Weekly Market Recap – March 13, 2020
In the Markets
Last week, the Dow Jones Industrial Average closed down 10.4% from where it had settled the previous Friday. Compared to its high water mark a month ago (29,551 on February 12th) the DJIA had retreated 21.5%. For investors aware of textbook definitions, a decline of more than 20% can be construed as bear market territory.
The weekly changes for the other stock indices were comparable: S&P 500 -8.8%, NASDAQ -8.2% and the Russell 2000 -16.7%. Regarding how the other benchmarks fared this past Friday as per the arbitrary 20 percent guideline: the S&P 500 settled 19.9% below its 2/19/20 high of 3386, the NASDAQ settled 19.8% below its 2/19/20 high of 9817 and the Russell 2000, which hit its all-time 136.11 high on 1/16/20, had moved 29.0% lower.
Regardless of descriptions given to trending markets, the magnitude and volatility of the reverse in direction require management. Traditionally, in times of increased stress, regulators and central banks deploy intervention strategies in currencies and interest rates. This event, however, is not traditional. The catalyst of this volatility is Covid-19, a global health issue.
Uncertainty in markets is sometimes addressed with flight-to-safety investment choices. In a bygone era, municipal bonds were the choice for “widows and orphans” and investors seeking the high ground. A perennial standard solution for uncertain times has always been gold, deemed as portable wealth in wartime or during social unrest. Although, last week the yellow metal was 9.3% down from the prior week, and silver lost 14.9%. Not only did the gold price decline as a result of central bank selling, professional bullion investors sold precious metal holdings to help offset losses in equities, as well. This unloading led to margin call selling by the non-professionals. Platinum was off 17.0% on the week, and palladium’s bubble seems to be deflating, as the futures fell $400 per ounce from Thursday to Friday, losing 38.1% for the week. Copper’s behavior has been anomalous. Often considered a barometer of economic health, copper is not in a nosedive. It is more than 100% higher in price than it was during the Great Recession.
We are not used to the combined repercussions from a declared state of national emergency, supply chain issues, school closings and suspensions of entertainment and sporting events. With the world already focused on the health crisis and on recession talk, last week saw the opening of another arena: Russia and Saudi Arabia sent the oil markets lower as their production squabble evolved into an economic war. Crude gapped down $10 on Monday’s opening, ending the day with WTI $9 lower and Brent losing $6. By Friday’s end, the losses were 23.1% and 25.2%, respectively, for the week. Products followed as heating oil dropped 17.9% and gasoline declined 35.3%, making it one of the few consumer-friendly price moves on the screen. Natural gas, however, proved to be the sleeper in the hydrocarbon sector with spot rising 9.4% for the week.
The agricultural commodities continue weakening, with soybeans -4.8% and corn -2.7%. Coffee has been in a fundamental bear market since January due to favorable growing conditions in Brazil, and the selling pressure on the Real. Coffee futures ended the week off only 0.6%, sugar dropped 10.1%, hogs fell to a new low, closing the week down 14.5% and milk lost only 0.8%.
World Cup Trading Championships
A. Masters and Michael O’Keeffe, both from Australia, separated from the World Cup Trading Championship pack, with Masters closing at a 2,750.8% and O’Keeffe ending the week in second place with a 943.8%. Yuwen Cao climbed into third place behind a 129.2% net eturn, followed by Allen Swiontek’s 113.6% fourth-best net return. Kirill Morozov claimed fifth on the week with a 108.5% as the entire leaderboard reached triple-digits.
In the Global Cup, Michael Cook retook first place with a 178.1% net return. Stefan Seibert closed Friday in second with a net return of 161.1%, followed by Wayne Wan’s 142.5% net return. Robert Miner sat in fourth with a 92.2% net return, as Maxim Schulz closed out the leaderboard with a 90.6% net return.
In the Forex division of the World Cup Trading Championships, Nicholas Ridley finished in first place at a net return of 126.3%, followed by Miguel Garcia’s 89.5%. Andreas Plagge took third with a 46.1% net return. Fourth and fifth places were separated by just 4% as Scott Welsh bested Artur Teregulov with net returns of 33.5% to 29.5%.
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