This was the most negative positive week I can remember. There were three bad days in the market this week, offset by two really good ones. The S+P gained just over ½ of a percent and the Dow gained just over 1.5% over the course of the whole week. The 10 year Treasury yield fell (the price rose) to a ridiculous 0.71% per year, a drop of almost half a percent in interest since last week.
Economically, the employment report for February was shockingly wonderful and the Fed decided to help the economy along by lowering rates by ½ of a percent, a large surprise move.
However, that’s not relevant right now, because all the markets wanted to think about was the coronavirus. The “official” estimated mortality rate has been revised to 3.4% from around 2%, and global cases have topped 100,000. The number of active cases in China is declining, along with the rate of new cases, so hopefully supply chains will begin to thaw. Unfortunately in many other countries, the disease has started to grow exponentially as they are on the front end of the outbreak. Most notably, South Korea, Iran, and Italy are seeing the largest growth numbers. So far the rest of Europe, Japan, and the Americas have fared better, with total cases staying below 1,000 in each country so far. The US currently has about 275 known cases.
Hoarding has started in the US, with toilet paper, bottled water, masks, and disinfectants selling out in many places. Campbells soup has stepped up ingredient ordering. Even Twinkies have seen the increased demand! The President signed an $8.3 billion dollar spending bill aimed at slowing and eventually preventing coronavirus.
There is some economic data coming out next week that normally would be interesting, but I am fairly certain that the market reaction next week will depend on the course of the virus. Hopefully as the weather starts warming into March, we will see the virus counts begin to fall.