Category Archives: News

Daily Markets: Coronavirus Delivers Sharp Shift To The Markets

Daily Markets: Coronavirus Delivers Sharp Shift To The Markets

First off, after a nail biter of a game heading into half time, the Kansas City Chiefs dominated the fourth quarter to win Super Bowl LIV.  Before the game, the AFC and the NFC were tied for Super Bowl victories at 27 each. The last time both conferences had the same number of wins was back in 1990 at 12 a pop. In the prior five years when the 49ers won the Super Bowl, the S&P 500 was up for the remainder of the year every time by an average of 20.2%. The one time the Chief won the Super Bowl was in 1970 which saw the S&P 500 fall 0.3%. The one other time they made it but lost to the Packers, the S&P 500 gained 14.1% in the remainder of the year.

Before the big game, last week we closed the books on January and to say it ended on a weak note would be a bit of an understatement. Coronavirus contagion fears dominated not just the stock market, but the global economy. Last Friday stocks fell sharply, with the major US indices falling between 1.5% and 2.1%. The hit from coronavirus fears has been so profound the S&P 500, the Dow Jones Industrial Average, the NYSE Composite and the Russell 2000 were all in negative territory YTD as of Friday’s close. The Nasdaq 100 and the Nasdaq Composite remained up 3% and 2% YTD, respectively, but even that is dwarfed by the near 37% jump in the CBOE S&P 500 Volatility Index.

And for context on the sharp shift in the markets last week, consider this: a week ago, every major global equity index was at least one standard deviation above its 50-day moving average. After Friday’s close most were in oversold territory except Australia and New Zealand, which were aided by currency declines.

As the Chiefs and their fans celebrate their victory…

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Daily Markets: Markets Grapple With GDP Impact Of Coronavirus

Daily Markets: Markets Grapple With GDP Impact Of Coronavirus

As we get ready to close the books on January, gains in equities earlier in the month have come under pressure as the coronavirus continues to expand. Earlier today China’s National Health Commission confirmed there have been 9,692 confirmed cases of the coronavirus, with 213 deaths, but reports suggest the virus has reached at least 18 counties. The U.K. confirmed its first two cases of coronavirus on Friday, while the U.S. and Japan advised citizens avoid traveling to China. We’d remind readers that yesterday the World Health Organization (WHO) labeled the virus a “global health emergency” and the US State Department elevated its China travel advisory to Level 4 –  “Do Not Travel.”

Investors and economists are now attempting to assess the impact of this moving target on the global economy and corporate earnings.

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Daily Markets: Coronavirus Beginning to Have Material Impact On Economy, Stocks

Daily Markets: Coronavirus Beginning to Have Material Impact On Economy, Stocks

In yesterday’s Daily Markets note, your authors shared that as equity markets looked to shrug off the mounting coronavirus news, our suspicion that we had yet to see the real fallout on economic growth and earnings expectations. It would seem we were correct in that thinking. Overnight economists updated their forecasts in an attempt to size up that potential economic impact, and it is weighing on global equities. With more than 7,700 people being infected by the virus and the World Health Organization saying the spread of the virus outside of China is a “grave concern,” one Chinese economist estimated the virus could hit China’s GDP by 1-5% while economists from Nomura shared the “outbreak could cause China’s real GDP growth to shrink to below 4% from the 6% pace.”  We suspect these are only the first few revisions to be had in the coming days.

Below in today’s note, we call out various companies who have announced changes to their operations as a result of the virus below, but we’d like to point out that the sheer magnitude of work that is being put on hold cannot help but have an impact on global supply lines as well. Add this to the impact of the ongoing trade war and you have some material headwinds to global growth.

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Thematic Reads: Week of January 27, 2020

Thematic Reads: Week of January 27, 2020

Each week Team Tematica consumes a voracious amount of content as we look to stay on top of the latest data and mine it for tailwind and headwind signals for our 10 investment themes.

Aging of the Population
The global demographic shift towards a more senior population


Cleaner Living
Growing demand for items that claim to be better for you and the planet:


Digital Infrastructure
The Buildout and upgrading of our Networks, Data Storage Facilities, and Equipment


Disruptive Innovators
Business models designed to transform an entire industry and leap-frog over incumbents.


Digital Lifestyle
The increasingly digital landscape that now underpins the entire consumer experience.


Guilty Pleasures

The products and services people will consume no matter the economic environment.


Living the Life

Those things that bridge the gap between want and ability at every socioeconomic level.


Middle-Class Squeeze

Consumers trading down when and where possible or looking to stretch the disposable dollars they do have.


New Global Middle Class

Areas around the world where rising disposable incomes are driving demand for a host of products and services.


Safety & Security

Reflecting the evolving needs across individual, cyber, corporate and homeland security.



What Else We Are Loving

Other reads, experiences, products, services and the like that we enjoyed so much this past week we just had to share

  • This coming Sunday will be the game… THE game that will capture global attention as the San Francisco 49ers square off against the Kansas City Chiefs in Super Bowl LIV. And as much as we will be watching the game and its outcome — 75 experts surveyed by ESPN have the Chiefs favored over the 49ers (48-27) with the most common predicted final score of 31-27 — team Tematica will, of course, be watching the commercials, sampling adult refreshments and, of course, eating wings. This very well could include sampling the new Old Bay hot sauce from McCormick.

 

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Daily Markets: The 737 Max Crisis Hits Boeing’s Earnings

Daily Markets: The 737 Max Crisis Hits Boeing’s Earnings

As your authors commented to each other when discussing yesterday’s market rebound following the coronavirus inspired sell-off on Monday – “that didn’t last long!”  The Nasdaq 100 lead the rebound, gaining 1.6% on the day with the Nasdaq Composite a close second, up 1.4%. The S&P 500 and Dow Jones Industrial Average rose 1.0% and 0.7% respectively and the CBOE S&P 500 Volatility Index (VIX) fell 10.7%. Helping fuel the rebound were a number of high-profile December quarter earnings reports that delivered better than expected results, but in some cases offered a cautiously optimistic outlook as managements continue to assess the impact to be had from the virus – see Stocks to Watch below.  

The number of confirmed coronavirus cases in China approached 6,000 with total deaths reaching more than 130, prompting the Hong Kong Hang Seng fell 2.8% to a seven-week low on the first day of trading after the Lunar New Year holiday. China’s financial markets will remain closed until next Monday after authorities extended the Lunar New Year break by three days as they grapple with the worsening virus that has now recorded more cases than SARS. The People’s Bank of China reiterated plans to use its tools to ensure liquidity once the interbank market reopens on Feb. 3. And as the number of reported coronavirus cases continues to grow, we can add the United Arab Emirates to that list as the first cases of the virus were reported earlier today. 

The Trump administration is reportedly considering a temporary ban on all flights from China to the U.S., and…

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Daily Markets: Despite Earnings, Investors Remain Focused on Spread of Coronavirus

Daily Markets: Despite Earnings, Investors Remain Focused on Spread of Coronavirus

Despite the accelerating velocity for the current earnings season, markets remain focused on the rapidly spreading coronavirus which has surpassed 4,500 cases in China and led China to restrict travel to Hong Kong as the death toll tops 100. Some 60 million are under travel restrictions in China, and select countries, including Indonesia and the Philippines, have restricted Chinese tourists. Outside of China, there are more than 60 confirmed cases, including ones in the US, Australia, France, and Germany. The US Centers for Disease Control and Prevention raised its travel precautions for China to its highest level, and at last count it is monitoring 110 possible coronavirus cases across 26 states.ADVERTISING

The escalation weighed on equity markets yesterday, leading the Dow Jones Industrial Average to fall 1.6%, its biggest one-day drop since October. The S&P 500 fell 1.6% as well extending its 2-day decline to 2.5% and the Nasdaq Composite dropped 1.9%, its worst day since August. As of yesterday’s close the Dow, NYSE Composite and the Russell 2000 were all in negative territory for the year. Year to date, at up 2.5% as of last night’s close, the Nasdaq 100 is the strongest performer of the major domestic equity indices, the Nasdaq Composite was up 1.9% and the S&P 500 up 0.4%. The CBOE S&P 500 Volatility Index rose over 25% yesterday and is now up 32.3% year-to-date.

As reports indicate the coronavirus continues to spread…

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Daily Markets: As Coronavirus Expands, So Do Investors’ Worries

Daily Markets: As Coronavirus Expands, So Do Investors’ Worries

Investors are starting the week off with itchy fingers as they look to assess the growing impact of the coronavirus. As we write today’s Daily Markets note, roughly 2,800 people in China have been infected and 80 killed by the disease, and infections also reported in Europe and the US.  In response, Hong Kong has shut its schools until Feb. 17 to help prevent the virus from spreading further and China has locked down 17 cities. Yesterday the US’s Centers for Disease Control and Prevention (CDC) announced another case in the US bringing the total to 5 but per the CDC there are more than 60 patients under investigation for possible infection in over 20 US states. One of the main concerns is how the outbreak will impact China’s Lunar New Year holiday season that spans Jan. 25- Feb. 8, but as the virus spreads so too are investor concerns over what the potential impact could be in other parts of the world and on the global economy.  Also stoking investor worries, five Katyusha rockets were fired at the Green Zone in Baghdad last night, one directly hitting the U.S. Embassy building. 

All of the above has given rise to a risk-off mood in equity markets today. In Asia, most markets are closed for the Lunar New Year, but Japan’s Nikkei…

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Daily Markets: Coronavirus Escalation Forces Companies To React

Daily Markets: Coronavirus Escalation Forces Companies To React

Despite a rough start yesterday, the major US equity indices managed to close little changed after the World Health Organization (WHO) calmed rising fears around the coronavirus coming out of China. The WHO’s declaration that coronavirus is not a global emergency helped travel stocks such as American Airlines (AALand United Airlines (UAL) rebound. In contrast to the WHO, however, yesterday the Centers for Disease Control and Prevention (CDC) escalated its health warning to a level 3.

Overnight things coronavirus continued to escalate and as we write today’s Daily Markets note, there are 875 confirmed cases with reported deaths now totaling 26, and all but two of China’s 31 provinces and municipalities reporting cases of the virus. In response, China has instituted travel restrictions that will affect at least 20 million people across 10 cities. The big concern here is how the outbreak will impact China’s Lunar New Year holiday season that spans Jan. 25- Feb. 8. The restricted travel is likely to hit consumer-related activity hard during the holiday season, and we are already starting to see companies such as Walt Disney (DIS) take action while others, like Remy Cointreau (REMYY) are warning over the potential impact to their business – we discuss both below. Until the virus is contained, we suspect the ranks of companies taking action and issues warnings will only grow in size as will the impact on China’s economy in the current quarter.

The Shanghai market was closed for the first day of the Lunar New Year festival…

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Daily Markets: Coronavirus Uncertainty Weighs on Global Stocks

Daily Markets: Coronavirus Uncertainty Weighs on Global Stocks

Despite a rather volatile session yesterday, stocks ended basically flat but well off their intraday highs. That said, the Nasdaq 100 is up nearly 40% YoY and up nearly 120% over the past four years. While many are comparing today’s markets to those of the late 1990s, your authors included, the Nasdaq 100 rose over 600% in the 4-years leading up to the dotcom bust – a much wilder rise than this time around. 

Turning to today, which sees the expanding coronavirus outbreak and response taking center stage, Asian equities finished the trading day lower, led by China’s Shanghai Index that fell 2.8%. Reports indicate that besides halting travel from Wuhan, the city where the new coronavirus first appeared, Chibi and Huanggang will be quarantined and Beijing announced that all public gatherings planned for next week will be canceled. At last count, the virus was responsible for the death of 17 people and has reportedly infected another 600 people. The travel ban, which looks to limit the expanse, comes before the Lunar New Year, the largest gift-giving holiday, and will in all likelihood crimp related spending. Later today the World Health Organization will decide on Thursday whether to declare the outbreak a global health emergency, which would step up the international response.

European indices are…

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