor in our view is the U.S. consumer,” said Gregory Faranello, head of U.S. rates trading at AmeriVet Securities. “We have coronavirus cases showing up in the U.S. To the extent that that continues to spread, which we all hope will not be the case, the risk factor for the Fed grows because this now is no longer something that they can point the finger to relative to tariffs and say the global economy is slow, but we’re okay.”




Global Markets – Top 5 Things to Watch This Week

The week will start after Saturday’s data showing a record contraction in China’s manufacturing and service sectors because of the coronavirus outbreak, underlining the extent of the potential impact on the broader global economy.

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Investors will also be closely watching comments from Federal Reserve policymakers this week, with the prospects of a March rate cut on the rise. Friday’s U.S. jobs report is likely to be overshadowed by the market turmoil, but the race for the Democratic U.S. presidential nomination could divert some attention from the spread of the coronavirus. OPEC is to meet later in the week and with oil prices now down 25% so far this year pressure for additional output cuts is mounting. And the Bank of Canada may surprise investors with a rate cut at its meeting on Wednesday. Here’s what you need to know to start your week.


1 – China PMI data to shock markets
Data on Saturday showed factory activity in China contracted at its fastest ever in February, even worse than during the global financial crisis of 2008. The shockingly weak data is likely to add to fears that the world’s second largest economy may not rebound as quickly as investors had initially hoped.

Another report on Sunday showing that South Korean exports snapped a 14-month losing streak in February masked disruptions from the coronavirus, reflected outside the headline figures.

The coming days will reveal whether the outbreak is accelerating in the United States, the world’s biggest economy, how much the U.S. government is prepared to deal with an epidemic, and the economic damage in other countries.

“Right now the market is saying that this is unbounded. We don’t know what the limits are and we don’t know where it’s going to peak,” said Graham Tanaka, chief investment officer at New York-based Tanaka Capital.

2 – The Fed and U.S. data
Surveys of U.S. manufacturing activity from Markit and the Institute of Supply Management on Monday will give investors a chance to assess the economic impact of the virus. Friday’s U.S. nonfarm payrolls report for February will be watched for indications on the strength of the labor market before coronavirus spread more widely. The consensus forecast points to non-farm payrolls gaining 175,000, slowing from 225,000 in January.

Several Fed speakers are due to make appearances this week, Including Cleveland Fed President Loretta Mester, St. Louis Fed chief James Bullard, Dallas Fed head Robert Kaplan, Minneapolis Fed President Neel Kashkari and New York Fed President John Williams.

The likelihood of a March rate cut by the Fed has risen in the past week with the U.S. economy looking increasingly vulnerable to the outbreak. Fed Chairman Jerome Powell said Friday that the U.S. central bank will “act as appropriate” as the virus poses “evolving risks” to the economy.

3 – Super Tuesday
Investors will be looking ahead to Tuesday, when 14 states will cast ballots as the race for the Democratic U.S. presidential nomination intensifies.

Market watchers are waiting to see whether progressive Senator Bernie Sanders consolidates his lead or if moderates such as former Vice President Joe Biden or former New York Mayor Michael Bloomberg can make inroads.

Sanders campaign promises to break up big banks, take on drug companies and essentially abolish private insurance in favor of a single government-run plan have rattled some investors.

Shares of health insurers such as UnitedHealth Group (NYSE:UNH) and Centene Corp. (NYSE:CNC) have sold off in recent months amid growing concerns over the potential nomination of Sanders or fellow candidate Elizabeth Warren.

While investors have been more focused on coronavirus developments, some analysts have said Sanders’ rise in the polls also contributed to the recent sell-off. Some investors also noted that continued volatility in markets or an economic downturn could erode support for U.S. President Donald Trump.

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4 – Bank of Canada to make preemptive rate cut?
The Bank of Canada is to hold its latest policy setting meeting on Wednesday, the second to last such meeting before Stephen Poloz steps down as Governor.

Heightened financial market volatility amid fears over the coronavirus outbreak mean that the odds of a rate cut are rising, despite a strong domestic jobs market and inflation that is running roughly in line with the bank’s target.

Growing concern about the economic impact of protests opposing the Coastal GasLink pipeline that have severely affected the country’s rail network have also fed into expectations for a rate cut.

“The BoC has a reputation for moving early and occasionally providing surprises and we certainly think they could choose to pre-emptively cut this coming week. After all, they have much more room to offer support than most other developed markets, given their policy rate,” analysts at ING wrote.

5 – OPEC facing challenge of slumping demand outlook
The Organization of the Petroleum Exporting Countries and its allies including Russia – known as OPEC+ – meet in Vienna on Thursday and Friday as the spread of coronavirus around the world stokes fears that a slowing global economy will hit energy demand.

Friday saw the lowest closes for both Brent and WTI since December 2018. For the week, Brent lost almost 14%, its biggest weekly percentage decline since January 2016, while WTI fell over 16% in its biggest weekly percentage drop since December 2008.

“OPEC+ will have to deliver a deeper production cut as oil prices remain in freefall,” Edward Moya, senior market analyst at OANDA in New York, said in a report.

The group has already slashed oil output by 1.7 million bpd under a deal that runs to the end of March. In an initial response to counter the hit of the virus, an OPEC+ committee has recommended deepening output cuts by 600,000 bpd, but that figure is now seen as not enough by some in the group.



Discover 7 Ways to Create a Sustainable, Passive Income for Life – By Robert Kiyosaki.

Day Trading – Stock Market: 3 Things Under the Radar This Week

It was no ordinary week on Wall Street. The broader market recorded its fastest correction in history and its biggest loss since the Financial Crisis as the spread of the coronavirus gathered pace.

But there are questions on how much the Federal Open Market Committee really can help equities.

Retail sales may be the helping hand to the U.S. economy and there’s evidence some market players just don’t know which ticker is the right one.

Here are three things that flew under the radar this week.

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1. Little Hope Fed’s Easing Medicine a Match for Coronavirus Fallout

Wall Street’s fast-paced selling strengthened calls for a Federal Reserve rescue mission. And at long last, Fed Chairman Jerome Powell appeared to answer the call — at least partly.

In what may be the strongest indication yet that rate cuts are coming soon, Powell flagged the coronavirus as “evolving risk” and pledged to support the broader economy.

Powell said the “fundamentals of the U.S. economy remain strong,” but vowed that the central bank would use its tools and “act as appropriate to support the economy,” as “the coronavirus poses evolving risks to economic activity”

But with the bulk of damage from the outbreak, particularly in China, expected to hit supply more than demand, some have cast doubt on the power of monetary policy to take on the virus-led crisis.

“The problem with doing monetary stimulus is that it will have limited impact on the effects of the virus,” said Jens Peter Sorensen, chief analyst at Danske Bank A/S, in Copenhagen. “The Covid-19 virus is keeping people from work, the supply chain is disrupted and tourists are not going to Italy. Monetary policy can do very little.”

While others agree that monetary policy will do little to speed up the opening factories and ease travel restrictions, they argue that not only inaction, but a lack of bold action from the Fed may prove economically detrimental.

“Although moderate Fed rate cuts are unlikely to be very powerful, the committee will probably be reluctant to disappoint market expectations for substantial rate cuts for fear of tightening financial conditions further,” Goldman Sachs said in a note.

The investment bank said it expected the Fed to cut interest rates by 75 basis points by June, with first cut coming as soon as March.

2. Shoppers Gonna Shop?

With Covid-19 threatening to become a pandemic and countries looking at various quarantine measures, service-heavy economies are looking at a sharp drop in economic activity.

But the U.S. National Retail Federation released a report this week that expresses confidence that the consumer will remain resilient, even in the face of Black Swan events.

Retail sales will rise 3.5% to 4.1% to between $3.93 trillion and $3.95 trillion in 2020, the NRF said. Online sales will be up between 12% and 15%.

“With gains in household income and wealth, lower interest rates and strong consumer confidence, we expect another healthy year ahead,” NRF President and CEO Matthew Shay said in a statement.

“There are always wild cards we cannot control like coronavirus and a politically charged election year,” Shay said. “But when it comes to the fundamentals, our economy is sound and consumers continue to lead the way.”

On Friday, the University of Michigan said its February consumer sentiment index came in at 101, up from 99.8 in January.

3. Pushing the Panic Button

Is Covid-19 dealing with not just “panic selling,” but also “panic buying”?

The money pouring into any stock with Zoom in the name says so.

With companies facing possibly protracted times with employees staying at home, video conferencing will be essential to keeping businesses running. With that in mind, investors have been buying shares of Zoom Video Communications (NASDAQ:ZM).

The company “is widely considered the leader in modern enterprise video communications, with an easy, reliable cloud platform for video and audio conferencing, online meetings, chat and webinars,”’s Jesse Cohen wrote.

The stock is up about 40% year to date.

But less-than-fastidious buyers have also been snapping up shares of Zoom Technologies (OTC:ZOOM), an over-the-counter stock that isn’t really in business anymore and hasn’t reported earnings since 2011.

Because it has the catchier ticker of “ZOOM,” it’s up 140% in the last five trading days.

While Zoom Technologies has seen ancillary benefits, Constellation Brands (NYSE:STZ) is dealing with reports of consumers being afraid of its Corona beer due to the similarity of the beer’s name and the coronavirus.

But Constellation said reports sales are plunging are “unfounded” and that sales of Corona are climbing in the U.S.

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Financial Markets – Panic Selling Continues as Dow Tumbles Below 25,000

Panic selling continued in the U.S. stock market on Friday, putting the market on course for its biggest weekly loss since 2008 amid growing signs that the coronavirus outbreak will ultimately cause an economic shock in Western economies as well as in China and its Asian trading partners.

The Dow Jones Industrial Average opened with another loss of 627 points, or 2.6%, taking it below the 25,000 mark. By 10:33 AM ET (1533 GMT), the DJIA was down 4%, or 1,034 points.

The S&P 500 was down 3.4%, at its lowest since October 2019. The Nasdaq Composite, meanwhile, fell 2.7%.

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Overnight, another sharp jump in the number of confirmed Covid-19 cases in South Korea and Iran, coupled with new emergency virus containment measures in Germany, Switzerland and elsewhere, all contributed to keeping the mood negative. A better-than-expected monthly rise of 0.6% in U.S. personal income in January was of little consolation.

“The landscape remains very uncertain,” said Mark Dowding, chief investment officer of BlueBay Asset Management in a weekly note. “For now, there is a sense with the coronavirus that things will need to get worse before they can get better.”

He argued that the point of “maximum bearishness” could be another couple of weeks away.

“This could coincide with the moment that Covid19 is officially declared a pandemic by the World Health Organization,” something that could lay the groundwork for a coordinated response of policy stimulus, Dowding argued. Such hopes seem far away at the moment, with the U.S. and German governments both playing down the seriousness of the situation.

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The bond market is now betting heavily on the Federal Reserve riding to the rescue. The2-Year Treasury bond yield dipped below 1% overnight and then roared lower to 0.91% after St. Louis Fed President James Bullard indicated that the Fed, if not fiscal policy, would react to a global pandemic.

“Further policy rate cuts are a possibility if a global pandemic actually develops with health effects approaching the scale of ordinary influenza, but this is not the baseline case at this time,” Bullard, who doesn’t vote on monetary policy this year, said Friday in prepared remarks to be delivered in Fort Smith, Arkansas.

Hot money continued to flood out of Tesla (NASDAQ:TSLA), which lost another 7.1%, taking its losses for the week to over 30%.

Beyond Meat (NASDAQ:BYND) suffered similar problems following a surprise quarterly loss after the bell Thursday, losing 17.6%. It’s now down 25% for the week.

Apple (NASDAQ:AAPL) was also the subject of some heavy profit-taking, falling 5.1% to its lowest since December. None of the companies mentioned released any news of note.

One stock emphatically bucking the trend was Zoom Video Communications (NASDAQ:ZM), the maker of software for video conference calls. Zoom Video stock has been flying as participants price in a boom in such calls as Covid-19 spawns a global outbreak of working from home and restrictions on business travel.

JPMorgan (NYSE:JPM), L’Oreal (PA:OREP) and Nestle (SIX:NESN) have all said this week they intend to limit staff travel as a result of the outbreak.

Discover 7 Ways to Create a Sustainable, Passive Income for Life – By Robert Kiyosaki.



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Stock Market Corrections: How Bad Can They Get And How Long Can They Last?

With the stock market sliding lower as coronavirus fears rise, all the talk about a so-called “correction” can cause nervousness and confusion.


A correction is a mechanical-sounding term to describe when a major stock market index like the Standard & Poor’s 500 falls 10% or more from a recent closing high. The recent losses on Wall Street officially pushed all three benchmarks into correction territory during trading Thursday.

The Dow Jones industrial average tumbled as much as 1,190 points, while the S&P 500 and the Nasdaq Composite both dropped more than 4%.

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It took just eight calendar days for the S&P 500 index to meet the 10% threshold — its fastest such drop since World War II, according to Sam Stovall, chief investment strategist at financial-research company CFRA.

“The swiftness of this decline signals the magnitude of uncertainty being expressed by investors,” Stovall said. “Even though history says that other viruses haven’t been a major event to corporate bottom lines, investors are thinking this time might be different.”

How bad were the biggest corrections?

Since a correction is a drop between 10% and 19.99%, there’s always a chance we’re only about halfway through this recent scare. The market fell more than 19 percent in corrections in 2018, 2011, 1998 and the 1976-78 period, CFRA data shows.

But even so-called “garden variety” corrections can cause fear levels to spike.

The good news? Not every correction morphs into a more feared bear market, a 20% or higher drop. The average bear since 1929 has sliced nearly 40% off the S&P 500.

Most bear markets coincide with a recession.

In the 23 corrections since World War II the average price drop for the S&P 500 has been 14 percent, according to data from CFRA. They normally last around 4.4 months.

Greg McBride, a chief financial analyst for, thinks a recession is an unlikely, but “ever-present threat.”

“We’re not immune from the economic cycle. Disruptions to economic expansion can certainly be the catalyst for a recession,” McBride said. He added that the jumpy stock market is a reflection of uncertainty surrounding the spread of coronavirus.

“In the face of uncertainly, markets and valuations are being subjected to a rapid reevaluation. That’s what’s underpinning the selling action that’s been prevalent this week,” McBride said.

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Wall Street Slips Into Correction Territory

Wall Street‘s main indexes fell for the sixth straight session and slipped into correction territory on Thursday, as the rapid spread of the coronavirus outside China intensified fears about the hit to economic growth and corporate earnings.

The S&P 500 and Nasdaq are now more than 10% below their intraday record highs hit on Feb. 19, while the Dow Jones Industrials is 10% off its Feb.12 peak.

The indexes were set for their steepest weekly pullback since the global financial crisis as rising number of new infections outside China raised fears of a pandemic.

Adding to worries, the U.S. Centers for Disease Control and Prevention confirmed an infection in California in a person who reportedly did not have relevant travel history or exposure to another known patient.

“In the recent week, markets have come to realize that the outbreak is much worse and are now realistically pricing in the impact of the virus on the economy,” said Philip Marey, senior U.S. strategist at Rabobank.

“In that sense it’s a bit of a catching up from the relative optimism that was there in the beginning when markets thought (the virus) will be contained to China with some minor outbreak outside.”

Industry analysts and economists continued to sound the alarm as they assessed the impact of the coronavirus, with Goldman Sachs (NYSE:GS) saying U.S. firms will generate no earnings growth in 2020.

Bank of America (NYSE:BAC) slashed its global growth forecast to the lowest level since the peak of the financial crisis.

At 10:08 a.m. ET, the Dow Jones Industrial Average was down 573.93 points, or 2.13%, at 26,383.66, the S&P 500 was down 67.33 points, or 2.16%, at 3,049.06. The Nasdaq Composite was down 221.07 points, or 2.46%, at 8,759.70. All of the 11 S&P sectors were deep in the red with energy losing the most, down 4.1%. Technology, financial, industrials, consumer discretionary, materials and communication services sectors dropped more than 2% each.

Declining issues outnumbered advancers for a 8.83-to-1 ratio on the NYSE and for a 8.65-to-1 ratio on the Nasdaq.

The S&P index recorded four new 52-week highs and 90 new lows, while the Nasdaq recorded 15 new highs and 361 new lows.

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Pandemic Fears Pummel Stocks

Stocks sunk deeper into the red on Thursday, oil prices fell and U.S. Treasuries rallied into record territory as more signs of the global spread of the coronavirus heightened fears of a pandemic.

Global markets have dropped for six straight days, wiping out more than $3.6 trillion in value. Much remains unknown about the virus that originated in China, but it is clear the ramifications of the world’s second biggest economy in lockdown for a month or more are vast.

Analysts have sharply downgraded their China and global growth forecasts, while policymakers from Asia, Europe and the United States have begun to prepare for a potentially steep economic downturn than initially anticipated.

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E-mini futures for the S&P 500 were down 1.4% (ESc1) and Europe appears set for a catch-up slump. EuroSTOXX 50 futures fell 2.7% (STXEc1) and FTSE futures skidded 2.3% (FFIc1).

Oil, sensitive to global growth given the vast energy consumption in a many countries, fell more than 1% to its cheapest in over a year. [O/R]

MSCI’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) fell 0.5% and is down more than 4% for the week.

The yield on U.S. Treasuries, which falls when prices rise, dropped in to uncharted waters underneath 1.3% (US10YT=RR). Bets on monetary easing in the United States have surged. [US/]

“I think the market is just pushing the Fed to cut rates,” said Stuart Oakley, Nomura’s global head of flow FX in Singapore.

“It’s a flight to quality as well,” he said.

“The news seems to be creating this mass hysteria everywhere, there’s panic that the world’s about to end, so people are getting out of risk and putting their money in safe havens and the biggest one of those are 10-year Treasury bond.”

China accounts for about 96% of cases but most new infections are now being reported elsewhere.

News on Thursday of a jump in cases in South Korea was accompanied by a warning that the virus may be spreading in California.

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Taiwan raised its epidemic response level to the highest possible. Japan’s Nikkei dropped 2% to a four-month low amid more worries that the Tokyo Olympic Games could be cancelled or shifted. (T)

And on top of that a tour-bus guide in Japan also tested positive to the virus for a second time, raising questions about how the pathogen spreads.

“This feels like a consolidation, potentially before another leg down,” said Jeffrey Halley, Senior Market Analyst at brokerage OANDA by phone from Jakarta.

The only bright spot, ironically, was China’s stock market, which climbed in relief that domestically, at least, the containment efforts are showing signs of working. (SS)


At the same time as the breadth of the virus’ spread has knocked markets, analysts have been steadily revising their estimates of the economic damage higher.

J.P. Morgan now expects Chinese GDP to shrink 3.9% this quarter, while Capital Economics sees it contracting this year.

“There is no equivalent exogenous shock the world has gone through in the post-Bretton Woods period,” said Deutsche Bank (DE:DBKGn) analyst Alan Ruskin in a note.

“Work place disruption, trade interlinkages, business uncertainties, profit warnings, inability to pay, and capacity to service credit are all related supply-side issues that, in turn, generate demand effects on employment, disposable income, wealth and confidence.”

Only a dramatic ratcheting higher of bets on interest rate cuts in the United States has given pause to the huge flow of money from Asia into greenbacks in the currency markets.

From almost nothing a week ago, markets are pricing a roughly even chance of a Federal Reserve interest rate cut next month and have almost fully priced a cut by April. <0#FF:>

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That was enough to help drag the China-sensitive Aussie dollar from an 11-year low and lend support to the euro (EUR=). [FRX/]

The Aussie last traded at $0.6550 and the euro lifted through $1.09 for the first time in two weeks to buy $1.0908.

The safe-haven Japanese yen firmed to 110.02 per dollar.



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Oil Steadied Above $56 A Barrel After Two Days Of Declines

Oil steadied above $56 a barrel on Tuesday after two days of declines as OPEC output cuts and Libyan supply losses balanced concerns about the spread of the coronavirus and its impact on oil demand.

Crude fell almost 4% on Monday, with other commodities also reporting losses while U.S. and European equities suffered their steepest declines since mid-2016 on concern the coronavirus outbreak could turn into a pandemic.

Brent crude rose 5 cents to $56.35 a barrel by 1338 GMT. U.S. West Texas Intermediate crude was up 16 cents at $51.59.

“Risk appetite appears to be growing again on the markets,” said Commerzbank (DE:CBKG) analyst Eugen Weinberg. He added that the virus and resulting impact on demand is not expected to disappear anytime soon.

South Korea aims to test more than 200,000 members of a church at the centre of a surge in coronavirus cases. The virus is also spreading in Europe and the Middle East.

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Concern about the demand impact from the virus has pushed Brent down by almost $10 a barrel this year despite the shutdown of most of Libya’s output and a supply pact between the Organization of the Petroleum Exporting Countries (OPEC) and allies.

Prices received further support as lawmakers based in areas of eastern Libya on Monday said that they would not participate for now in peace talks.

“Libyan peace talks appear to have taken a further blow with both sides announcing the end of their participation, pointing to lost crude volumes from the country carrying on for now,” JBC Energy analysts said in a report.

However, oil could come under more pressure from the latest U.S. supply reports.

Crude inventories are expected to rise for a fifth week running. The first of this week’s two supply reports, from the American Petroleum Institute (API), is due at 2130 GMT.

Potential support for prices could also come from OPEC and allies including Russia, which are considering whether to curb output further. However, scepticism is growing about the chance of further action.

“Doubts are emerging about the willingness of OPEC+ to extend and expand the necessary production cuts,” said Commerzbank’s Weinberg. The producers are due to meet in Vienna over March 5-6 to decide policy.

Saudi Arabia’s energy minister on Tuesday said OPEC+ should not be complacent about the coronavirus. But Russia, key to any deal, has yet to announce its position on further curbs.



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European Shares Steady As Selling Pressure Eases

European shares bounced back on Tuesday after recording their worst losses since June 2016 in the previous session, with investors assessing the economic hit of a coronavirus outbreak that has spread far beyond China.

Markets across the globe attempted to stabilize, with the pan-European STOXX 600 index (STOXX) rising 0.6%.

After a 5.4% tumble on Monday, Milan-listed shares (FTMIB) rose 0.6%. Italy is struggling with the worst flare-up of coronavirus cases in Europe, with 220 cases reported and seven dead.

Airline stocks, which took the biggest hit on Monday, edged higher. Lufthansa (DE:LHAG), EasyJet (L:EZJ) and Ryanair (I:RYA) rose between 0.6% and 1.4%.

Prudential Plc (L:PRU) rose 2.9% after hedge fund Third Point LLC amassed a more than $2 billion stake and called on the British insurer to split into two companies.




Moderna Inc. Ships First Experimental Coronavirus Vaccine For Human Tests

Drugmaker Moderna Inc. has shipped the first batch of its rapidly developed coronavirus vaccine to U.S. government researchers, who will launch the first human tests of whether the experimental shot could help suppress the epidemic originating in China.

Moderna on Monday sent vaccine vials from its Norwood, Mass., manufacturing plant to the National Institute of Allergy and Infectious Diseases in Bethesda, Md., the company said. The institute expects by the end of April to start a clinical trial of about 20 to 25 healthy volunteers, testing whether two doses of the shot are safe and induce an immune response likely to protect against infection, NIAID Director Anthony Fauci said in an interview. Initial results could become available in July or August.

Moderna’s turnaround time in producing the first batch of the vaccine—co-designed with NIAID, after learning the new virus’s genetic sequence in January—is a stunningly fast response to an emerging outbreak.

If a trial starts as planned in April, it would be about three months from vaccine design to human testing. In comparison, after an outbreak of an older coronavirus, severe acute respiratory syndrome, in China in 2002, it took about 20 months for NIAID to get a vaccine into the first stage of human testing, according to Dr. Fauci.

“Going into a Phase One trial within three months of getting the sequence is unquestionably the world indoor record. Nothing has ever gone that fast,” Dr. Fauci said.

Public-health authorities say advances in vaccine technology, aided by government and private investments, are shortening development timelines when outbreaks occur. In the past, researchers scrambled to develop vaccines in response to outbreaks such as SARS, Ebola and Zika with mixed results. Older types of vaccines are developed from viral proteins that must be grown in eggs or cell cultures, and together with animal testing it can take years before a vaccine can be used in humans.

Newer approaches rely on what are known as platform technologies—building blocks that can be tweaked quickly with the genetic information from a newly emerged pathogen.

The fast production of a vaccine and plans to test it soon don’t guarantee its success. “You’re never sure until you’re at the end what you have,” said Bruce Gellin, president of global immunization at the Sabin Vaccine Institute. Saying there are other coronavirus vaccines in the works, he added: “The sequence of testing is designed to sort out what works from what doesn’t. That’s why it’s important to try as many things as possible that seem feasible, because not all horses will finish the race.”

It is uncertain whether Moderna’s vaccine will work because its gene-based technology hasn’t yet yielded an approved human vaccine. And even if the first study is positive, the coronavirus vaccine might not become widely available until next year because further studies and regulatory clearances will be needed, Dr. Fauci said.

But health authorities say it is worth placing bets on these new technologies in the face of fast-moving outbreaks. Since early January, when only a few dozen cases were confirmed in central China, the virus has spread to more than 79,000 people, including more than 2,600 who have died. The vast majority of the cases are in China, according to the World Health Organization.

Dr. Fauci said it is possible the spread of coronavirus could lessen during warmer months, but then return next winter and become a seasonal virus like the flu, making a vaccine useful even if it isn’t ready for widespread distribution until next year.

“The only way you can completely suppress an emerging infectious disease is with a vaccine,” Dr. Fauci said in his office in Bethesda. “If you want to really get it quickly, you’re using technologies that are not as time-honored as the standard, what I call antiquated, way of doing it.”

Moderna, which has more than 800 employees, was founded in 2010 to develop drugs and vaccines based on what is known as messenger RNA, the genetic molecules that carry instructions from DNA to the body’s cells to make certain proteins. The company is targeting cancer, heart disease and infectious diseases. It hasn’t brought any drugs or vaccines to market.

Moderna Chief Executive Stephane Bancel said he got in touch with NIAID after hearing about the new China virus while vacationing with his family in France in early January, to discuss collaborating on a vaccine.

Chinese scientists found the genetic sequence of the new virus and published it online around Jan. 10. Researchers at NIAID and Moderna analyzed the sequence and homed in on a section they believed was most likely to induce the desired immune response if incorporated into a vaccine. NIAID agreed to run a clinical trial if Moderna could supply a vaccine.

Moderna didn’t need actual samples of the virus or its proteins. The company’s vaccines instead contain nucleic acids with genetic codes that instruct the body’s own cells to make certain proteins from the virus that don’t infect a person, but trigger an immune response.

Moderna in 2018 opened a manufacturing site in the shell of a former Polaroid plant in Norwood, near the company’s Cambridge, Mass., headquarters. In the plant, employees wearing white lab gowns, hair nets and safety goggles work amid lab hoods, robotic machinery and steel tanks to produce drugs and vaccines for clinical trials. Meeting rooms are named after famous scientists such as Curie and Pasteur.

To make the coronavirus vaccine, Moderna repurposed some of the robotic equipment that was making cancer vaccines tailored to the genetic mutations of patients’ tumors.

As many as 100 manufacturing and quality-control employees were involved in the effort, many working nights and weekends. As manufacturing ramped up, the company’s leaders had frequent meetings, calls and WhatsApp messaging chains to monitor progress, and stayed in close contact with NIAID.

After Moderna’s effort became public in January, friends and family members became interested.

Juan Andres, Moderna’s head of technical operations, said, “I wasn’t used to my kid thinking I did anything cool,” but his 15-year-old son began asking questions about the project at dinner.

Moderna finished manufacturing about 500 vials on Feb. 7, a Friday. Normally, the company would have waited until Monday to start quality-control tests, but about 10 to 15 workers spent the weekend testing samples for potency and other features. The batch cleared most tests that weekend, but it took about two weeks to complete sterility testing. Moderna stored the supply in freezers set to minus-70 degrees Celsius.


One risk of moving so fast is that Moderna and NIAID won’t know for sure they picked the best fragment of the virus’s genetic sequence to target until the human study is completed.

“It is possible it’s going to work, but we have to wait and see,” said Mr. Bancel, Moderna’s CEO.

The first trial will be conducted at NIAID’s clinical-trials unit in Bethesda. If the first one is successful, a second trial of hundreds or thousands of participants could begin, which could take six to eight months, Dr. Fauci said. This trial could be conducted partly in the U.S. but also in China or a region where the virus is spreading, so the testing could gauge whether the vaccine reduces infection rates.

If the second trial is positive, the vaccine could be ready for widespread use, he said. How widely the virus has spread by then will determine whether it is given to targeted groups such as health-care workers, or more broadly to the general population, Dr. Fauci said.



Pandemic Fears Grip Wall Street

Wall Street plunged into the red in early trading Monday as a spike in the number of Covid-19 virus cases confirmed outside of China pushed money out of riskier investments.

The Dow dove 905.27 points, or 3.12%, to 28,087.04 at 9:35 AM ET (14:35 GMT) and the S&P 500 fell 93.63, or 2.8%, to 3,245.62. The Nasdaq Composite plunged 341.72, or 3.6%, 9,234.87, with tech stocks particularly hard hit.

The U.S. Treasury yield curve inverted the most since October and the 10-Year yield fell below 1.37%. Its all-time low is 1.32% hit in 2016 after the Brexit vote.

Worries snowballed over the weekend as the numbers of cases of Covid-19 jumped in Italy, South Korea and Iran. Authorities in Italy imposed a quarantine in the north of the country and its benchmark MIB index tumbled nearly 6%.

The Covid-19 shock is a test of the fear-of-missing-out (FOMO) and buy-the-dip conditioning that has helped stocks overcome the headwinds of valuations, Allianz (DE:ALVG) Chief Economic Adviser Mohamed El-Erian tweeted.

“A key element is whether markets distinguish between Central Banks’ willingness (high) and ability (low) to counter the economic shock,” he said.

Among individual stocks, Dow component Apple (NASDAQ:AAPL) sank 6% after the latest data showed shipments of mobile phones in China dove 36.6% in January from the year-ago period.

High-flying Tesla (NASDAQ:TSLA), which has a factory in Shanghai, was also hit on virus worries, with shares dropping 8.6%.

Chip stocks were also hard hit. Advanced Micro Devices (NASDAQ:AMD) lost 10.2%, Nvidia (NASDAQ:NVDA) tumbled 8.4% and Micron Technology (NASDAQ:MU) slumped 7.4%.

Expectations that the Federal Reserve would stop in with a rate cut to help the economic situation rose today, with the odds of a March cut rising to more than one in four.

“Growing consensus among economist(s) I am speaking to at (the National Association for Business Economics 2020 conference) is that the Fed will have to cut and do so soon – March – in response to COVID-19,” Grant Thornton Chief Economist Diane Swonk tweeted. “It may not be called a health pandemic yet but it is an economic pandemic.”

Diane Swonk@DianeSwonk

Growing consensus among economist I am speaking to at is that the Fed will have to cut and do so soon – March – in response to COVID-19. It may not be called a health pandemic yet but it is an ecomomc pandemic.






Shares Drop, Gold Surges As Investors Scurry For Safety

Global shares and oil slid on Monday while safe-haven gold surged as the spread of the coronavirus outside China darkened the outlook for world growth with infections and deaths rising in South Korea, Italy and the Middle East.

The large spike in Italian cases has especially rattled investors on concerns about the potential for the virus to spread deeper into Europe and cause economic disruption there.

The selloff in Asian markets and U.S. and European stock futures on Monday was financial markets’ first reaction to the weekend news, which analysts described as game-changing developments in the outbreak.

South Korea put the country on high alert while the number of infections jumped to 763 and deaths rose to seven. In Italy, officials said a third person infected with the flu-like virus had died, while the number of cases jumped to above 150 from just three before Friday.

Iran, which announced its first infections last week, said it had confirmed 43 cases and eight deaths, with most of the infections in the Shi’ite Muslim holy city of Qom. Saudi Arabia, Kuwait, Iraq, Turkey and Afghanistan imposed travel and immigration restrictions on the Islamic Republic.

“There is lots of bad news on the coronavirus front with the total number of new cases still rising,” AMP chief economist Shane Oliver wrote in a note.

“Of course, there is much uncertainty about the case data, new cases outside China still looks to be trending up and the economic flow on has further to go with the Chinese economy likely to have contracted in the March quarter.”

U.S. stock futures were dumped with E-minis for the S&P500 falling 1.4% while Nikkei futures stumbled 2.7%. EuroStoxx 50 futures declined about 2% while futures for London’s FTSE skidded 1.3%.

Asian share indexes were also a sea of red.

Australia’s benchmark index slid 2.3% while New Zealand was about 1.8% lower.

South Korea’s KOSPI index fell about 3.4%. Chinese shares opened down with the blue-chip CSI300 index easing 0.5%.

That left MSCI’s broadest index of Asia-Pacific shares outside Japan off 1.9% at its lowest since early February. Japanese markets were closed for a public holiday.

The virus has killed 2,592 people in China, which has reported 77,150 cases, and slammed the brakes on the world’s second largest economy.

It has spread to some 28 other countries and territories, with a death toll of around two dozen, according to a Reuters tally.


Economists have roundly downgraded growth forecasts for China as well as the world as travel restrictions and lockdowns have already hit tourism, supply chain and factory output in a number of countries.

Oxford Economics estimated world economic output growth would fall to nearly zero in the first half of 2020 if the coronavirus outbreak became a global pandemic.


As investors wagered central banks would step in with policy stimulus to support economic growth U.S. Fed fund futures surged signalling more rate cuts later this year.

The dollar paused at 111.58 against the Japanese yen after falling steeply on Friday.

The losses came as data showed American business activity stalled in February, signalling a contraction for the first time since 2016. The manufacturing sector also clocked its lowest reading since August.

“The data was a wake-up call for the U.S. equity market, hitherto complacent about the impact of the virus,” NAB currency strategist Rodrigo Catril said, adding it “was probably too early to throw the towel” on the greenback.

Despite losses since Friday, the greenback rose 1.7% last week and is still up more than 2.7% so far this year.

“We are likely entering a period of messy and potentially misleading data releases,” Catril said.

“The U.S. had a bad data day, but we think that is just a taste of what is yet to come with other major economies likely to show bad economic numbers too.”

The Australian dollar, considered a liquid proxy for China plays, was down 0.4% at $0.6601 as it languished near an 11-year low.

The euro fell 0.2% to $1.0817.

That left the dollar index slightly higher at 99.581.

Analysts expect the Korean won to stay on its downward spiral against the dollar as one of the favourite risk proxies for investors.

The won has fallen more than 4.5% on the dollar so far this year. It was last down 1% at 1,219.06 after hitting its weakest since August 2019.

In commodities, oil prices slid as investors fretted about crude demand being pinched by the impact of the coronavirus outbreak, while leading producers appeared to be in no rush to curb output.


Brent crude slumped 2.4%, or $1.4, to $57.09 a barrel while U.S. crude dropped 2.3%, or $1.25, to $52.13 a barrel.

U.S. gold futures climbed 1% to $1,665.1 an ounce. Spot gold jumped to a seven-year high of 1,678.58 after marking its biggest weekly gain last week since early August.




Financial Markets – Top 5 Things to Watch This Week

While China is slowly getting back to normal, fears over the economic fallout from the spread of coronavirus beyond its borders remain to the fore, so remarks by central bank officials from the U.S. and Europe will be watched for their outlook on the global economy. It’s a quiet week for data with durable goods orders, consumer confidence, and the second reading of fourth quarter growth due out in the U.S. Investors will continue to monitor the U.S. dollar’s progress after it was last week’s big winner in foreign exchange markets (despite Friday’s declines). And while most of earnings season is already in the books, this week will bring results from consumer facing companies. Here’s what you need to know to start your week.

G20 calls for coordinated response to coronavirus
Finance officials from the world’s 20 biggest economies on Saturday called for a coordinated response to the coronavirus outbreak, which the International Monetary Fund predicted would pull down China’s growth this year to 5.6% and cut 0.1% from global growth.

“But we are also looking at more dire scenarios where the spread of the virus continues for longer and more globally, and the growth consequences are more protracted,” said IMF Managing Director Kristalina Georgieva at the G20 Finance Ministers and Central Bank Governors Meeting.

China reported another fall in new cases on Sunday, but world health officials warned it was too early to make predictions about the outbreak as the number of new cases continued to increase in other countries.

Chinese PMI data on Saturday will show the first signs of the outbreak on the world’s second largest economy.

Can the dollar index breach the 100 level?
Leaving aside Friday’s declines, triggered by disappointing U.S. PMI data for February, last week saw the greenback rally to a near three-year high versus the euro, a 10-month high against the yen and an 11-year peak versus the Aussie. So far this month it has risen more than 2% against a currency basket.

The U.S. economy’s relative resilience to coronavirus has made the greenback the safe-haven of choice, at least temporarily.

The weak economic outlook in the eurozone and Japan against the background of the coronavirus epidemic is likely to continue to weigh on the euro and the yen.

The selloff in the yen marks a departure from the pattern in recent years where the Japanese currency rises in times of geopolitical or market turmoil due to Japan’s status as the world’s largest creditor nation.

“All considered we think the dollar should at least retain its strength, with a chance for more appreciation,” FX analysts at ING said in a note. “At this stage, we suspect that a break above 100 in DXY is just a matter of time.”

Fedspeak, U.S data
Federal Reserve Vice Chairman Richard Clarida is to speak at an economic policy conference in Washington on Tuesday, where other speakers include IMF Chief Economist Gita Gopinath and Cleveland Fed President Loretta Mester. Minneapolis Fed President Neel Kashkari and Dallas Fed President Robert Kaplan are also set to make appearances this week, with investors on the lookout for any comments on the virus impact.

Also on Tuesday, a report on U.S. consumer confidence will be closely watched for any indications that the global coronavirus outbreak is hitting sentiment.

Thursday’s durable goods orders data is forecast to be weaker amid a slowdown in factory output in Asia, while the halting of Boeing (NYSE:BA) 737 Max production in mid-January is also likely to weigh. Meanwhile, the second reading of U.S. fourth quarter growth is not expected to be subject to a major revision.


Eurozone data
Monday’s German IFO report will be central to the direction of the euro this week. The consensus is for a reading of 95.3 in the Business Climate Index, down from 95.9 in January. Other key releases will be Friday’s inflation numbers for Germany and France which will be closely watched ahead of the upcoming European Central Bank meeting in March.

ECB President Christine Lagarde is due to deliver remarks at an event in Germany on Wednesday, while several other ECB officials, including Chief Economist Philip Lane will also give speeches this week.

Earnings results
Estimates from Refinitiv point to growth of 3.1% in the S&P 500’s fourth-quarter earnings, defying expectations for a year-over-year decline. In January analysts had forecast a 0.3% fall.

Those figures don’t reflect damage from coronavirus and earnings growth has been boosted by stronger-than-expected results from tech giants including Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL).

This week investors will get results from more consumer-facing companies, including retailer Macy’s (NYSE:M), whose credit rating was cut to junk last week by S&P Global (NYSE:SPGI). Results also are due from Marriott International (NASDAQ:MAR), but that won’t reflect the hit it and other hotel chains are currently taking throughout Asia.






Stock Trading: 3 Things Under The Radar This Week

Financial markets found themselves at the mercy of coronavirus headlines once again this week. But digging deeper in some market-moving events, the U.S. dollar saw a swift change of its narrative as weekly trading came to a close.

Amusement park icon Six Flags admitted that its thrill-ride business needs a major rethink.

And Hong Kong faces not just a dearth of visitors, but pessimistic locals.

Here are three things that flew under the radar this week.

1. Dollar Gets a Gut Check

The U.S. dollar index surged earlier this week, setting it sights on the 100 handle, a level it has not breached in nearly three years. But its stumble on Friday has many debating whether the greenback’s rally is sustainable.

For the majority of managers on Wall Street, the greenback’s rally is on borrowed time, according to a Bank of America fund manager survey.

A net 54% of respondents surveyed in February said the dollar was overvalued, up one percentage point since the last survey and the second-highest reading since 2002, BofA said.

Concerns about the coronavirus outbreak and its impact on global growth has sparked a bid in the dollar as a safe-haven investment in recent weeks, according to the survey respondents.

The rise in the dollar caught Wall Street by surprise.

Toward the end of last year, many were betting on the dollar to falter in 2020 on expectations that easing U.S.-China trade tensions would support global growth, sparking a rebound in global economies, some of which sport unattractive negative rates (like the EU).

But the spread of the coronavirus and its potential impact on the global economy has undermined those bets.

The ratio of the MSCI US Index to the MSCI World Index, excluding the U.S., rose to a record high of 1.6, suggesting yield-starved investors view the U.S., and by extension the dollar, as the only game in town.

“Currencies are weakening on incoming bad data that leads to inflows into dollar assets,” Ben Emons, global macro strategist at Medley Global Advisors, wrote.

Others agree and expect the dollar to continue racking up gains against its rivals, with the euro feared to add to recent losses.

“Since data will most likely show the divergence between the eurozone and U.S. economies widening in the coming weeks, further losses are likely,” said Kathy Lien of BK Asset Management.

2. Six Surrender Flags

Investors likely saw the big drop in shares of theme park operator Six Flags Entertainment (NYSE:SIX) (and the obligatory accompanying roller-coaster jokes). But given how double-digit percentage moves in stocks are common lately, the scope of the fundamental problems the company is facing might have been overlooked.

The company reported earnings on Thursday and the bottom line was a very unpleasant surprise.

Six Flags reported a loss of 13 cents per share, compared with expectations for a profit of 15 cents per share, according to analysts forecasts compiled by

It also announced it was slashing its dividend by 70% to 25 cents per share and that its chief financial officer was leaving

There are big problems with its project to open theme parks in China, as its partner in the country defaulted on payment obligations. There will be no revenue or income from China park developments in 2020, Six Flags said.


But even more concerning, its “base business” – the core (ahem, flagship) parks like Six Flags Over Texas and Six Flags Great Adventure — is struggling. Attendance, guest spending per capita and revenue were flat in 2019.

And this year the company predicts “operating cost headwinds, including higher wages and increased investment in the parks to improve the guest experience.”

All this is leading Six Flags to overhaul its strategy, with a new plan to be unveiled at its investor day on May 28.

Piling onto the pessimism today, S&P put its current BB credit rating for the company’s debt on review at CreditWatch negative. That could mean a downgrade if S&P isn’t convinced Six Flags can stop erosion in earnings before interest, taxation, depreciation and amortization (EBITDA).

But after all that there are already some betting the turnaround will be a success.

After Thursday’s plunge, shares closed up 2.3% Friday.

3. Hong Kong Ghost Town?

While supply-chain questions abound about mainland China and the effects of Covid-19, Hong Kong is providing an illustration on what can happen to a financial center during a possible pandemic.

Charles Schwab Chief Investment Strategist Liz Ann Sonders tweeted this week, illustrating the enormous plunge in daily visits to Hong Kong.


Citing a chart from Christophe Barraud, chief economist and strategist at Market Securities, which used preliminary data from the Hong Kong Tourist Board, the island is seeing just 3,000 people visit per day.

That’s a “nearly 99% drop from February last year when about (200,000) people visited per day,” Sonders tweeted.

That may not be affecting financial market activity as much, with many in the sector living there or able to meet and work remotely. But the impact on the businesses that provide services to financial workers will be huge.

Looking at a longer-term picture, Sonders tweeted a chart showing the rise in pessimism about Hong Kong’s economy.




Today’s Stock Market News { Wednesday – 5th February 2020 }

Stock Market News — { Wednesday – 5th February 2020 }

Here’s what you need to know in financial markets on Wednesday, 5th February.

1. Coronavirus toll nears 500; markets grasp at news of drug progress

The death toll from the coronavirus reached 493, another rise of over 16% on the previous day, but more than twice as many people infected by the disease have now recovered. Fatal cases remain highly concentrated in the Hubei region around Wuhan, where the outbreak originated.

Markets in Europe picked up on reports of progress by lab researchers with drugs aimed at treating the disease, while an institute in Wuhan applied for a patent on an antiviral drug developed by Gilead Sciences (NASDAQ:GILD), threatening to revive U.S.-China tensions over intellectual property.

Apple (NASDAQ:AAPL) supplier Hon Hai revised down its sales outlook for the year citing the virus, while Disney said it expects the closure of its theme parks in Shanghai and Hong Kong to hit operating profits by a combined $175 million.

2. Stocks, oil set for higher opening on virus optimism

U.S. stock markets are set for another strong opening, helped by more solid gains in Asia and Europe overnight, which in turn reflected the Chinese central bank’s liquidity measures this week and the – still somewhat speculative – reports of progress in finding drugs to treat the coronavirus.

By 6:30 AM ET (1130 GMT), Dow 30 futures were up 264 points or 0.9%, while S&P 500 futures were up 0.9% and Nasdaq 100 futures were up 1.0%.

In China, the Shanghai Composite had ended up 1.3% while in Europe, the Stoxx 600 was up 1.1%.

Crude oil futures had rebounded overnight after dipping below $50 for the first time in a year. U.S. crude futures were up 2.9% at $51.06 a barrel, while gold futures were flat at $1,556.15 and the U.S. 10-Year benchmark Treasury yielded 1.64%, up three basis points from late Tuesday.

The bounce in crude is set to be tested by the release of government inventory data at 10:30 AM ET (1530 GMT).

3. GM earnings in focus after Ford slumps; ICE-eBay tie-up also eyed

Earnings seasons grinds on, with the focus Wednesday falling on General Motors after Ford Motor slumped 10% in after-hours trading on the back of a gloomy outlook for 2020. Ford’s figures made for an interesting counterpoint to the wild, but volatile, surge in Tesla (NASDAQ:TSLA) stock on Tuesday amid signs that the company’s valuation had lost all relation to any realistic development in sales and profit in the near term.

Also reporting in the course of the day are pharma giant Merck, Humana, Boston Scientific , Spotify and Metlife. Qualcomm completes day’s action after the bell.

Another stock likely to be in focus Wednesday is Intercontinental Exchange Group. ICE (NYSE:ICE), which owns the New York Stock Exchange, confirmed late on Tuesday it had offered to buy struggllng online marketplace eBay (NASDAQ:EBAY), in a radical departure for a group which has so far concentrated only on wholesale financial markets. ICE stock, which fell 7.5% on Tuesday on initial reports of talks, recovered 0.8% in after-hours trading as it emerged that no talks were currently in progress.

4. ADP’s report to trail Friday payrolls ballyhoo

ADP (NASDAQ:ADP) will update the market on the U.S. private-sector labor market, amid expectations of a slowdown in hiring at the start of the year after the December numbers surged to a seven-month high.

Analysts polled by expect a gain of 156,000 in what is widely seen as the dress rehearsal for the broader government report on payrolls on Friday. The report is due at 8:15 AM ET.

Economic data around the world were mixed: China’s service-sector purchasing managers index fell short of expectations, while the same index in the euro zone outperformed, pushing the composite PMI to a five-month high of 51.3. The ISM’s survey of non-manufacturing activity will be released at 10 AM ET.

5. Buttigeig wins in Iowa as Washington theatricals intensify

Pete Buttigeig emerged as the winner of the Democratic Party’s Iowa caucuses, with Vermont Senator Bernie Sanders a close second and Massachusetts Senator Elizabeth Warren a respectable third. Former Vice-President Joe Biden trailed badly in fourth place after a lackluster campaign.

Buttigeig capitalized on the inability of Sanders and Warren to campaign more actively in the state during the impeachment trial of President Donald Trump, which is expected to end today with his acquittal by a Republican-controlled Senate.

Trump’s State of the Union address on Tuesday passed without any major policy initiatives being announced, leaving the public to focus on a theatrical exchange of insults between the President and House Speaker Nancy Pelosi.


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Financial Markets – Top 5 Things to Watch This Week

Stock Market NewsFinancial markets in mainland China are set to reopen on Monday, after the holiday for the Lunar New Year was extended by the government amid the Coronavirus outbreak. Investors will continue to monitor the global economic fallout from the virus’s progression, which has largely overshadowed earnings season so far. Disney , Alphabet and Twitter are among the biggest names to report this week, while the economic calendar features the first U.S. jobs report for 2020. Meanwhile, the Reserve Bank of Australia might deliver a surprise rate cut. Here’s what you need to know to start your week.

China to play catch-up to global market selloff
Financial markets in the Chinese mainland are set to reopen on Monday, with investors bracing for a volatile session playing catch-up to global markets, which have sold off sharply amid concerns over the economic repercussions of the outbreak. The country’s central bank is gearing up for more stimulus measures on Monday to boost liquidity and support companies affected by the virus, which has so far claimed 305 lives, all but one in China.

Efforts to contain the spread of the virus have caused major disruptions and look set to deal a major blow to growth in China and globally. It comes after last year’s trade war between Washington and Beijing knocked China’s GDP down to 6% in 2019 and acted as a drag on global growth, which slowed to 3% last year from 3.6% in 2018.

Global economic impact of virus
China’s central role in the in the global supply chain means that the ripple effects from the virus are being felt far and wide and countries that are heavily dependent on Chinese demand have seen steep drops in their currencies. The Australian dollar ended down around 5% in January, its worst month since 2016.

Global stocks have tumbled, with Wall Street’s major indexes dropping more than 1.5% on Friday, sealing their worst week in six months.

Economists fear the coronavirus could have a bigger impact than Severe Acute Respiratory Syndrome (SARS), which killed about 800 people between 2002 and 2003 at an estimated cost of $33 billion to the global economy, since China’s share of the world economy is now far greater.

Oil prices capped off their worst monthly loss in more than a year on Friday, while safe haven play gold notched up its best month in five.

Earnings season nears halfway mark
Almost 100 companies traded on the S&P 500 are due to report earnings this week, which means that approximately two-thirds of the index will have reported by Friday, while two Dow components, Disney (NYSE:DIS) and Merck (NYSE:MRK), are on the slate.

Disney’s fourth quarter earnings report, due after the close on Tuesday, will include the first official subscriber figures for its Disney+ streaming service which launched halfway through the quarter. Investors will also be on the alert for any indications of the impact of the coronavirus outbreak on theme-park attendance after Shanghai Disneyland was indefinitely shut down late last month.

Meanwhile, Google parent Alphabet (NASDAQ:GOOGL) will report on Monday, Snap (NYSE:SNAP) is due to report numbers on Tuesday while Uber (NYSE:UBER) and Twitter (NYSE:TWTR) follow on Thursday.

U.S. jobs report likely to play second fiddle to virus fears
Friday’s U.S. nonfarm payrolls report for January is forecast to show jobs growth of 161,000, while wage growth is expected to tick up to 3% after slipping back to 2.9% in December. Any signs of sluggish wage growth could foreshadow weakness in consumer spending.

Monday’s ISM manufacturing index is expected to see a small uptick from better regional data in the wake of the phase 1 trade deal between the U.S. and China. Several Federal Reserve officials are due to deliver remarks this week after keeping rates on hold at their January meeting and U.S. President Donald Trump is set to make his State of the Union speech on Tuesday.

In the euro zone, retail sales numbers for December are due on Wednesday, while European Central Bank President Christine Lagarde is to testify on the economic outlook before European lawmakers on Thursday.

RBA to cut rates?
The RBA is due to announce its latest policy decision on Tuesday and the bushfire emergency along with the threat to the economic outlook from the Coronavirus (and its impact on China) mean that a 25 basis point rate cut could be on the cards, despite a recent welcome dip in the country’s unemployment rate.

Even if policymakers hold off on cutting rates for now a more dovish sounding rate statement could indicate that a cut is imminent.

Australian inflation edged higher in the final quarter of 2019 but remained below the RBA’s 2-3% target band. Persistent weakness in inflation was one reason the RBA cut interest rates three times last year to an all-time low of 1.75%.

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How To Start Investing In 2020

StockMarketNews.Today — Over half of Americans (55%) say they are not participating in the stock market, according to a 2019 poll of over 8,000 U.S. adults conducted by MetLife. Gen Z (18 to 24) and millennials (defined here those 25 to 34) are opting out in far greater numbers than older Americans.

For many, it comes down to fear. “There are so many choices today — it’s definitely overwhelming for people,” says David Day, a certified financial planner with Colorado-based Gold Medal Waters. “When you have too many choices and there are too many options, you end up just getting paralyzed and doing nothing.”

But experts say even if the stock market conditions aren’t perfect, it’s worth investing, be it in a retirement account or a taxable brokerage account. Don’t waste time trying to get into the market at the perfect time, says Ron Guay, a financial planner with California-based Rivermark Wealth Management.

“The best time to invest in the market is when you have the money to do so. Holding money on the sidelines in anticipation of a market dip is a loser’s game,” he says.

Here’s how financial planners recommend first-time investors get started today.

Understand what you’re willing to risk
It sounds easy to determine if you’re a conservative or aggressive investor, but it can be a bit more nuanced — especially if you haven’t invested much in the past, or have only contributed to a target date fund within a retirement account, such as a 401(k). In those instances, you may not have had to consider risk because the fund was based on your potential retirement date and allocated accordingly.

It’s a little different when you’re the one picking the funds or finding a portfolio in an individual retirement account or a taxable brokerage account that works for you. The last decade has brought a charging bull market that doesn’t seem to be losing steam. That environment of an economically sound market that consistently delivers good returns may have created unrealistic expectations among young people that markets will never go down and that investing isn’t that risky.

Take a moment to consider what you’d be willing to risk if the market experienced a sustained downturn and you lost part of your investment. If you’re not sure, there are quizzes you can take, such as the Investment Risk Tolerance Assessment created by personal financial planning professors, Dr. Ruth Lytton at Virginia Tech and Dr. John Grable at the University of Georgia.

Online investment tools can make it easier
If you’re looking for a fairly easy way to get started investing, Guay frequently suggests first-time investors open a managed account with an online investment advice service (also called a robo-advisor) like Betterment.

They do a nice job of first focusing the investor on their goal, such as building an emergency fund — a key component to financial health — or investing savings for a down payment for a first home or other large purchase, Guay says. “Many times investors want to jump right in and start buying stocks without even determining what the eventual use of the funds will be,” he says. Having a clear goal for the money will dictate how and where you invest.

Several robo-advisors, including Betterment and investing apps like Stockpile and Stash, offer fractional share investing, which allows investors to buy a portion of a stock or ETF instead of a whole unit. This makes it easier for investors with only a limited amount of money to put everything into the market, says Ryan Firth, a CFP with Texas-based Mercer Street.

Many of these platforms also make it easy to make regular contributions to your retirement accounts part of your routine, such as putting $100 aside every two weeks, a strategy that experts call dollar-cost averaging.

This is good for investors with a long time horizon and a goal like saving for retirement because it takes emotion out of the equation. Instead, you’re continually investing, week after week, no matter what the market is doing. Plus, it keeps you from selling out during market lows and buying in at market highs.

If going the DIY route: Find diversified, low-cost funds
Of course, you can invest on your own by simply signing up for an account, like a Roth IRA or a taxable brokerage account, with a brokerage such as Fidelity or Charles Schwab.

If you’re a first-time investor investing on your own, keep it as simple as possible, recommends John Crumrine, a CFP with North Carolina-based Brunswick Financial. “The easiest way to do that while still having a diversified portfolio is to invest in the broadest index funds you can find,” he says

It’s reasonable for an investor in their 20s or 30s to invest a majority, or even all of the money, in their Roth IRA in stocks because they have a longer time to recover from any potential losses. But instead of picking individual stocks, experts say to look for a total stock market exchange-traded fund (ETF) or index fund, which is a type of mutual fund. Crumrine says something like the Fidelity Total Market Index Fund (FSKAX) or the Schwab Total Stock Market Index Fund (SWTSX), both of which cover virtually the entire U.S. stock market, would be a good start. The Vanguard Total Stock Market ETF (VTI) is a similarly broad stock ETF option.

You could also look for a blend index fund, whether for a Roth IRA or a brokerage account. These types of funds contain a variety of stocks and sometimes bonds, to create a diversified investment option, says Sara Behr, a CFP and founder of California-based Simplify Financial Planning. The Vanguard Balanced Index Fund (VBINX), which has roughly 60% in stocks and 40% in bonds by tracking two indexes, is a good example of this type of blend fund.

When investing, you want to create a balanced, diversified portfolio, which means that you have your money invested in different types of assets, such as stocks and bonds. You want to set up your investments in a way that when one sector of the market is dipping, you are also invested somewhere that is performing well. To do that, you may need to invest in more than one fund.

That said, don’t get so hung up on finding that perfect fund that you don’t invest at all. “Getting invested is way more important than the difference between Fund A and Fund B,” Day says.

Keep an eye on fees
Whether you’re using a robo-advisor or investing via a brokerage, you need to understand what you’re paying for your investments. Over a third of U.S. investors think that they don’t pay any fees, a 2018 survey found. But it turns out, a vast majority do — and those fees can add up. In some cases, they’ve been found to eat away at your investment returns.

Robo-advisors offer a lot of helpful tools and easy-to-follow formats. But you are paying a bit more, usually between 0.25% and 1% of your assets, for the service’s help setting up and managing your money. That’s on top of the cost of the fund, typically referred to as the expense ratio.

By doing it yourself, you’ll avoid those management fees, but you will still have to pay the expense ratio. The average ratio across all mutual funds, including index funds, was about 0.48% in 2018, according to Morningstar. ETFs, on the other hand, carry lower average expense ratios of 0.44%. That means if you invest $1,000 into an ETF, you’ll likely pay about $4.40 in annual fees.

Most funds, and even some investment services, have minimum initial investment amounts ranging from $100 to $3,000, although you can find some with no minimum, Crumrine says. If you don’t have enough to hit the minimum and start investing right away, he says you can set up the automatic money transfers to the account until you have built up enough to meet the requirement.

Temper your expectations
“Patience is an important lesson to learn for young investors. They want to see quick results,” says Randy Gardner, an adjunct professor of financial planning at the American College of Financial Services and financial coach with the Garrett Planning Network of financial planners.

Everyone expects to have the next Microsoft or Apple or Google, Gardner says, and while there are stocks with big gains and years that the market does very well (including last year, with the S&P 500 rising 28.9%), the stock market returns a historical average of about 10%.

“We’ve been trained to expect big returns, and if we don’t get them, then we’re disappointed,” Gardner says. “A lot of people lose confidence in the markets because they don’t give the returns as quickly as people hoped.”

And don’t forget to reinvest the returns you do get, Crumrine says. “Reinvestment is one of the keys to growing your balances over time,” he says. When first purchasing a mutual fund, as part of the order entry, the investor will have an option to automatically reinvest dividends and capital gains. This option should always be selected, he adds.



Financial Markets News For This Week

◊ 5 Things To Know Before The Stock Market Opens ◊

1. Trump to Speak at Economic Club of New York

On Tuesday, Trump will deliver remarks at the Economic Club of New York with markets hoping for more clarity on a planned “phase one” deal. Trump on Friday said he has not agreed to rollbacks of U.S. tariffs sought by China, sparking fresh doubts about when the world’s two largest economies may end a 16-month trade war that has slowed global growth.

His comments came a day after officials from both countries said China and the U.S. had agreed to roll back tariffs on each others’ goods in a “phase one” trade deal. U.S. stocks dipped after Trump’s comments, and the dollar fell against the yen, stalling a rally fueled by trade deal optimism that took major indexes to record levels.

2. Powell Testimony

Investors will hear directly from Fed Chair Jay Powell on the U.S. central bank’s outlook on the economy, inflation and monetary policy when he testifies before the congressional Joint Economic Committee in Washington on Wednesday and the House Budget Committee on Thursday.

He is expected to reiterate that plans for further easing are now on hold after the Fed cut rates last month for the third time in as many meetings.

Market watchers will also have the chance to hear from no less than eight other Fed officials who are speaking this week, including New York Fed head John Williams, who said on Friday the U.S. economy is in a good place, reiterating his view that the interest rate cuts made this year should appropriately address potential risks to the economy.


3. U.S. Economic Data

A fresh round of U.S. economic data will be closely watched at a time when markets are trying to gauge the impact of the trade conflict on the outlook for growth.

Wednesday brings October’s Consumer Price Index. Core year-on-year CPI is expected at 2.4% and headline at 1.7%. But the Fed’s favorite measure of core personal consumption expenditures is running around 1.6% – hovering mostly below the 2% target since pre-financial crisis.

On Friday, October retail sales and industrial production data will shed light on whether the consumer can continue to drive growth in the face of a struggling manufacturing sector and months of trade tensions.

4. Global Growth Update

Several countries from Germany to Japan will release third-quarter growth data in coming days. Figures from Germany on Thursday will show whether the Eurozone’s largest economy slid into a recession in the third quarter.

In the U.K., data on Monday is expected to show that the economy narrowly avoided a recession after a 0.2% contraction in the previous quarter. But a high degree of economic uncertainty looks set to persist, prompting Bank of England to indicate last week that it’s ready to cut rates in the event of a no-deal Brexit.

Japan is to release third quarter GDP figures on Thursday, amid forecasts for a slight slowdown from the previous quarter.

5. Alibaba eyes another record Singles Day

Alibaba Group (NYSE:BABA) will kick off its annual 24-hour shopping extravaganza on Monday with deals and deep discounts galore, and a performance by Taylor Swift, as it pushes to rake in another record Singles’ Day sales.

This year’s event comes as the Chinese retail juggernaut navigates through a major turning point, the resignation in September of its flamboyant co-founder Jack Ma as chairman, and looks to raise up to $15 billion via a share sale in Hong Kong as early as this month.

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Alibaba saw sales worth $30 billion on its platforms on Singles’ Day last year, dwarfing $7.9 billion U.S. online sales for Cyber Monday. But the 27% sales growth was the lowest in the event’s 10-year history, after ranging from 40% to even 100% in previous years.

“This is likely due to the slowdown of the overall economy [in China]. There might not be a big jump in growth this year, even if people tend to buy things,” said Jennifer Ye, China consumer markets leader for PwC China.

“PwC expects Singles’ Day sales to rise moderately this year, albeit at a slower pace compared with the last few years as macroeconomic uncertainty continues to weigh on consumer confidence.”



Tesla Surprising Profit

◊ Tesla Stock Market News ◊

Tesla’s shares climbed 20% in after-hours trading. “We were able to make great strides in controlling our costs,” Chief Executive Elon Musk said in a call with analysts Wednesday. “Our operating cost is now the lowest level since Model 3 production started.”

The company said trial production of its compact Model 3 car has started at a new facility in China, and production on its new Model Y compact sport-utility vehicle is ahead of schedule, with a launch set for next summer. The China facility is another sign of Tesla’s ambition to become a global force in car production.


Tesla posted earnings of 78 cents a share for the three months ended Sept. 30, upending analysts’ predictions for a loss of 46 cents a share. For the year-earlier quarter, the company reported earnings of $1.75 a share.

A record delivery figure helped lift Tesla’s bottom line, as customers largely flocked to the lower-price Model 3. But even as Tesla ramps up Model 3 production, sales of its premium cars have declined.

Third-quarter revenue fell to $6.3 billion from $6.82 billion a year earlier, as deliveries of the Model S and Model X vehicles dropped 37%.
Analysts polled by FactSet had predicted. The company said it is on track to deliver more than 360,000 vehicles in 2019, the lower end of its targeted range of 360,000 to 400,000.

Tesla has had back-to-back quarters of record vehicle deliveries this year after failing to meet estimates earlier in 2019. The company needs to deliver at least 104,800 vehicles in the three months through Dec. 31 to meet the lower end of the projected range.

Tesla has made significant gains in its yearly production—a crucial part of Mr. Musk’s strategy to become a mass-market auto maker. The lower end of the projected range compares with deliveries last year of almost 250,000 cars.

But even as Tesla gets closer to showing it can consistently produce large volumes of cars, it faces the prospect that market dynamics might be shifting as demand slows. Tesla faces the elimination next year of a federal tax credit to its customers, a change that analysts say could affect demand.

What’s more, industry experts fear overall demand for new vehicles might be about to slump after a prolonged growth period. Demand in China and Europe already is showing signs of weakness and the appetite for new vehicles in the U.S. could be in jeopardy, analysts have said.

New vehicles often help generate sales interest among reluctant vehicle buyers. Tesla said it would produce limited volumes next year of an all-electric semi truck the company unveiled in 2017 and is starting to install equipment for the Model Y. The car maker also said it would announce the location of a new factory in Europe by the end of the year.

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Tesla, which initially rolled out the luxury Model S large sedan and Model X SUV, has shifted its focus to the Model 3. That smaller car accounted for about 82% of the 97,000 deliveries the company made in the third quarter.

Tesla has said it wants the Model 3 to be a mass-market car and has priced the vehicles accordingly. They cost less than half the price of the premium models. The starting price of the Model 3, which Tesla has been working to bring down to $35,000 by shedding jobs and closing facilities, is currently listed at roughly $39,000 on the company’s website, excluding projected savings from gasoline and tax credits.

Despite price reductions, Tesla said its gross margins improved through cuts to manufacturing and material-related costs. Operating expenses decreased 16% from the year before to $930 million. Zach Kirkhorn, Tesla’s chief financial officer, noted that the company reduced costs by making “improvements in labor hours per vehicle,” as well as in its logistics, warehouse and delivery operations.

Sales of the Model 3 boosted Tesla’s free cash flow, a metric considered important for the company’s health because it supports operations and helps the company maintain its assets. Tesla recorded $371 million in cash flow for the third quarter, compared with $614 million for the three months ended June 30. The car maker’s cash reserves totaled $5.3 billion

The opening of Tesla’s China facility comes as car sales in the country, the world’s largest auto market, have slumped.

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A slowing Chinese economy has pinched sales for major car makers, including in the electric-vehicle market, where sales fell 11% in the third quarter.


Week Ahead: Brexit Deal Failure Will Rattle Markets

◊ The Week Ahead in Business and Finance ◊


The Week Ahead – Stock Markets
All times listed are EDT.

21:30: China – PBoC Interest Rate Decision

20:30: Australia – RBA Meeting Minutes: expected to provide additional insights into current—and possibly future—Aussie interest rate policy.

8:30: Canada – Core Retail Sales: anticipated to edge up to 0.1% from -0.1%.

10:00: U.S. – Existing Home Sales: likely to decline slightly, to 5.45M from 5.49M.

10:30: U.S. – Crude Oil Inventories: forecast to plunge to 2.878M from 9.281M.

4:30: Germany – Manufacturing PMI: seen to have edged up to 42.0 from 41.7.

7:45: Eurozone – ECB Interest Rate Decision: expected to remain at 0.00%.

8:30: U.S. – Core Durable Goods Orders: probably plunged to -0.1% from 0.5%.

10:00: U.S. – New Home Sales: seen to have edged down to 700K from 713K.

4:00: Germany – Ifo Business Climate Index: expected to edge down to 94.4 from 94.6 previously.

6:30: Russia – Interest Rate Decision: forecast to remain at 7.00%.

Financial Charts

Markets, particularly currency trade and especially sterling, will likely be volatile as the week begins. As well, expect gains across all markets to slip, as optimism over the prospect of a Brexit deal between the UK and EU—touted by UK Prime Minister Boris Johnson late last week as a virtual certainty—fades, after the British Parliament deferred Saturday’s vote in order to have more time to study the details.

As a result, Johnson was forced by law to request an extension from the EU, after repeatedly vowing he would not do this. European Council President Donald Tusk will discuss the request with EU leaders, while Johnson plans to try and push the deal through at his end.


Last week, the U.S.’s third quarter earnings season kicked off, with major banks reporting mostly solid earnings versus depressed investor expectations, leading the group and most U.S. benchmarks, higher. Overall, U.S. equities eked out gains on a weekly basis but fell Friday with Boeing (NYSE:BA) plunging -6.79% on additional bad news for the U.S. aerospace giant. Microsoft’s (NASDAQ:MSFT) losses on Friday allowed Apple (NASDAQ:AAPL) to take back the lead as the world’s most highly valued company.

The Dow Jones Industrial Average underperformed on Friday after closing on Thursday just 1.25% below its July 15 record. Boeing (NYSE:BA), the most heavily weighted stock on the 30-component mega cap index, accounted for roughly two-thirds of its selloff. The avionics manufacturer which has been in the news for months now, made fresh headlines on Friday after regulators charged that the company neglected to disclose communications between its employees in 2016 during the certification of the now grounded 737 MAX jet.

Technically, Friday’s trading erased four days of advances, on the highest volume since Oct. 2, when the index dropped 1.8 percent, after nearing record highs. For the week, the Dow retreated 0.2%. Though U.S. corporate earnings thus far have been relatively upbeat, after Morgan Stanley (NYSE:MS) on Thursday became the latest big bank to buck concerns about weak growth, technicals on U.S. indices increased chances of topping out.

Also, economic data flipped negative once again. U.S. retail sales disappointed, and the International Monetary Fund (IMF) lowered, yet again, its projections for global growth this year from 3.5% to 3%. Traders will also be mulling the data from China, released early Friday, which showed GDP had slowed to 6% in the third quarter, with limited pick-up from domestic demand, but factory output had improved and retail sales held up.

The NASDAQ Composite slumped -0.83% on Friday, with Microsoft (-1.63%) leading tech firms lower. Technically, the price neared the neckline of a potential H&S top, whose development was accompanied by falling volume. The tech heavy index gained 0.4% for the week. Treasurys fluctuated but remained unchanged. The U.S. 10-year note closed at the top of a symmetrical triangle, situated below the downtrend line since November 2018.

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The pound is expected to plunge when FX trade opens this coming week, unless some drastic new twist toward a Brexit deal materializes. Technically, the pound surged through both the downtrend line since May and its uptrend line since August. Unless a miraculous deal emerges, the pound is likely to retest the broken downtrend line toward 1.2600.

Oil closed slightly lower after fluctuating throughout Friday’s session, finishing at the bottom of a rising flag, bearish after the preceding sharp downturn. If completed, it will imply a downside breakout of a larger descending triangle singe April 2018 and the top of a rising channel since August, on high volume, after cutting through the 200 DMA


SEC Seeks Ideas For Improving Trading in Small-Cap Stocks

Regulators are looking for ways to make the U.S. stock market a better place for trading shares in small- and medium-size companies. The Securities and Exchange Commission on Thursday asked stock exchanges and other firms to submit proposals on how to improve the markets for thinly traded securities. The call for fresh ideas is the latest move in a push by SEC Chairman Jay Clayton to address complaints by small-cap companies that they are poorly served by the structure of the U.S. stock market.

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Currently, stocks can be traded on any of 13 exchanges or dozens of off-exchange “dark pool” venues. Advocates for smaller companies say that such fragmentation makes it harder and more expensive for investors to buy or sell their shares. Around half the stocks listed on U.S. exchanges trade fewer than 100,000 shares a day, according to SEC data. “As we have heard from issuers, exchanges, and other market participants, a one-size-fits-all approach to market structure doesn’t work for many of our public issuers, particularly small and medium sized companies,” Mr. Clayton said Thursday.

In soliciting the proposals, the SEC laid out a number of possible approaches, without endorsing any of them. One such approach would limit trading in low-volume stocks to the exchange where they are listed. Nasdaq Inc. has promoted a similar plan, arguing that it would create deeper markets for small-cap stocks by concentrating the trading of their shares on one venue. But critics, including some rival exchanges, have attacked Nasdaq’s plan as anticompetitive, saying it would benefit big exchanges like Nasdaq.


In another approach floated by the SEC, trading in low-volume stocks would take place in periodic auctions, separated by discrete time intervals, instead of continuously throughout the trading day.


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U.S. Futures Point To Mixed Open

U.S. stock index futures were mixed Thursday morning. At around 04:30 a.m. ET, Dow futures rose 5 points, indicating a negative open of more than 6 points. Futures on the S&P and Nasdaq were slightly higher. The moves in pre-market trade come amid heightened concerns about the health of the world’s largest economy. On Wednesday, unexpectedly weak retail sales data fuelled fears about a possible recession.


Global economic data points to slower growth while the U.S. manufacturing sector is already contracting. In the center of those worries is the ongoing U.S.-China trade war, which is becoming increasingly uncertain. In Europe, the Northern Irish Democratic Unionist Party (DUP) said Thursday that it could not support the British government’s Brexit plans “as it stands.” The announcement dealt a blow to the chances of Prime Minister Boris Johnson securing a Brexit deal, with only two weeks left before the world’s fifth-largest economy is scheduled to leave the European Union.

Data, earnings Back in the U.S., investors are likely to closely monitor a flurry of economic data and earnings reports on Thursday. The latest weekly jobless claims figures, housing starts for September, building permits for September and the Philadelphia Fed’s manufacturing index for October will be released at 8:30 a.m. ET. Industrial production data for September will follow slightly later in the session.

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In corporate news, Morgan Stanley, Philip Morris and Union Pacific are among some of the major companies set to report earnings before the opening bell. Intuitive Surgical, Bank OZK and First Financial are among those scheduled to report their latest quarterly figures after market close.


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Trade Deal: China Wants More Talks Before Signing

China wants further talks as soon as the end of October to hammer out the details of the “phase one” trade deal touted by Donald Trump before Xi Jinping agrees to sign it.

Beijing may send a delegation led by Vice Premier Liu He, China’s top negotiator, to finalize a written deal that could be signed by the presidents at the Asia-Pacific Economic Cooperation summit next month in Chile, one of the people said. Another person said China wants Trump to also scrap a planned tariff hike in December in addition to the hike scheduled for this week, something the administration hasn’t yet endorsed. The people asked not to be named discussing the private negotiations.

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The details of the verbal agreement reached in Washington last week between the two nations remain unclear. While Trump hailed an increase in agricultural purchases as “the greatest and biggest deal ever made for our Great Patriot Farmers in the history of our Country,” China’s state-run media only said the two sides “agreed to make joint efforts toward eventually reaching an agreement.” S&P 500 futures extended losses, the Stoxx 600 fell and the yen rose as investor pessimism on the deal grew. China’s Ministry of Commerce did not immediately respond to a request for comment on further talks. Geng Shuang, a foreign ministry spokesman, reiterated on Monday that both sides had made progress and said he hoped “the U.S. will work with China and meet each other halfway.”

China’s Economic Slowdown

China’s Imports And Exports Fell More Than Expected

Investors have struggled to determine whether the U.S. and China reached a breakthrough in an 18-month trade war, with global stocks mixed on Monday. Worse-than-expected September trade figures in China underscored the growing pressure on both Trump and Xi to reach a deal to avert a wider slowdown in the global economy. China has become increasingly wary of any statements from Trump. Trust between the two sides suffered a big blow in May 2018, when Trump put a stop to a deal for China to buy more energy and agricultural goods to narrow the trade deficit. The U.S. president further sowed distrust in August when he claimed that Chinese officials had called and requested to restart trade talks.

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For Xi, it’s seen as politically unfeasible to accept a final deal that doesn’t remove the punitive tariffs altogether. Nationalists in the Communist Party have pressured him to avoid signing an “unequal treaty” reminiscent of those China signed with colonial powers. “The U.S. must concede on its December tariff threat if they want sign a deal during APEC summit, otherwise it would be a humiliating treaty for China,” said Huo Jianguo, a former Chinese commerce ministry official who is now vice chairman of the China Society For World Trade Organization Studies. “The U.S. has definitely shown some good gestures but we shouldn’t exclude the possibility of another flip-flop.”



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Financial Markets: Top 5 Things to Know in the Market on Thursday


Here’s what you need to know in financial markets on Thursday, 10th October.

1. Trade talks resume

Top-level trade negotiations between China and the U.S. are due to resume in Washington after a two-month hiatus. With both sides having ramped up the pressure earlier this week with measures against the NBA on the one side and Chinese makers of surveillance equipment on the other, the chance of a comprehensive rapprochement is close to zero, meaning that the next two days will principally be an exercise in damage limitation.

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Background briefings from both sides have created a confusing backdrop, with Bloomberg talking up the chance of an interim deal that could lead to a scheduled increase in U.S. tariffs being pushed back again. However, the South China Morning Post and Fox have both played down the chance of agreement, citing officials as saying that the talks may be broken off after one day.

2. Turkey ground troops enter Syria

Turkey sent its ground troops into northern Syria to establish a 20-mile buffer zone along its southern border, from which it hopes to drive out Kurdish militia who were instrumental in defeating ISIS and who now hold a large number of ISIS fighters in prison.


It then intends to resettle some of the Syrian refugees currently in Turkey in the safe zone. Turkey has accepted over 3.5 million refugees from Syria since the start of the latter’s civil war.

Turkish airstrikes which began on Thursday are reported to have inflicted numerous civilian casualties. Kurdish forces have responded by shelling points in Turkey. The Turkish lira fell to a four-month low against the dollar.

3. Stocks set to open flat

U.S. stock markets are set to open flat ahead of the trade talks with China, with few willing to bet heavily on an outcome one way or the other. By 6:15 AM ET, Dow futures were up 3 points, effectively unchanged. S&P 500 Futures and Nasdaq 100 Futures were up less than 0.1%.

On the earnings front, Delta Air Lines (NYSE:DAL) will report its third-quarter figures. Boeing (NYSE:BA) will also be in focus after reports that cracks had been found in the wings of some of its older planes.

Earlier Thursday, Dutch medical goods maker Koninklijke Philips (AS:PHG) warned that its third-quarter profit margins would be badly hit by the impact of U.S. tariffs on the equipment that it makes in China, a pattern that may affect many more companies in the forthcoming earnings season.

4. CPI, Jobless claims due as Europe weakens further

The market can update its outlook for further rate cuts from the Federal Reserve at 8:30 AM ET (12:30 GMT), when consumer inflation figures for September are announced, along with the latest weekly jobless claims numbers. The consensus forecast is for the annual inflation rate to rise to 1.8%.

In a speech late on Wednesday, Fed Chairman Jerome Powell highlighted the risks to the global economy from the current uncertainties over U.S.-China trade and Brexit.

News out of Europe this morning won’t have cheered him up much: industrial production in France fell by a sharper-than-expected 0.9%, and German exports also weakened further, although the U.K. economy appeared on course to avoid recession in the third quarter, as GDP rose 0.3% in the three months through August.

5. OPEC to update on oil market

The oil market also gets a regular reality check at 7 AM ET (11:00 GMT) with the publication of OPEC’s monthly report.

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The cartel’s latest estimates for global supply and demand will come a day after the U.S. government said U.S. crude output hit a record high of 12.6 million barrels a day last month. By 6:15 AM ET, WTI Futures, the U.S. benchmark, were down 0.4% at $52.36 a barrel, while international benchmark Brent was down 0.5% at $58.02.



How to Become a Professional Trader – 5 Rules to Develop a Professional Trader’s Mindset


You want to become a professional trader? Before you start, it’s worth thinking about exactly who or what a professional trader is.

Most people think a professional trader is someone who works for some big bank on a trading desk, but this isn’t true. Of course those are professionals, but a professional trader can be anyone who takes their trading seriously, who approaches their trading like a job and has a set of trading rules that they follow. This might seem like a simple definition, but you’d be surprised how many people approach trading with no plan. And trading without a plan isn’t actually trading – that’s just gambling. And that’s not professional.

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STEP 1: DEVELOP A TRADING STRATEGY – The very first step to becoming a professional trader is to create a trading strategy. This strategy will affect every trading decision you make so it needs to reflect your ultimate goals and the style you use to try and achieve them. And while there’s a lot that goes into creating a profitable trading strategy, there are two key pillars to build around.

The first is that your strategy must have a winning edge over the long-term. Sure, you might have a few winning trades and be happy about your success, but that doesn’t make you a professional trader. A real pro has the ability to repeat their success consistently and over a long time frame.

Second, you must manage your risk. The way to make money from trading is by building on the existing funds in your account. If you don’t protect your bottom line by incorporating an appropriate approach to managing risk, you simply won’t succeed long enough to become a pro.

STEP 2: TEST YOUR STRATEGY – After you’ve created your trading strategy the next stage is to test your strategy in the markets.

Testing is the only way to know for sure if your strategy has a winning edge in real market conditions. For example, if your trading strategy is based on breakouts, you need proof that it actually works. The best way to prove that your system has an edge is to back test it using historical market data and there are many programs that allow you to do this.

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STEP 3: TRUST YOUR STRATEGY – Once you’ve put the hard work into deciding on your trading goals, strategy and style, you need to learn to trust them. What this means is that you should follow the rules that you have set in your trading strategy for a period of time before considering any changes. You need to give your strategy a chance to perform. This can be a major issue for beginner traders as it’s very easy to be reactive and change your strategy quickly in response to a few losing trades. But remember, being a professional is a long term goal so you need to give things time to work. If your level of risk is suited to your broader strategy, you should be able to manage a few losses provided your long term profitability is increasing. Obviously, if you are sustaining consistent losses without any wins, you need to look at whether you have a more fundamental problem with your approach.

STEP 4: STAY DISCIPLINED – Once you’ve established trust in your system, you need to remain consistent in your trading activity.

This means that instead of focusing on making a specific amount each day from the markets, you should focus on following your strategy each day. After all, this is the plan you’ve put in place. Your analysis has determined that this is the way to reach your goals. Anyone can win a few lucky trades. Professionals know how to stay in the game.


STEP 5: KEEP LEARNING – The best traders and investors are constantly learning and improving their trading abilities.

Markets change. Systems change. New technology emerges. Part of your long-term success as a trader is to continue accumulating new knowledge and experience and applying it to your trading. Warren Buffett, widely regarded as the world’s best investor, recommends that professional traders read at least 500 pages a day. While this might be extreme, the point is that to be successful in the markets you should set aside time to learn more about the markets.

CONCLUSION – There’s no guaranteed way to be successful as a professional trader, but following the above rules will help improve your chances of becoming a pro. Just remember that true mastery of any activity is only achieved through constant application of the processes that lead to success.

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Red October – Wall Street Falls on Persistent Trade War Concerns

StockMarketNews.TodayWall Street tumbled on Tuesday after reports that the White House is moving ahead on possible curbs to capital flows in China stirred up fresh concerns that a trade deal between the two countries won’t happen.

The Dow slumped 263 points or 1% by 9:40 AM ET (13:40 GMT), while the S&P 500 was down 30 points or 1.1% and the Nasdaq composite lost 77 points or 1%.

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The two sides are scheduled for high-level trade talks this week. Yesterday after the U.S. blacklisted 28 Chinese entities, including surveillance camera maker Hikvision, for their role in China’s repression of Muslim minorities.

Meanwhile, the White House is in talks around restrictions focused on investments made by U.S. government pension funds, according to a Bloomberg report.

“I don’t think there’s really much hope that we are going to see a completed deal any time soon,” said Scott Brown, chief economist at Raymond James. “For markets, it may be enough to just see a stop in the escalation.”

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Boeing (NYSE:BA) was down 1.5% on a Wall Street Journal report that the European Aviation Safety Agency refused to accept FAA assurances that Boeing’s Max 737 are safe.

Domino’s Pizza (NYSE:DPZ) dipped 4.2% after a decline in same-store sales, while Oracle (NYSE:ORCL) fell 1% after reports that it is hiring 2,000 workers. Ambarella (NASDAQ:AMBA) tumbled 9.4% after the blacklisting of Hikvision Digital Technology, one of its biggest customers.

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In commodities, the U.S. dollar index, which measures the greenback against a basket of six major currencies, was flat at 98.662 and gold futures rose 0.6% to $1,512.85 a troy ounce. Crude oil futures fell 13% to $52.09 a barrel.



U.S. Futures Down Ahead of Payrolls

StockMarketNews.TodayU.S. stocks were indicated to open lower Friday, as the market braced for a downbeat monthly employment report from the Bureau of Labor Statistics.

Hiring in the U.S. economy is expected to have increased by a net 140,000 in September, up from 130,000 in August but still running at a clip well below that seen in recent years. Fears of a weaker number have risen after surveys of both manufacturing and services industries showed activity to have slowed sharply last month, with direct negative impacts on hiring. The numbers are due at 8:30 AM ET (12:30 GMT).

By 7 AM ET (11:00 GMT), Dow futures were down 94 points, or 0.4%, while the S&P 500 futures contracts was down 12 points, likewise a drop of 0.4%. Nasdaq 100 Futures were down in line with their old-economy counterparties.

This week’s data have forced market participants to drastically rethink the outlook for monetary policy, with many pricing in additional rate cuts from the Federal Reserve. Chairman Jerome Powell has repeatedly said that he’ll “act as appropriate” to sustain the economy and keep a long expansion on its legs. Powell is due to speak later at 2 PM ET (18:00 GMT).

“If jobs growth can remain robust, this may reassure markets on the growth outlook and could cause Powell to defer further easing until the December meeting,” said Mark Dowding, chief investment officer at BlueBay Asset Management, in a note to subscribers. “However, any suggestion that the slowdown in manufacturing and business investment is causing hiring to slow and businesses to shed jobs could be a clear catalyst for additional action on the monetary policy front.”

Among individual stocks, Apple is set for a strong opening after a Japanese newspaper report that it’s planning to increase iPhone 11 production by around 10%, as its decision to cut the new model’s price underpins demand. The company hasn’t confirmed the report but CEO Tim Cook said separately in an interview with France’s Les Echos that he expects a big upgrade cycle in smartphones.

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HP Inc is set for a more mixed opening after saying it will cut up to 9,000 jobs – 16% of its workforce – to shore up profitability. The maker of laptop computers, printers and other hardware is also expanding its buyback program and raising its dividend. The company’s shares fell 5.9% in after-hours trading.

Elsewhere, Crude oil futures drifted sideways, rising 0.1% to $52.49 a barrel, while gold futures also edged higher to $1,514.95 on expectations of lower interest rates. The dollar index, which measures the greenback against a basket of six developed-market currencies, inched down 0.1% on the same factors to 98.475.



Dow Drops 300 Points … Fears of a Recession Continue

StockMarketNews.TodayStocks fell on Wednesday, adding to Wall Street’s poor start to the final quarter of 2019 as investors grapple with fears of an economic recession.

The Dow Jones Industrial Average declined by 273 points, or 1% to break below its 50-day and 100-day moving averages, two technical levels watched by traders. Dow Inc was the worst-performing stock on the 30-stock index, sliding 3%.

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The S&P 500 lost 1.1% to fall below its 100-day moving average as the industrials sector dropped 1.5%. Eaton Corp and United Rentals were among the laggards in the sector. They both fell at least 2.9%%. The Nasdaq Composite lost 1.2%.

Concern around the economy was sparked on Tuesday after the Institute for Supply Management said U.S. manufacturing activity fell last month to its lowest level in more than 10 years.

The weak data sent the major indexes tumbling on Tuesday, the first day of the fourth quarter. The Dow dropped more than 300 points while the S&P 500 slid 1.2%, their biggest one-day drops since Aug. 23.

Those losses were enough to wipe out the Dow and S&P 500′s gains for the entire third quarter. Both indexes gained 1.2% in the previous quarter.

Nicholas Colas, co-founder of DataTrek Research, said the market will “want to see real progress” from the upcoming U.S.-China trade talks after the disappointing data. “Markets will be looking for positive commentary from both sides going into this meeting and tangible steps to an agreement immediately after,” he said in a note.

Chinese and U.S. officials are scheduled to meet in Washington next week. Both sides have been in a trade war since last year that has rattled investor sentiment and economic growth expectations.

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Wall Street’s focus remained on the economic data as private payrolls growth slowed down in September, according to a report from ADP and Moody’s Analytics. Payrolls increased by 135,000 in September, a drop from 157,000 in August. The gains from August also reflected a downward revision of nearly 40,000 payrolls.

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The data from ADP and Moody’s Analytics is seen by investors as a preview to the government’s monthly jobs report, which will be released Friday at 8:30 a.m. ET.



Global Stocks Inch Up On Trade Hopes

Global Stocks – Trade Hopes – StockMarketNews.Today …Global shares edged up on Tuesday after U.S. Treasury Secretary Steven Mnuchin confirmed U.S.-China trade talks will resume next month, but lingering concerns about slowing global growth reduced the overall appetite for riskier assets.

MSCI’s broadest index of Asia-Pacific shares outside Japan inched up 0.1%, led by 0.6% gains in mainland Chinese shares after the vice head of China’s state planner said Beijing will step up efforts to stabilize growth.

Japan’s Nikkei was up 0.2% after a market holiday on Monday while European shares are also on track to open higher, with pan-European Euro Stoxx 50 futures up 0.26%, German DAX futures up 0.24% and FTSE futures up 0.33%.

U.S. stock futures gained 0.38%, helped by comments from Mnuchin that U.S.-China trade talks will resume next week. He later clarified that the negotiations will take place in two weeks.

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“The comments gave a little bit of boost to sentiment, but markets are still not that optimistic either,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management.

“It seems there have been a lot going on behind the scenes,” he said, referring to unusual exchanges in which U.S. President Donald Trump questioned a decision by his top trade negotiators to ask Chinese officials to delay a planned trip to U.S. farming regions.

That cancellation was seen by markets as a sign all is not well in the U.S.-China talks and helped send share prices lower on Friday.

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The dispute between the world’s two largest economies has dragged on for well over a year, rattling investors and denting global growth.

Concerns over a slowing global economy remained front and center for financial markets, hurting earnings estimates, as poor business activity readings from the euro zone deepened fears of a recession and suggested more stimulus was required.

“While the Nikkei was fairly well supported, we need more catalysts to further rises. That’s also true for U.S. markets as well,” said Takeo Kamai, head of execution service at CLSA. “Although speculators have reacted to the trade-related headlines, real-money people appear to be staying on the sideline.”

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The euro wobbled at $1.0987, falling below a key support around $1.10 and not far from a 28-month low of $1.0926 touched earlier this month.

Sterling also slipped to $1.2431, after peaked at a two-month high of $1.2582 set on Friday as traders awaited a Supreme Court ruling on whether Prime Minister Boris Johnson misled Queen Elizabeth over his reasons for suspending parliament this month.

The Supreme Court said it will issue its decision at 09:30 GMT on Tuesday.

The collapse of the British travel firm Thomas Cook could also put some pressure on the pound by highlighting the weakness of British retailing.

The yen traded at 107.62 yen per dollar, having hit two-week highs of 107.32 on Monday.

U.S. Treasuries yields extended their decline, with the 10-year rate falling to 1.716%, edging down further from 1.908% marked on Sept. 13.

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Oil prices also dipped amid gloomy demand outlook as investors fret about a global slowdown although uncertainty on whether Saudi Arabia would be able to restore full output after the attacks on its facilities provided some support.

Brent crude futures fell 0.52% to $64.43 a barrel while U.S. West Texas Intermediate (WTI) crude lost 0.48% to $58.36 per barrel.









Financial Markets News: Top 5 Things to Watch This Week

Stock Market Today – Business & Financial News ◊ … — Upcoming appearances by Federal Reserve policymakers in the coming days will be even more closely watched by investors than usual in the wake of its second rate cut this year. In addition, investors will be focusing their attention on economic data for fresh indications on the outlook for monetary policy. Brexit and trade tensions will also be occupying the attention of market participants. Here’s what you need to know to start your week.

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1 – Central Bank Speakers

Investors will get to hear from a number of Fed officials this week, including New York Fed President John Williams, St Louis Fed President James Bullard and Chicago Fed President Charles Evans.

The main focus will likely be on Bullard, who was the lone dissenter in favor of a 50 basis point rate cut at last week’s Fed meeting, when it delivered a 25 basis point cut. Two other policymakers voted in favor of no rate cut at all.

After the U.S. Fed’s second rate cut of 2019, the bank’s latest dot plot indicates no more cuts this year. The shift has come as a shock given expectations prior to the Fed meeting were for several more cuts to contain economic fallout from the U.S.-China trade war. Investors will be on the lookout for any fresh indications on whether rates could move again this year.

Meanwhile, European Central Bank President Mario Draghi will make a final appearance in the European Parliament on Monday ahead of his imminent departure.

2 – Durable Goods Orders


Upcoming durable goods data will help give investors fresh insights in the possible outlook for U.S. monetary policy.

August durable goods orders will shed light on whether the trade war is eroding business investment. Orders for goods such as airplanes and toasters are seen having fallen 1% after rising 2% in July. Of keen interest will be orders for non-defense capital goods, excluding aircraft — a closely watched proxy for business spending plans that increased 0.4% last month, even as shipments posted the biggest drop since October 2016. Core capital goods shipments are used to calculate GDP.

The calendar also features a final reading on second quarter GDP, personal income and spending and a look at consumer confidence.

3 – Trade Tensions

Hopes for a breakthrough in the U.S. – China trade war receded further on Friday after Chinese officials unexpectedly canceled a visit to farms in Montana and Nebraska as deputy trade negotiators wrapped up two days of negotiations in Washington.

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Before the talks started, some reports had suggested that an interim deal was being considered, involving Chinese purchases of U.S. farm goods, some improvements in Chinese market access and an easing of U.S. sanctions on Huawei .

But U.S. President Donald Trump made clear on Friday that purchases would not be enough for him to end his punitive tariffs. “We’re looking for a complete deal. I’m not looking for a partial deal,” he told reporters, adding that he did not need a deal to happen before the 2020 presidential election.

4 – Brexit


Britain’s Supreme Court is expected to make a ruling in the coming days on whether Prime Minister Boris Johnson acted unlawfully in suspending parliament. A decision against Johnson may force him to recall lawmakers, giving them more time to challenge his plan to take Britain out of the European Union on Oct. 31 — with or without a divorce deal.

Markets will also be focusing on whether Johnson can make a revised Bexit deal with the EU, though this still seems unlikely. Recent comments by EU Commission President Jean-Claude Juncker stirred hopes of a Brexit deal, sending the pound to its highest level since July and putting it on track for its best month this year.

5 – PMI watch

While the Fed has been talking up the state of the U.S. economy, European Central Bank chief Mario Draghi has urged euro zone governments to step up spending if they want to see economic growth speeding up.

Given that background and the Fed’s promise to be “highly data-dependent” while setting interest rates, Monday’s flash Purchasing Managers’ Index (PMI) readings are likely to be closely scrutinized — a strong number would tip the balance in favor of the hawks on the Fed board.

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The ECB on the other hand has already pledged indefinite stimulus and looking at depressed activity across the bloc, that seems justified. A positive Eurozone PMI surprise would of course be highly welcome but a negative reading could be what’s needed to chivvy tight-fisted governments into spending more.




FedEx Corporation – Shares Tumbled

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The shares tumbled 10% to $155.29 before the start of regular trading in New York on Wednesday. The drop wiped out FedEx’s year-to-date gain

Blaming a weakening global economy, FedEx Corp. sliced its profit outlook in the latest sign that trade tensions are dragging down U.S. corporate titans. The shares tumbled.

The forecast signaled deepening trouble for the courier as the U.S. and China battle over tariffs — which has also ensnared manufacturing giants such as Caterpillar Inc. and Deere & Co. FedEx, which had announced an employee-buyout program in January, said it would pare its cargo-jet fleet to contend with the diminished expectations.

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The global economy continues to soften and we are taking steps to cut capacity,” Chief Executive Officer Fred Smith said in a conference call to discuss earnings late Tuesday. The slowdown is being “driven by increasing trade tensions and policy uncertainty.”

Analysts, however, said some of FedEx’s problems were of its own making.

President Donald Trump’s trade maneuvers are tormenting Smith, a free-trade advocate and longtime Republican donor who has sounded the alarm quarter after quarter that tariffs would hurt economic growth. Commercial tensions are complicating FedEx’s costly integration of a European acquisition and putting the company under the microscope of the Chinese government. FedEx is also girding for a revenue drag after severing most ties with Inc

The shares tumbled 10% to $155.29 before the start of regular trading in New York on Wednesday. The drop wiped out FedEx’s year-to-date gain and spurred declines at rivals such as United Parcel Service Inc. and Germany’s Deutsche Post AG. FedEx was already trailing the returns this year of UPS and a Standard & Poor index of U.S. industrial companies.

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FedEx failed to acknowledge “its own execution failures,” said Deutsche Bank analyst Amit Mehrotra. “In reality, FedEx’s release is largely the result of many management missteps over the years, including overspending on aircraft despite weaker returns in Express over the long-term, and acquisition debacles,” he said in note to investors.

The U.S.-China trade war has weighed on manufacturers, disrupting a key market for FedEx. A surge in industrial jobs seen in the first two years of Trump’s presidency has reversed in parts of the country, and there’s evidence that some corners of the U.S. economy are sliding toward recession. Companies have slowed business investment and capital expenditures as uncertainty over trade policies has clouded the outlook for future growth.

For FedEx, the weaker outlook underscored the hurdles as the company introduces costly changes to its ground network to handle surging e-commerce deliveries while contending with rising competition from Amazon.

FedEx stuck with its plan to invest $5.9 billion for fiscal year 2020, which ends in May, and will probably match that in 2021, Chief Financial Officer Alan Graf said on the call. The company needs to spend on new aircraft and to modernize sorting hubs, Graf said.

But to reduce capacity at the Express air-shipping network, FedEx will retire as many as 20 older planes and park additional aircraft as it adjusts to the weaker economic outlook. The company already announced a $575 million employee-buyout program in January.

FedEx is implementing additional cost-reduction initiatives to mitigate the effects of macroeconomic uncertainty, including post-peak reductions to the global FedEx Express air network to better match capacity with demand,” Graf said.

Amazon Break… The Memphis, Tennessee-based company failed to renew contracts with Amazon for U.S. ground deliveries and air shipments as the e-commerce retailer builds out its own transportation network.

The move will dent FedEx’s sales since Amazon had accounted for about 1.3% of annual revenue. But FedEx is betting that the decision will boost profit margins because the business fetched below-average prices. Earnings are already under pressure from the weaker global economy.

The courier’s best-case scenario for adjusted earnings in the fiscal year ending in May was only $13 a share — a dollar short of the lowest of 25 analyst estimates compiled by Bloomberg. The forecast implied at least a 16% drop from the previous year’s level. FedEx had predicted in June a decline of a “mid-single-digit percentage point.”

In the fiscal first quarter, adjusted earnings dropped to $3.05 a share, FedEx said in a statement. That trailed the $3.15 average of analyst estimates complied by Bloomberg. Sales were little changed at $17 billion. Operating income fell 8.8% to $977 million in the quarter. Operating margins narrowed to 5.7% from 6.3%.

Europe, China… An economic slowdown in Europe is hampering FedEx’s effort to turn around operations at TNT Express, a Dutch company acquired in 2016 for $4.8 billion. Integration spending will be about $350 million over the 12-months ending in May 2020, FedEx said in June, pushing the expected total to about $1.7 billion by May 2021.

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For now, the company is running both the TNT and FedEx networks in Europe, which drives up costs, said Seaport’s Sterling.

In China, FedEx has been under scrutiny in recent months after Huawei Technologies Co. said documents that it asked to be shipped from Japan to China were instead diverted to the U.S. without authorization.

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In another incident, FedEx said it mistakenly rejected a package containing a Huawei phone being sent to the U.S. from the U.K., a claim China rebuffed.

Earlier this month, China said it was investigating FedEx on suspicion of illegally handling a package to Hong Kong containing knives that are controlled by law, according to a report by state-run Xinhua News Agency.



Stock Markets: Top 5 Things to Watch This Week

Top 5 Stock Market News ♦ … Oil prices will react when markets open after an attack on a key Saudi production facility, amid uncertainty over how much global supply will be disrupted. Investors are also bracing for another interest rate cut from the Federal Reserve this week, as well as a flurry of rate decisions from other world central banks.

Here’s what you need to know to start your week.

1 – Oil set to jump after Saudi attack

Saturday’s attacks on key Saudi Arabia processing plants will test the world’s ability to handle a supply crisis as it faces the temporary loss of more than 5% of global supply from the world’s biggest crude exporter.

The U.S. has blamed Iran for the attack, which will cut Saudi production by about 5.7 million barrels per day (bpd), more than half of the kingdom’s output, according to a statement from state-run Saudi Aramco.

Crude prices could spike by several dollars per barrel when markets open Sunday night as a prolonged outage could prompt the U.S. and other countries to release crude from their strategic petroleum reserves to boost commercial stocks globally.

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Oil prices will jump on this attack, and if the disruption to Saudi production is prolonged, an SPR release … seems likely and sensible,” said Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University in New York.

2 – Fed set to cut rates again


The Fed is widely expected to lower interest rates again at the conclusion of its two day policy meeting on Wednesday, in order to offset risks to the U.S. economy from trade tensions between Beijing and Washington, Brexit and a broad global slowdown.

Investors are pricing in a 78.5% chance of a quarter-point rate cut, according to The Fed cut rates for the first time in over a decade in July.

“We think the Fed will come down in favor of cutting rates 25bp again in what will be described as an insurance move against the headwinds facing the economy”, analysts at ING wrote in a note. “Moreover, a Fed rate cut will help to mitigate upward pressure on the U.S. dollar given policy loosening seen from the likes of the ECB.”

3 – Central bank ‘Super Thursday’


Thursday brings policy meetings in Japan, the U.K., Norway and Switzerland in the wake of Wednesday’s Fed decision and last week’s stimulus package from the European Central Bank.

The Bank of Japan is expected to keep interest rates unchanged unless the Fed decision jolts markets and triggers a spike in the yen.

Switzerland, with a -0.75% interest rate, is quiet so far on the prospect of emulating ECB easing but will be concerned at the franc’s surge to two-year highs versus the euro.

The Bank of England is not expected to make any changes, but its rate statement will be closely watched for any concerns over the economic fallout from Brexit.

The central bank of Norway could hike again, but with easing gathering steam all around, it is very likely to mark the end of its tightening cycle.

4 – Trade hopes

Junior U.S. and Chinese officials meet in the coming week ahead of planned talks between senior trade negotiators in early October and investors will be on the lookout for any indications that relations between the two sides are thawing.

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Beijing exempted some agricultural products from additional tariffs on U.S. goods last week and President Donald Trump postponed a tariff increase on certain Chinese goods by two weeks.

Economic data from China on Monday, including reports on industrial production, retail sales and fixed asset investment will provide some insight into how the world’s second largest economy is bearing up amid the protracted trade war.

5 – Economic data, earnings


The economic calendar will bring an update on the health of the U.S. housing market, with reports on housing starts and existing home sales. Global shipping giant FedEx (NYSE:FDX), considered a bellwether for the U.S. economy, is due to report earnings on Tuesday.

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In the Eurozone, a report on Germany’s ZEW index on Tuesday will offer more insight on whether the bloc’s largest economy is on track for a recession after contracting slightly in the second quarter.

The U.K. is to release data on CPI, while Canada is to report on CPI and retail sales.






10 Best Stocks to Buy { Second Half of 2019 }


< StockMarketNews.Today > … Stocks to buy in the second half 2019 … Here are 10 stocks to buy today { Second Half of 2019 } …

  1. Netflix

  2. iRobot


  4. Intuitive Surgical

  5. Alphabet

  6. Axon Enterprises

  7. Wayfair

  8. Facebook

  9. Constellation Brands

  10. Lululemon athletica 

5 of the Best Stocks for Beginning Investors

Let’s start with five that are particularly good for beginning investors because of their strong balance sheets, positive free cash flow, and competitive advantages:
Intuitive Surgical
Axon Enterprises

The first three stocks are all “FAANG” (Facebook, Amazon, Apple, Netflix, and Google) stocks. These Big Tech companies have their hands in seemingly everything and have the potential to disrupt the parts of the economy they don’t. Their large market capitalizations reflect the fact the market knows this, too. That said, beginning investors are generally better off sticking to well-known large cap stocks with strong brand recognition as they start off on their investing journey versus getting too cute with under-the-radar smaller cap stocks.

Amazon dominates online retail to the tune of about half of all U.S. e-commerce! If that doesn’t amaze you, how about the estimates that over 100 million Americans are now paying the $119/year price tag to be Amazon Prime members?

And that’s not even where it gets most of its profit. That comes from Amazon Web Services, its cloud computing offering. While its retail segment sells us literal picks and shovels, Amazon Web Services sells the virtual picks and shovels of the Internet.

As a bonus, Amazon throws in other goodies like its burgeoning original content as well as its subsidiaries like high-end organic retailer Whole Foods and the gaming-related live streaming video platform Twitch.

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Alphabet (aka the owner of Google) is no less impressive. Its search engine might be better termed a “money engine.” That’s what happens when you have around a 90% market share worldwide.

In addition, YouTube is the #1 video platform in the world while Android is the #1 mobile operating system.

Also within the Alphabet umbrella are a whole bunch of futuristic moonshots and other “alpha bets”. As a result, Google is involved in everything from driverless cars to virtual reality to drones to artificial intelligence (AI).

Rounding out the FAANG companies here is Facebook, the ruler of social media with Instagram and WhatsApp in addition to its namesake Facebook and Facebook Messenger platforms. Each of those four platforms counts at least a billion monthly users. Pretty impressive when the world’s population is also counted in the single-digit billions. And yeah, don’t forget about their Oculus VR tech and other bets, too.

Getting out of the Big Tech space a bit, there’s healthcare pioneer Intuitive Surgical, which makes robotic surgery a reality with its da Vinci surgical systems. The technology assists surgeons in making procedures less invasive, leading to better patient outcomes. Far from an unproven flyer, Intuitive Surgical already has billions in annual sales and has been consistently wildly profitable — think gross margins in the 60% to 70% range and net margins in the 20% to 30% range.

It’s easy to see a growth path forward with increased adoption by surgeons and hospitals and increasing numbers of approved procedures.

Finally, we come to Axon Enterprises, known for its law enforcement and self-defense products. To wit, its Taser stun guns, Axon body cameras, and (uses AI to analyze uploaded video footage) offerings give an integrated solution to police departments.

5 of the Best Growth Stocks

In contrast to dividend stocks, growth stocks often pay little (or none) of their earnings back to investors as dividends. In fact, many are at the pre-earnings stage or have such small earnings that their P/E ratios are stratospheric. And if they do have earnings, they tend to plow them back into their businesses.

Lululemon athletica
Constellation Brands

iRobot is known for its Roomba line of robotic vacuum cleaners. Bears worry about the threat of increased competition. Bulls, however, point to the huge potential for optionality (i.e. a company morphing and pivoting over time to become something we can’t envision today). iRobot is already expanding its offerings into robotic lawn mowers, so it’s not hard to imagine it going after other household and commercial applications soon. More broadly, though, there’s a lot of room for pivoting into interesting spaces when you’re an early ish mover into robots, machine learning, and artificial intelligence. It’s hard to speculate on exactly what iRobot could become, but at just over $3 billion in market capitalization, it’s still less than 1% the size of Facebook, Alphabet, or Amazon, meaning there’s lots of room for the stock price to run if its wildest goals come true. And plenty of room for success in between if there’s a more conventional outcome.

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Springing from its core yoga apparel base, the Lululemon brand has become an absolute force in athleisure. There are debates about whether athleisure (e.g. wearing spandex as if it were denim) is merely a trend or here to stay. While the answer to that debate may affect shorter-term growth, consumers will need fitness apparel for a long time to come. Beyond that, Lulu can grow internationally, beyond its North American stronghold (while Lululemon is a Canadian company, about 70% of its sales come from the U.S. and only about 10% of its sales come from outside the U.S. and Canada). Another potential growth driver is expansion beyond its traditionally female target demographic.

Wayfair is an online destination for furniture and other home items. Retail in any channel is tough, and it’s no different for Wayfair. Competition is fierce, featuring major online players like Amazon, all the traditional bricks-and-mortar players, and a host of online boutique start-ups. To buy the Wayfair story, you’ll probably want to believe that Wayfair can build up a brand, customer loyalty, and scale that’ll enable it to boost margins to a point where it can be sustainably profitable. One favorable indicator for that case is Wayfair’s 5-year sales growth rate near 50%.

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Netflix needs no introduction. It’s been able to stay steps ahead of doubters as it has vanquished Blockbuster, pivoted from mailed DVDs to online streaming, created award-winning original content, and kept total content costs contained enough to be consistently profitable. The worries today include ever-present competition (including other streaming service entrants from formidable content owners), fears of domestic saturation, and even higher content costs. On the other side, Netflix seems to have brand and pricing power, the notion that cable cutters can sign on to more than one online service, international expansion possibilities, and economies of scale as it continues to grow the top line (30%+ the past few years).

Constellation Brands is aptly named. Even if you haven’t heard of the company, you know many of the alcohol brands it either owns outright or markets. These include beers like Corona, Modelo, and Ballast Point, wines like Robert Mondavi, Clos du Bois, and Ruffino, and spirits like SVEDKA Vodka. It’s accomplished much of this through acquisitions over the years (and decades), a strategy that is generally riskier than growing organically. So far, however, it’s worked out pretty well for Constellation.



Trade War News: China Waives Tariffs on Some US Goods for First Time

♦ Trade War Latest News — Stock Market News Today ♦

China just waived import tariffs on more than a dozen US goods. It’s the first time Beijing has issued such exemptions since the US-China trade war began.

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The Chinese government issued tariff exemptions on 16 products, including shrimp, fish meal and cancer treatment drugs. Chinese importers can apply for a refund of tariffs already levied on 12 of the products. Four products, including whey, are eligible for the exemption but not for refunds.

The exemptions will start Sept. 17 and last for a year. The move is notable because it comes ahead of the next round of face-to-face talks between US and Chinese officials in Washington. But analysts pointed out that the exemption list didn’t include major goods subject to tariffs, like soybeans or meat.

Chinese tariffs that really matter are the ones on US agricultural and manufacturing goods, produced mainly in states with strong support for [President] Donald Trump,” said Artur Baluszynski, the head of research at Henderson Rowe. “We just don’t see China willing to negotiate on them before the race for US presidential elections really kicks off.”

Iris Pang, economist for Greater China at ING, added that while the exemptions could be seen as a “gesture of sincerity,” they are “probably more a means of supporting the economy.”

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The trade war is weighing on the Chinese economy, which is suffering a major slump in growth. And tariffs have only been getting more severe lately. The United States has levied tariffs on Chinese goods worth hundreds of billions of dollars. Beijing has retaliated with its own tariffs that target more than 5,000 US products. Some of those have already taken effect, while others are expected to take effect in the coming weeks.

China’s State Council Tariff Commission, which made Wednesday’s announcement, said it will continue to review exemption requests and announce new lists in the future.

Beijing is also finding other ways to offset the pain brought on by tariffs, including diversifying its sources of agricultural imports. On Tuesday, Argentina’s agricultural ministry announced that China would allow the import of soybean meal from that country. Soybean meal is Argentina’s largest export product.

Soybean farmers in the United States have been hit particularly hard by the trade war. China was their biggest market before the outbreak of hostilities and buys a majority of the world’s soybean production.

If China doesn’t resume purchases of US soybeans this year, then Argentina is capable of filling the gap in demand, according to Tian Yaxiong and Shi Lihong, analysts at China Futures, a brokerage firm based in Chongqing.

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Argentina isn’t the only South American country that China’s soybean industry is turning to because of the trade war — Chinese farmers have also stepped up imports from its neighbor, Brazil.

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Trade War: China & U.S. to Hold Trade Talks in October

China and the United States agreed to hold high-level trade talks in early October in Washington, China’s commerce ministry said on Thursday, amid fears that an escalating trade war could trigger a global economic recession.

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The announcement followed a call earlier in the day between China’s Vice Premier Liu He and U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin, the Ministry of Commerce said in a statement on its website. China’s central bank governor Yi Gang was also on the call.

“Both sides agreed that they should work together and take practical actions to create good conditions for consultations,” the ministry said.

Trade teams from the two countries will hold talks in mid-September before the high-level talks next month, the ministry said. Both sides agreed to take actions to create favorable conditions, it said.

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A spokesman for the U.S. Trade Representative’s office confirmed that Lighthizer and Mnuchin spoke with Liu and said they agreed to hold ministerial-level trade talks in Washington “in the coming weeks”.

Washington began imposing 15% tariffs on an array of Chinese imports on Sunday, while China began placing new duties on U.S. crude oil. That prompted China to lodge a complaint against the United States at the World Trade Organization.

The United States plans to increase the tariff rate to 30% from the 25% duty already in place on $250 billion worth of Chinese imports from Oct. 1.

U.S. President Donald Trump warned on Tuesday he would be tougher on Beijing in a second term if trade talks dragged on, compounding market fears that ongoing trade disputes between the United States and China could trigger a U.S. recession.

Chinese leaders will have a packed schedule next month, gearing up for National Day celebrations scheduled for Oct. 1.

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They will also hold a key meeting in October to discuss improving governance and “perfecting” the country’s socialist system, state media has said, more than a year after the last was held.

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Recession Signals Flashed by The Bond Market May Have Been Exaggerated …

Some investors and analysts are convinced that fears of an imminent upset may be overdone.

Long-term bonds have been on a tear in recent weeks with yields tumbling more rapidly than almost any other time in the past decade. But the recession signals flashed by these moves may have been exaggerated because of “forced buying” among some investors.

The strong rally in long bonds has made them among the best performing assets of any market in the world this year. They have also caused dreaded inversions of the U.S. yield curve in August: That is where 10-year yields fall below two-year yields, a reliable signal that recession is around the corner.

Some investors and analysts are convinced that fears of an imminent upset may be overdone. A lot of the recent fall in yields has been because some banks, asset managers, insurers and pension funds have had to gorge on long bonds or bond derivatives because market moves have hurt other positions they hold.

This activity is often called “forced buying” since the trades are dictated by pre-existing risk models and investment strategies. “There was a fundamental driver to this move-in yields and that continues to be validated by economic data and the Fed,” said Josh Younger, head of U.S. interest rates derivatives strategy at JPMorgan in New York. “But the signals provided by the rates markets are being amplified by this hedging activity.”

Less than half the fall in 10-year yields during August—the biggest monthly drop in percentage point terms since 2011—was down to fundamental economic reasons, according to Mr. Younger. He figures 10-year Treasury yields that are currently priced around 1.5% are about one-quarter of a percentage point below where they would be without this activity.

One giveaway that hedging activity has been important in recent market moves is that yields in swap markets, where hedging is done, have fallen faster than those on bonds, according to Mr. Younger.

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There are several factors driving investors into long-dated bonds. Falling rates and a wave of Americans refinancing home loans means mortgage-backed bonds get paid off quicker than expected. Institutions who owned those bonds—banks, mortgage real-estate investment trusts and fund managers—are pushed into buying longer-dated Treasurys or interest-rate swaps as the quickest and cheapest way to replace the disappearing income.

Buying also comes from pension funds and insurers that sell annuities. When yields fall, their liabilities often grow faster than their assets. That can increase the so-called “duration gap” in their books, which is the shortfall between what they are going to earn on their assets and what they owe to pensioners. To close the gap, these businesses need more long-term assets.

Bets on low volatility in the bond options and futures markets—a trade popular among so-called unconstrained bond funds—can also produce extreme demand for long dated bonds when volatility spikes.

These trades rely on volatility and yields remaining within a limited range. When yields break lower, as they have recently, investors need to rebuild their long-term exposure quickly and rush into government bonds or swap markets to do so, says James McAlevey, head of rates at Aviva Investors in London.

On Wall Street, these effects all have typically obscure sounding names: mortgage bond owners face “negative convexity,” the risk that the duration of portfolios, or the time it takes for an investor to be paid back through coupon payments, could grow or shrink rapidly. Those betting on low volatility can find themselves “short gamma,” which refers to the risk of market losses on short-dated options on longer-term bonds and interest rate swaps.

“The lower we go in long-term bond yields, the more demand starts to increase for certain products: gamma hedging, convexity hedging and closing duration gaps,” said Mr. McAlevey. “You end up with a market that is all buyers and no sellers.”

None of these types of activity kick off a market move, but they can help it gather pace, said Mr. McAlevey. Hedging activity linked to volatility strategies can also create forced sellers when yields start to rise. “Gamma hedging works both ways,” he said. “So a lot of what’s going on is just going to lead to higher volatility.”

The upshot is that without these flows, the U.S. yield curve wouldn’t have inverted and there would be much less fevered chatter about a coming recession.

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“The flattening of the [yield] curves has been exacerbated by these flows,” said Stefano Di Domizio, head of fixed-income strategy at Absolute Strategy Research.

To be sure, all this hedging activity might have helped yields in the U.S. and Europe to fall more quickly to a level where they will eventually deserve to be. “It’s the middle of August, it’s quiet, so moves get exaggerated,” says Helen Anthony, a portfolio manager at Janus Henderson. “We were expecting this to play out over much longer than just this month.”

Stock Markets: New U.S.-China Tariffs add to Global Gloom

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Stock Markets: New U.S.-China Tariffs add to Global Gloom

Global stock prices fell on Monday after the United States and China imposed new tariffs on each other’s goods, reinforcing investors’ worries over slowing global growth.

The E-mini futures for U.S. S&P500 (ESc1) fell as much as 1.06% in early trade and last stood down 0.39%.

Japan’s Nikkei (N225) shed 0.28%.

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MSCI’s broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) dropped 0.3%, led by 0.5% drop in Hong Kong’s Hang Seng (HSI) after another weekend of violent anti-government protests.

But mainland Chinese shares fared better, with the CSI300 index (CSI300) rising 0.3% despite the trade row escalation.

China’s State Council said on Sunday it will increase adjustments of economic policy. A private survey on Monday showed factory activity unexpectedly expanded in August, though gains were modest and contrasted with official data that pointed to further contraction.

U.S. President Donald Trump slapped 15% tariffs on a variety of Chinese goods on Sunday – including footwear, smart watches and flat-panel televisions – while China imposed new duties on U.S. crude, the latest escalation in a bruising trade war.

A variety of studies suggest the tariffs will cost U.S. households up to $1,000 a year, with the latest round hitting a significant number of U.S. consumer goods.

In retaliation, China started to impose additional tariffs on some of the U.S. goods on a $75 billion target list. Beijing did not specify the value of the goods that face higher tariffs from Sunday.

“So far Trump appears defiant though on the tariff hikes, blaming the Fed and American companies for their difficulties in dealing with the tariffs,” said Shane Oliver, chief economist at AMP in Sydney.

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“There is a long way to go though and re-establishing trust will be difficult after the experience since mid-last year. Share markets may still have to fall further to pressure Trump to resolve the issue.”

Many market players say the market’s reaction was likely exaggerated by algorithm-driven players’ flows in thin trading conditions at start of Asian trade on Monday.

Liquidity could be even more limited than usual because of a U.S. market holiday on Monday.

“(The market move) goes to show you how many data mining algos are involved with equity linked compared to forex-linked. Was anyone surprised by these tariffs that took effect yesterday?” said Takeo Kamai, head of execution at CLSA in Tokyo.

Tension is also running high in Hong Kong, with police and protesters clashing in some of the most intense violence since unrest erupted more than three months ago over concerns Beijing is undermining democratic freedoms in the territory.

Thousands of protesters blocked roads and public transport links to Hong Kong airport and police made several arrests after demonstrators smashed CCTV cameras and lamps with metal poles and dismantled station turnstiles.

China, eager to quell the unrest before the 70th anniversary of the founding of the People’s Republic of China on Oct. 1, has accused foreign powers, particularly the United States and Britain, of fomenting the unrest.

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Oil prices also fell on Monday.

Brent crude (LCOc1) futures fell 0.49% to $58.96 a barrel while U.S. West Texas Intermediate (WTI) crude (CLc1) lost 0.18% to $55.00.

In the currency market, the dollar dipped slightly against the yen to 106.12 yen .

The euro stood almost flat at $1.09905 (EUR=), not far from two-year low of $1.0963 hit in U.S. trade on Friday.

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Stock Markets – Stock Rally Powers On Despite Tariff Deadline

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• U.S. stock futures gain

• Treasury yields edge up

• Tariffs to be implemented over the weekend

Global stocks extended their rally on the final trading day of the month on optimism around U.S.-China trade relations, despite impending new tariffs. The Stoxx Europe 600 opened up 0.8%, with the U.K.’s FTSE 0.3% higher and the German DAX up 1%.

U.S. futures for the S&P 500 were up 0.6%. Futures don’t necessarily predict moves after the opening bell.

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Stocks have drifted higher since China said Thursday that its officials remained in communication with the U.S. over possible talks in September. The Dow Jones Industrial Average and the S&P 500 both rose 1.3% Thursday.

Despite the positivity among investors, both the U.S. and China are set to impose new tariffs each other’s goods on Sunday.

Oliver Jones, a senior markets economist at Capital Economics, said given the August political volatility, it is hard to know what the reaction will be if the tariffs go into effect.

“It’s really hard to pin down exactly what’s priced in,” he said. The gains in Europe also came after weak German retail sales for July reinforced expectations for a strong stimulus package from the European Central Bank, said Michael Hewson, chief market analyst at CMC Markets. Retail sales fell 2.2%, more than analysts had expected.

Mr. Hewson said he expects gains in the equities market to be temporary.

Ian Williams, an economics and strategy research analyst at Peel Hunt, said in addition to the positive reaction from investors to recent comments from the U.S. and Chinese governments, some of the strength in stocks reflected end-of-month position