March 23rd, 2020 Newsletter
Another day of market mayhem with more volatility sparked by the deepening economic impact from the virus. The Federal Reserve’s pre-market announcement that its bond-buying programme would cover all US Treasuries provided a temporary boost to sentiment with its unprecedented action, but the deadlock in the Senate and Congress is unnerving to the markets. The stalemate is over details of the stimulus package with Democrats wanting more for workers and Republicans favoring corporate bailouts.
The U.S. Senate is expected to vote on a roughly $1.3 trillion package designed to blunt the economic impact of the coronavirus pandemic. Timing is uncertain. -WSJ.
However, as I write this, the futures are advancing, adding 1.3% so far. We’ll just have to wait and see what tomorrow brings. Hang in there!
On March 23, 2010, President Barack Obama signed into law the Affordable Care Act, the most sweeping piece of federal legislation since Medicare was passed in 1965.
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On March 23, 1922, Mahatma Gandhi was on trial on a charge of sedition. This is what he said when asked to speak:
I wanted to avoid violence. Non-violence is the first article of my faith. It is also the last article of my creed. But I had to make my choice. I had either to submit to a system which I considered had done an irreparable harm to my country, or incur the risk of the mad fury of my people bursting forth when they understood the truth from my lips. I know that my people have sometimes gone mad. I am deeply sorry for it and I am, therefore, here to submit not to a light penalty but to the highest penalty. I do not ask for mercy. I do not plead any extenuating act. I am here, therefore, to invite and cheerfully submit to the highest penalty that can be inflicted upon me for what in law is a deliberate crime, and what appears to me to be the highest duty of a citizen.
PHOTOS OF THE DAY
A combination picture shows residents toasting during a “safe distance” aperitif time between neighbours during the coronavirus lockdown imposed by the Belgian government in an attempt to slow down the coronavirus disease (COVID-19), in the Brussels commune of Anderlecht, Belgium.
CREDIT: REUTERS/YVES HERMAN
Times Square stands mostly empty as much of the of the city is void of cars and pedestrians over fears of spreading the coronavirus.
CREDIT: SPENCER PLATT/GETTY IMAGES
Yorkshire Sculpture Park, visitors look at ‘The Virgin Mother’ by British artist Damien Hirst on Mother’s Day at Yorkshire Sculpture Park.
CREDIT: ADAM VAUGHAN/SHUTTERSTOCK
Market Closes for March 23rd ,2020
|Bonds||% Yield||Previous % Yield|
10 Year Bond
10 Year Bond
30 Year Bond
|WTI Crude Future||20.36||22.43|
On this day in 1989, two scientists at the University of Utah, Stanley Pons and Martin Fleischmann, announced they had triggered nuclear fusion on a table-top by using electrodes of palladium and platinum to electrolyze a glass jar full of heavy water. Cold fusion, as the scientists christened their experiment, was hailed by many as the greatest scientific discovery of the 20th century. Unfortunately, within weeks, it was proven to be a scientific fraud.
By Bloomberg Automation
(Bloomberg) — The S&P/TSX Composite fell for the second day, dropping 5.3 percent, or 623.32 to 11,228.49 in Toronto. The index dropped to the lowest closing level in at least a year. Today, financials stocks led the market lower, as 9 of 11 sectors lost; 186 of 230 shares fell, while 44 rose.
Royal Bank of Canada contributed the most to the index decline, decreasing 8.0 percent. NFI Group Inc. had the largest drop, falling 32.9 percent.
* In the past year, the index had a similar or greater loss four times. The next day, it advanced after all four occasions
* This quarter, the index fell 34 percent, heading for the biggest decline in at least 10 years
* This month, the index fell 31 percent, heading for the biggest decline in at least 10 years
* The index declined 30 percent in the past 52 weeks. The MSCI AC Americas Index lost 22 percent in the same period
* The S&P/TSX Composite is 37.5 percent below its 52-week high on Feb. 20, 2020 and 0.5 percent above its low on March 23, 2020
* The S&P/TSX Composite is down 9.2 percent in the past 5 days and fell 37 percent in the past 30 days
* S&P/TSX Composite is trading at a price-to-earnings ratio of 11.2 on a trailing basis and 11 times estimated earnings of its members for the coming year
* The index’s dividend yield is 4.6 percent on a trailing 12- month basis
* S&P/TSX Composite’s members have a total market capitalization of C$1.81t
* 30-day price volatility rose to 74.55 percent compared with 73.82 percent in the previous session and the average of 38.41 percent over the past month
| Index Points | | Sector Name | Move | % Change | Adv/Dec
Financials | -297.0409| -7.9| 1/25
Energy | -96.1539| -6.5| 1/29
Utilities | -86.5380| -13.1| 0/16
Communication Services| -72.2217| -9.2| 0/8
Real Estate | -57.5281| -14.5| 1/24
Consumer Staples | -49.3169| -8.4| 1/10
Industrials | -48.9272| -3.4| 2/29
Consumer Discretionary| -12.3727| -3.1| 5/11
Health Care | -1.9984| -1.6| 3/7
Information Technology| 22.4767| 2.8| 2/8
Materials | 76.2783| 5.4| 28/19
* The benchmark 10-year bond rose and the yield fell 7.8 basis points to 0.791 percent
By Sarah Ponczek and Vildana Hajric
(Bloomberg) — U.S. stocks started the week down as investors saw little progress on a congressional spending package to blunt the fallout from the coronavirus pandemic. Measures of corporate credit risk eased after the Federal Reserve announced a massive second wave of initiatives to support a shuttered American economy. The S&P 500 closed lower, despite a late-session surge, after lawmakers failed to agree on a stimulus bill over the weekend and again fell short of the needed Senate votes for a deal on Monday. Tech shares outperformed, with the Nasdaq 100 eking out a small gain, as negotiations continued on Capitol Hill. Trading volumes remained above average. The S&P is down almost 35% from its Feb. 19 record and marked its lowest close of Donald Trump’s presidency. The Dow Jones Industrial Average has lost almost all its gains since he was elected on Nov. 8, 2016. “Fiscal is far more important than the Fed in stabilizing risk assets,” said Dennis DeBusschere of Evercore ISI. “That being said, as the Fed gets more creative, they can become much more relevant. They are going to buy everything.” The central bank said it will buy an unlimited amount of bonds to keep borrowing costs low and will set up programs to ensure credit flows to corporations and state and local governments. The cost to insure against corporate defaults fell and bond ETFs eligible for Fed purchases jumped. “The Fed has really rallied to do as much as it can to extend its reach, but I think at the end of the day, the markets recognize this requires a fiscal response,” said Nela Richardson, an investment strategist at Edward Jones. “Every time the Fed takes a strong step forward there’s a kind of, ‘Oh no, this is worse than anyone thought’ reaction in the market.”
The Stoxx Europe 600 fell as the continent’s leaders sought to impose more curbs on people’s movements and Italy began shutting most industrial production. Core European bonds climbed. Equities fell earlier across most of Asia, where India’s benchmark plunged a record 13% while the rupee sank to the lowest ever amid moves to lock down widespread areas of the country. Brent crude stabilized after its 20% decline last week; West Texas crude gained, as did gold. Investors are beginning another dramatic week digesting slashed economic forecasts and news of Europeans struggling to curb the pandemic, with Italy and Spain reporting 2,000 deaths over the weekend between them. Warnings grew that a global recession is coming as cities from New York to Los Angeles all but shut down and cases rise rapidly outside Asia. Morgan Stanley warned the epidemic could cause U.S. GDP to shrink a record 30% in the second quarter. Federal Reserve Bank of St. Louis President James Bullard said the country’s jobless rate may hit 30%. Meanwhile, international air carriers continued to announce drastic measures to cope with the outbreak, with giants Emirates and Singapore Airlines Ltd. among the latest to slash flights, and jet maker Airbus SE withdrawing its earnings guidance.
Morgan Stanley Sees U.S. GDP Plunging 30% in Second Quarter (1) Italy Bans Movement Inside Country as Another 651 People Die Fed Officials See More Moves Ahead Amid Dire Economic Outlook
Here are the main moves in the market:
* The S&P 500 Index fell 2.9% as of 4 p.m. in New York; the Dow Jones Industrial Average lost 3%.
* The Nasdaq 100 gained 0.2%.
* The Stoxx Europe 600 Index decreased 4.3%.
* The MSCI Asia Pacific Index dipped 3.4%.
* The Bloomberg Dollar Spot Index gained 0.4%.
* The euro gained 0.4% to $1.0728.
* The British pound slid 1.3% to $1.1481.
* The Japanese yen fell 0.3% to 111.28 per dollar.
* The yield on 10-year Treasuries declined 10 basis points to 0.75%.
* Germany’s 10-year yield fell five basis points to -0.38%.
* Britain’s 10-year yield decreased 14 basis points to 0.425%.
* West Texas Intermediate crude rose 3.9% to $23.51 a barrel.
* Gold climbed 3.7% to $1,553.97 an ounce.
–With assistance from Jeremy Herron, Cormac Mullen, James Crombie, Adam Haigh and Todd White.
Have a great night.
You have power over your mind – not outside events.
Realize this, and you will find strength.
-Marcus Aurelius, 121-180
Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM
Senior Investment Advisor
Queensbury Securities Inc.,
St. Andrew’s Square,
Suite 340A, 730 View St.,
Victoria, B.C. V8W 3Y7
Toll Free: 1.877.430.5895