(Houston)

Generally speaking, when oil prices fall it is considered good for the economy as it unleashes excess consumer spending. This is what happened in the last big drop in 2014-2015. However, this time around, there are likely to be no winners from the drop. Because the huge fall in prices is coming at a time of significantly reduced economic demand because of the coronavirus, it is hard to imagine that much excess economic activity will be created to account for the drop in oil-related industries.

FINSUM: Supply and demand are tumbling simultaneously across the economy (not just in oil), so it does not seem this will be a net positive like it has been in the past.

(New York)

Markets are in a very rough place right now, with benchmark indexes approaching bear market territory on Monday. Energy and travel have been the epicenter of losses, but every sector s getting hit badly. With that in mind, what is the best sector to invest in right now? The answer may be—somewhat surprisingly—financials, and XLF in particular. Whereas the S&P 500 as a whole was in the 99th percentile of valuations historically before the big fall, financials were only in the 60-70% range. Now with the big tumble in prices, financials are in the bottom 1% of their ten-year valuation range.

FINSUM: So rates and yields are super low, which obviously hurts banks’ net interest margin and has led to financial stocks getting pummeled. However, they are so cheap that this is a very good long-term entry point.

(New York)

In what comes as a very important sign for the wider US economy, lower rates and yields are apparently not flowing through to mortgages in the way that many expected. One of the bright economic spots in the big market volatility recently has been the hope that much lower rates would stimulate more housing demand. Mortgages rates have actually risen by 20 bp since March 5th despite the huge fall in Treasury yields. Even since mid-February (when the market was peaking), mortgage rates have only dropped 15 bp to 3.35% for a 30-year fixed.

FINSUM: This is very important because it takes a 75 bp fall for a typical homeowner to save money on a refinancing. We are not even close to that yet, so hard to see any economic boost coming.

(Washington)

The “mini Super Tuesday” results are in from yesterday’s six primaries, and Joe Biden has taken an even more commanding lead. The biggest prize he won yesterday was Michigan, giving him a very strong lead heading into next week’s primaries, which includes Florida. He is almost untouchable at the point, but a win in Florida—which is forecasted—would make his advantage insurmountable.

FINSUM: Two thoughts here. Firstly, Sanders is the most successful non-winning candidate ever. He changed the party and galvanized the center, which ultimately led to his losing, but transformed the vision of the party. Secondly, Biden is more dangerous for Trump. He has the right middle-of-the-road policies and demeanor to attract moderates and those whose eyes might be wavering from the president.

(San Francisco)

The market is in a brutal position, everyone knows that. Peak losses hit 19% yesterday, just a hair off a bear market. The reality, though, is that some sectors are thoroughly in a bear market, including the biggest growth driver of them all—tech. The S&P info tech sector is down 20%, while Microsoft is down 20% and Apple 19%. Amazon and Facebook are both down 17%. IBM, Cisco, and older-guard tech companies are getting slaughtered down to the 25%+ range.

FINSUM: Some of these are smart to stay away from, but others could be good buying opportunities. For instance, social media companies are more exposed to consumer spending declines (and resultant advertising declines) that B2B tech companies offering cloud and other software infrastructure that is hard to cut from budgets.