Displaying items by tag: stocks
Bernie is a long, long way from the White House. He has not even won his party’s bid. Yet, his odds of winning the Democratic ticket, and thus his effect on markets are growing. The reality is that even if you think Trump is likely to win the election, Bernie is probably going to have a big effect on markets this year because of how tight polls are likely to be. With that in mind, here is some advice to protect your portfolio. Analysts are still working through how Bernie might impact specific sectors, but there is one area where all agree he will be devastating—defense. Bernie favors heavy cuts to the defense budget—a position unique to him among the Democratic field of candidates. Therefore, selling defense companies or buying puts on the defense sector seems smart. Such puts are still quite cheap, so not a bad time to prepare.
FINSUM: If Sanders wins the bid he is going to have a stronger impact on markets every week (provided the polls stay close). Best to start thinking about this now as it may be a theme for the rest of the year.
Global and US stocks are teetering on the brink of a major correction right now. US indexes fell around 3.5% and fears over the spread of coronavirus and its impact on the economy continue to rattle the psyche of markets. One analyst summarized the deepening fears of the virus’ potential impact this way, saying “When countries are closing borders, the threat of an outbreak is becoming more pronounced in Europe and the Middle East and supply chains are just going to be more disrupted, how do we model risk when we can’t even model economics with any confidence?”.
FINSUM: There was an early morning bounce in Asian markets that fizzled. The news today is not any better than yesterday. It is easy to imagine the bottom temporary falling out of markets.
Apple’s stock has suffered significantly last week since it announced that it would likely miss its revenue targets because of the virus outbreak in China. The stock is down 7% since the announcement and there is increasing speculation the damage may not be transient. The whole incident calls into question whether the country is too reliant on China for production (and also for sales). Many Wall Street analysts have pushed lost revenue for this quarter into other quarters, but it is not at all inconceivable to think that some of the sales may be lost permanently as consumers could have bought rival products, or just won’t switch at all (especially those in China).
FINSUM: Apple should probably work to adjust its supply chain as a reaction to this, but that seems unlikely. Hard to tell how this plays out; it depends on the news cycle.
We have ben warning for weeks that as the coronavirus continued to spread, airline and other travel stocks would continue to be wounded (and likely not recover soon). That is happening n a big way today as news of a quarantine in Italy sent markets into a panic about the spread of the disease beyond China. Cruise ships and airline stocks are taking body blows as a result, with Delta and American down 7% and 10% respectively.
FINSUM: These are massive losses, and the worst part about it is that there is unlikely to be a “V” shaped recovery in these sectors, as it will take some time for the public’s fear of the virus (and thus travel) to wane even after things start to get better.
Stock across the developed world went into freefall today as news spread of the explosion of the coronavirus in Europe and the subsequent quarantine that has been put in place in Northern Italy. Additionally, US data shows business activity contracted for the first time in four years in February. The S&P 500 and Dow are both down about 3.4% at the time of writing.
FINSUM: The virus is now no longer contained to China, with Italy sporting 150 cases and three deaths. Chip companies, travel and tech are getting hit the hardest.