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  • March 16, 2020

Week in Review

Week Ending: Friday, March 13, 2020

Recap & Commentary

U.S. equities posted their worst week since 2008 as volatility shook the markets and investors braced for weaker economic growth. Trading was halted for fifteen minutes twice during the week as indexes plunged shortly after the open. Wednesday marked the end of the longest bull market in history as the Dow dropped -10% and saw the largest sell-off since 1987’s Black Monday. European equities also had their worst day on record after President Trump announced a 30-day travel ban, and more European cities closed all businesses, except grocery stores and pharmacies.
As of Friday, the World Health Organization (WHO) had reported 138,000 cases of coronavirus globally and over 5,000 deaths. The WHO declared coronavirus a pandemic on Wednesday. Ireland cancelled its St. Patrick’s Day parades and all US sports leagues suspended their seasons in an effort to slow the spread. On Friday, President Trump declared a national emergency, freeing up $50B in aid to assist Americans affected by the outbreak. Stock indices soared after his address, posting their largest single-day gain since 2008.
Oil had another volatile week as Saudi Arabia initiated a price war after Russia refused to follow OPEC guidance of production cuts in order to offset decreased demand. US oil fell 20% from last Friday, even after a 5% rally at the end of trading Friday as Trump announced US oil purchases for strategic reserves.
The 10-Year Treasury yield hit an all-time low 0f 0.32% but jumped later in the week as investors bought back into stocks on Friday. The 30-Year Treasury yield also hit a new low, dipping below 1% for the first time.

Economic Bullet Points

Small Business Optimism rose 0.2 points in February as small business owners expressed higher levels of optimism. This reading lands within the 90th percentile of the 46-year history of the survey.
Inflation eased to 2.3% after January’s reading of 2.5%, the highest level since October 2018. The Consumer Price Index (CPI) edged up 0.1% as increases in food and medical care costs offset decreases in gasoline and recreation costs.
Producer Price Index dropped 0.6% as cost of goods fell. Sixty percent of the decline this month can be attributed to falling energy prices.
Consumer Sentiment fell to 95.9 in March, from the prior reading of 101. The reading beat forecasts but marked the lowest reading since October as coronavirus concerns and a sharp decline in energy stocks continue to spook investors.
Import & Export Prices US Import prices sunk 0.5% in February, mostly reflecting a drop in cost of imported oil. The US is expected to see even more of a decline in import prices as the Saudi Arabia and Russia price war plays out. Excluding oil, the price of imports actually rose 0.3%. Prices of US exports fell 1.1% in February after rising by 0.6% in January marking the largest decline since December 2015.

Of Note

US mortgage applications jumped 55% last week, while refinancing applications increased 79%, as home buyers and homeowners scrambled to take advantage of the lowest mortgage rates in history.

Market Indices Week of 3/13

S&P 500-8.8%
Small Caps-16.5%
Intl. Developed-18.4%
Intl. Emerging-11.9%
Commodities-7.7%
U.S. Bond Market-3.2%
10-Year Treas. Yield1.01%
US Dollar2.6%
WTI Oil ($/bl)$33
Gold ($/oz)$1,519

The Week Ahead

  • NY & Philly Mfg Index
  • Retail Sales
  • Industrial Production
  • Capacity Utilization
  • Housing Starts
  • Import & Export Prices
  • Jobless Claims

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