As the most famous living poet in America once sang, “He not busy being born, is busy dying.” These are words for the current moment. Take a look around. Everywhere, from our education and financial and technological systems, down to our familial dynamics and even the way we as individuals view ourselves and live, things are changing. And thanks to pressure of current events, they are changing — irrevocably — fast. The Buffalo Diocese’s lists of assets and liabilities filed with the U.S. Bankruptcy Court identifies multiple investment funds and bank accounts holding in exc… In this article you are going to find out whether hedge funds think MVB Financial Corp. (NASDAQ:MVBF) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks "Thank You @barbrastreisand for my package, I am now a Disney Stockholder thanks to you," read an Instagram post. Despite a 58% rise in Wheaton Precious Metals’ stock from its March lows of this year, at the current market price of $38, we believe WPM has already reached its near term potential. WPM’s stock has rallied from $24 as on 18th March to $38 on 11th June 2020, a rise of 58% as against S&P 500… Dow Jones futures tumble because of surge in coronavirus cases in Beijing in China. US reports 25,000 Covid-19 cases, Texas and Florida suffers. Investors worried about the second coronavirus wave. It could shut the US economy. Dow down over 900 points and stock market rally comes under threat
As the most famous living poet in America once sang, “He not busy being born, is busy dying.” These are words for the current moment. Take a look around. Everywhere, from our education and financial and technological systems, down to our familial dynamics and even the way we as individuals view ourselves and live, things are changing. And thanks to pressure of current events, they are changing — irrevocably — fast.
The rate of change feels destabilizing. And truth be told, it is. During times of uncertainty, with the ground ever moving beneath our feet, a lot bad can happen, and often does. Like a volcano that erupts, nature is displaced in a sudden, destructive manner. Of course, after the lava cools, and over time, life forms anew. But we are at the eruption phase.
Consider, for example, the effect of COVID-19 on our understanding of traditional working arrangements. Much of our workforce and the companies that employ us determined long ago that the office environment was simply the only environment from which work could be accomplished. Even after the advent of the Internet, the morning march to the office remained. Cities were populated as a cause of this phenomena. Whole socioeconomic ecosystems flourished on account of this animating principle.
Then the coronavirus hit and many Americans were forced to labor from home. There were and continue to be bumps in the road, but work has continued. Efficiencies are now being discovered. In a matter of months, the whole concept of punch-in/punch-out has been rethought. Multi-billion-dollar companies like Twitter announced that employees never have to return to an office if they don’t wish. Every day more organizations make the same decision. Once this catches on, expect waves of second- and third-order effects to follow. And who knows, we may find the depopulation of major cities goes hand-in-hand with (potentially) renewed home life and a rediscovery of community.
In nearly every category one can imagine, the old ways of doing things no longer seem to fit. Our legacy media institutions (as recently and disastrously typified by The New York Times) are out-of-step with average Americans. Consequently, we no longer feel they have anything to teach us and we don’t trust them and we don’t read them. The concerns brought to us by way of a near collective virtue-signaling by the entertainment industry, from Hollywood to the NFL, again are not the concerns of average Americans, who just want to get back to work. Don’t get us started on corporations like Nike.
Perhaps most crucially, during the time of COVID-19 and the protests, we have seen that the government cannot totally be relied upon for protection or support. The political divide in America was once a source of fruitful tension. Now, political partisanship runs so deep that it barely can be said to represent the feelings of average Americans. As we draw closer to November, it will get worse. Beyond the election, no matter who wins, there is no telling how fractious the landscape will become. All of this forces the question: Of what consequence is the government in my life, really?
So, with all this change, how does one stay sane and survive? Well, it feels too pat simply to urge a mindset of adaptability. That’s important, but it’s insufficient in isolation. In fact, the atomization of modern society is largely to blame for a lot of the vice we see today. An opposite predilection is needed. A return to the family and strengthening the civic institutions that support healthy communities is what will save America in the end. A strong family and a strong community is the best defense against any virus, any economic downturn. Moreover, the traditions maintained by healthy families and communities keep a people psychologically grounded despite the hurly-burly of technological change around them. Paradoxically, the more we turn toward solidifying and mooring basic building blocks of our society, the more adaptative to the modern world we will become.
So, embrace the old saying that goes something like “the more things change, the more we stay the same.” That’s not a bad thing. And actually, it is key to our survival.
Author: The Washington Times http://www.washingtontimes.com
Buffalo Diocese relies on insurance policies to cover abuse claims in bankruptcy
The Buffalo Diocese’s lists of assets and liabilities filed with the U.S. Bankruptcy Court identifies multiple investment funds and bank accounts holding in excess of $28 million, dozens of properties and a fleet of vehicles.
What the schedule doesn’t mention is insurance coverage, which has played a huge role in the resolutions of other Chapter 11 reorganizations by dioceses and archdioceses facing child sex abuse lawsuits.
Eight insurance companies, for example, agreed in 2018 to pay $137 million toward a $210 million fund to settle abuse claims in the Archdiocese of St. Paul & Minneapolis.
Of the nearly $800 million in bankruptcy settlements reached by 15 Catholic dioceses, archdioceses and religious orders since 2004, more than half of the funds have come from insurers, according to research by Pennsylvania State University law professor Marie T. Reilly.
Buffalo Diocese lawyers are now counting on the yet-to-be quantified insurance coverage as they try to resolve the claims of more than 250 people who allege they were abused as children by priests or other employees.
“Insurance is without question in this case our largest and most important asset,” Buffalo Diocese bankruptcy attorney Stephen Donato said during a hearing last week with Chief Judge Carl L. Bucki of the U.S. Bankruptcy Court in the Western District of New York.
The diocese’s desire to have complex, decades-old insurance policies pay off child sex abuse claims that could end up costing tens of millions of dollars already is colliding with some victims’ demands for justice.
Diocese officials said they now have a better understanding of what policies the diocese owned in the 1970s and 1980s, when most of the child sexual abuse is alleged to have occurred. Attorney James R. Murray described the diocese’s overall historical insurance picture as “a solid B-plus.”
The situation is murkier prior to 1973, when parishes owned their own policies, the documents of which may still be located somewhere in a church attic or basement, said Murray, an insurance expert retained by the diocese.
Diocese officials this past March discovered 25 bound volumes of parish annual reports from 1949 to 1973, and an insurance “archaeologist” is combing through the material to determine if there’s information about older insurance policies and if claims could be made on them, said Murray.
Murray told Bucki it could take several more weeks before the diocese and parishes have a more accurate understanding of the coverage they may have had.
But even in instances where the diocese has some documentation of coverage, insurers so far have been unwilling to pay.
In an August 26, 2019, letter, diocese insurance director John M. Scholl notified Wausau Insurance Co. of 38 pending lawsuits against the diocese alleging child sex abuse.
The diocese had purchased Wausau general liability and umbrella policies, with primary coverage that provided up to $500,000 per occurrence from July 1, 1978 to July 1, 1980, and up to $5 million per occurrence in excess coverage from July 1, 1979 to July 1, 1980. Wausau also provided coverage of $1 million per occurrence and excess coverage of $50 million per occurrence from July 1, 1983 to July 1, 1984.
Wausau responded to the diocese Sept. 24, 2019, regarding one of the claims by stating it investigated the lawsuit and had no obligation to defend or indemnify the diocese. Several similar denial letters followed.
Ultimately, though, after the diocese notified Wausau of 175 claims and lawsuits, Wausau acknowledged it had an obligation to defend the diocese in 107 of those claims, according to federal court papers.
Wausau is among eight different companies from which the diocese purchased liability insurance between 1973 and 2019.
The Continental Insurance Co. sued the Buffalo Diocese in state court last October to avoid paying on policies the diocese bought from Commercial Insurance Co., which was merged into Continental. Those policies were effective July 1, 1973 to July 1, 1978.
The diocese’s bankruptcy filing stopped the Continental lawsuit from going forward, but the diocese and the insurers have remained at odds in bankruptcy court. The diocese has asked Bucki to appoint a mediator who could help broker an agreement on what the insurers would contribute to a global settlement of the child sex abuse cases.
Among the points of contention will be how “occurrences” of abuse get quantified and to what extent diocese officials knew about abuse and allowed it to happen. Insurers in past cases have sought to group allegations of abuse into a single occurrence, regardless of the number of victims or perpetrators, thus limiting the amount they would need to pay out. And Continental’s lawyers already have accused the Buffalo Diocese of creating “a system of protecting, transferring, and obscuring the identities of pedophilic priests” that would invalidate insurance coverage.
The diocese and its 161 parishes have asked Bucki to stop Child Victims Act lawsuits in state court from advancing against the parishes and other Catholic entities until December, so that they can get a better handle on insurance coverage and increase the compensation that may be available to abuse victims.
The diocese already has found “secondary evidence” of a 1968 Aetna policy at a parish or parishes from the parish annual reports discovered in March. And there could be more, said J. Ford Elsaesser, an attorney who represents the parishes in the bankruptcy proceeding.
“We need to dissect and determine this coverage, in a collective way,” said Elsaesser. “That coverage may be a significant way in which the parishes can contribute to the ultimate resolution of this case.”
In past diocesan bankruptcies, courts have granted injunctions that shield parishes from lawsuits in exchange for a substantial contribution from the parishes toward a global settlement for victims, and Elsaesser said the 161 parishes in the Buffalo Diocese were looking to pursue a similar path.
The diocese’s lawyers said they were concerned the amount of insurance funds available for a global settlement would dwindle if parishes had to litigate Child Victims Act lawsuits.
But some Child Victims Act attorneys said they’re not interested in waiting for the diocese and parishes to figure out what insurance money is available.
“All they talked about is we want to get maximum insurance coverage. Well, the victims want justice, and sometimes the justice is more than insurance coverage,” said Richard Weisbeck, who represents 29 plaintiffs in cases involving Catholic entities.
Some of the victims Weisbeck represents are in their 60s, 70s and 80s, and they want a resolution as soon as possible in state court, after waiting decades for justice, he said.
He urged Bucki to allow those cases to move forward in the state courts so that he can begin discovery and depose clergy alleged to have committed abuses and others who may have covered up abuses.
What has happened in the bankruptcy proceedings of other dioceses is irrelevant here, Weisbeck added.
“If there’s a $5 million judgment, we’ll take the church and we’ll sell it. And the idea that it’s limited to insurance is offensive to every one of our child victim clients,” he said.
Some child sex abuse plaintiffs said they understood the need for the diocese and its parishes to pursue payment from old insurance policies, but they were concerned about how long it will take.
“It’s stressful. It doesn’t seem like there’s going to be closure,” said Gary Astridge, who filed a lawsuit last August alleging abuse by the Rev. Edward Townsend in the 1960s, starting when he was 7 years old. “When this is all said and done, is the problem really getting solved?”
Astridge said he’s also worried the legal costs of bankruptcy could deprive victims of the compensation they deserve.
Bucki said he planned to issue a written decision, possibly by the end of June, on whether to allow lawsuits against parishes to move forward in the state courts.
If he does grant a stay that restricts state court cases connected to the diocese bankruptcy, that stay will be limited in scope and won’t last indefinitely, he said.
Author: By Jay TokaszPublished Mon, Jun 15, 2020|Updated Mon, Jun 15, 2020
Hedge Funds Have Never Been This Bullish On MVB Financial Corp. (MVBF)
In this article you are going to find out whether hedge funds think MVB Financial Corp. (NASDAQ:MVBF) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is MVB Financial Corp. (NASDAQ:MVBF) a safe stock to buy now? Investors who are in the know are in an optimistic mood. The number of long hedge fund bets improved by 3 in recent months. Our calculations also showed that MVBF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
Millennium Management, Catapult Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s go over the fresh hedge fund action surrounding MVB Financial Corp. (NASDAQ:MVBF).
At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 75% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards MVBF over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Is MVBF A Good Stock To Buy?
Among these funds, EJF Capital held the most valuable stake in MVB Financial Corp. (NASDAQ:MVBF), which was worth $14.4 million at the end of the third quarter. On the second spot was Second Curve Capital which amassed $2.8 million worth of shares. Renaissance Technologies, Citadel Investment Group, and Tontine Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Second Curve Capital allocated the biggest weight to MVB Financial Corp. (NASDAQ:MVBF), around 23% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, dishing out 3.03 percent of its 13F equity portfolio to MVBF.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into MVB Financial Corp. (NASDAQ:MVBF) headfirst. Citadel Investment Group, managed by Ken Griffin, created the largest position in MVB Financial Corp. (NASDAQ:MVBF). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Chuck Royce’s Royce & Associates.
Let’s now review hedge fund activity in other stocks similar to MVB Financial Corp. (NASDAQ:MVBF). These stocks are SunOpta, Inc. (NASDAQ:STKL), Nature’s Sunshine Products Inc (NASDAQ:NATR), PICO Holdings Inc (NASDAQ:PICO), and Gencor Industries, Inc. (NASDAQ:GENC). This group of stocks’ market values are similar to MVBF’s market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STKL,12,59990,-1 NATR,6,65608,0 PICO,13,20900,1 GENC,4,20616,1 Average,8.75,41779,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $18 million in MVBF’s case. PICO Holdings Inc (NASDAQ:PICO) is the most popular stock in this table. On the other hand Gencor Industries, Inc. (NASDAQ:GENC) is the least popular one with only 4 bullish hedge fund positions. MVB Financial Corp. (NASDAQ:MVBF) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately MVBF wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); MVBF investors were disappointed as the stock returned 16.5% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
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Barbra Streisand gives Disney stock to George Floyd’s 6-year-old daughter
The daughter of George Floyd recently received Disney stock as a gift from star entertainer Barbra Streisand.
A photo of 6-year-old Gianna Floyd holding up her new portfolio was posted over the weekend on Instagram.
“Thank You @barbrastreisand for my package, I am now a Disney Stockholder thanks to you,” reads the post.
The post was shared to an Instagram account for Gianna that launched last week. The page features numerous photos of the little girl with her father.
Floyd, who was 46, died on May 25 in police custody in Minneapolis. A criminal complaint accuses fired Minneapolis police officer Derek Chauvin of kneeling on the neck of Floyd, an unarmed black man, for nearly nine minutes.
Chauvin is charged with second-degree murder, while three other officers have also been fired and were charged with aiding and abetting second-degree murder.
Floyd’s death has led to massive anti-racism protests throughout the United States and beyond in recent weeks.
The profile description on Gianna’s Instagram account reads: “My Daddy Changed the World.”
Streisand, 78, is one of 23 accounts that Gianna follows on Instagram.
Author: Peter Sblendorio
Has Wheaton Precious Metals Stock Peaked?
Despite a 58% rise in Wheaton Precious Metals’ stock (NYSE: WPM) from its March lows of this year, at the current market price of $38, we believe WPM has already reached its near term potential. WPM’s stock has rallied from $24 as on 18th March to $38 on 11th June 2020, a rise of 58% as against S&P 500 which increased 25% during this period. The stock was able to beat the broader market due to a sharp rise in gold prices during the current pandemic, which benefited WPM as over 60% of its revenue comes from gold. The stock is almost 80% higher than the levels seen in the beginning of 2018, a little over two years ago. Though the current stock price is also 27% over the level at the beginning of this year, we believe that WPM’s stock has peaked for now and is likely to remain around its current level as the world still awaits the sign of abatement of the pandemic. Our dashboard What Factors Drove 90% Change In Wheaton Precious Metals Stock Between 2017 And Now? provides the key numbers behind our thinking, and we explain more below.
Some of the rise in stock price in the last 2 years is to a certain extent justified by a 2.2% increase in WPM’s revenues between 2017 and 2019. But this was offset by almost 9% decline in net income as margins dropped from 32.8% in 2017 to 29.3% in 2019. Lower margins reflected higher exploration costs per ton. On a per share basis, earnings declined 11% from $0.63 in 2017 to $0.56 in 2019, as shares outstanding increased marginally by 1% during this period.
But what actually explains the rise in stock price is the increase in the company’s P/E multiple from 34x in 2017 to 53x in 2019. This is mainly due to sharp rise in gold prices and with the company diversifying by starting palladium mining in 2018. Though the multiple went up in 2020 and currently stands at 68x, given the volatility of the current situation, there is a slight downside for WPM’s P/E multiple when compared to the levels seen in the past years.
What’s The Trigger for Stability – Coronavirus vs Commodity Prices
A slowdown in economic and industrial activities and expectations of a global recession, following the outbreak of coronavirus this year, has increased gold’s value as a hedging instrument. Global gold prices have increased from about $1,500/ounce at the beginning of 2020 to almost $1,700/ounce currently due to higher demand. With rising investment in the yellow metal by major central banks and expectations of interest rates heading south, gold prices already saw a sharp rise in 2019. This trend was further boosted by the current Covid-19 crisis.
Following the New San Dimas agreement, the company has increased its focus on gold in place of silver. The share of gold in WPM’s total revenue increased from 50% in 2017 to 63% in 2019. Thus, the current crisis has so far helped WPM with better price realization for gold as well as silver. This was confirmed to a certain extent in Q1 2020, with total revenue rising 13.2% y-o-y. Though global gold and silver prices have increased, this effect is partially offset as the company faces supply bottlenecks due to the lockdown, leading to lower shipments.
However, over the coming weeks, we expect subdued growth in the number of new Covid-19 cases in the U.S. to buoy market expectations. Following the Fed stimulus — which set a floor on fear — the market has been willing to “look through” the current weak period and take a longer-term view. With investors focusing their attention on 2021 results, the valuations vs historic valuations become important in finding value. Though market sentiment can be fickle, and evidence of an uptick in new cases could spook investors once again.
WPM’s stock is likely to hover around its current level, with a slight downside as per our Wheaton Precious Metals Valuation analysis.
Our dashboard -28% Coronavirus crash vs. 4 Historic crashes builds a complete macro picture. The complete set of coronavirus impact and timing analyses is available here.
For additional insight into how WPM’s competitors are faring during this crisis, find out who is performing better: Newmont or Freeport-McMoRan?
See all Trefis Price Estimates and Download Trefis Data here
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Author: Trefis Team
Dow Jones Futures Tumble As China Covid-19 Outbreak Sparks Fear Of Second Wave; Stock Market And Oil Plunge
The Dow Jones futures are plunging today, and the coronavirus stock market rally has come under a significant threat after the S&P500 and Dow broke through some major levels last week. Investors are increasingly becoming anxious after China reported a sizable increase of coronavirus cases for the first time in nearly 50 days. The infection rate is spiking in the US, and conversations regarding a second wave have become highly misdirected. But the concerns of a potential lockdown in Beijing remain a chief threat due to new cases.
Riskier assets are entirely out of favour, and volatility is likely to surge once again. Oil prices are down massively today, with WTI Crude oil down over 5 percent today. The safe-haven asset, gold, is failing to attract bids. This is because investors are worried whether we are going to see a repeat of the situation that we experienced during March this year when large institutions had to sell their gold positions to save themselves from margin calls.
However, it is essential to keep in mind; the world is better equipped to deal with a second wave if there is one. The chances of shutting down the whole world economy like before are still minuscule, even though investors are concerned that it may happen.
What we need is good news on the coronavirus vaccine, and the moment we get more positive announcements about a coronavirus vaccine, the stock market is likely to roar once again as the bulls stand ready to take their vengeance.
The stock market breadth, something that filters the noise and provides the actual picture of the stock market rally, shows how the bull momentum has lost its mojo.
Here is more on this
NEW YORK, NEW YORK – MAY 26: A trader walks by the New York Stock Exchange (NYSE) on the first day … [+] that traders are allowed back onto the historic floor of the exchange on May 26, 2020 in New York City. While only a small number of traders will be returning at this time, those that do will have to take temperature checks and wear face masks at all times while on the floor. The Dow rose over 600 points in morning trading as investors see economic activity in America picking up (Photo by Spencer Platt/Getty Images)
Dow Jones Futures Today
The Dow Jones futures have tanked over 750 points. This is nothing unexpected because the weekly price action for the Dow Jones Industrial average last week confirmed that there was more pain ahead for the US stock market rally because it set a new low. Yet, there was also a new high (on the weekly candle) for the Dow Jones, and this keeps trader hopes alive for the possibility of a re-bounce in the stock market.
On the weekly chart, the Dow Jones stocks dropped below their 50 and 100-week smooth moving averages (SMA); this indicates extreme weakness in the Dow Jones’ price. The only hope for the bulls now is if the Dow Jones’ price remains above the 200-week SMA. Otherwise, the odds are stacked in favor of the Dow to retest its Covid-19 low.
The bottom line is that the Dow index has become a lot more vulnerable, and bulls need to show some strength, which could happen near the 200-week SMA.
Dow Jones falls below key level and this threatens the stock market rally. The Dow Jones futures … [+] fall below 50 and 100-week smooth moving averages. The Dow futures fall over 800 points
Stock Market Rally
The stock market rally had a roller-coaster day on Friday, and after rising as much as 3%, bulls lost the battle for a short period before claiming the victory by finishing the day on a positive note. But for the week, the S&P500 stocks and Dow Jones stocks snapped their three-week rally and posted a loss. Both stock indices hit a lower floor than the previous week, indicating that more pain could be on the doorstep for the coronavirus stock market rally.
The S&P500 index gained 39 points and jumped by 1.31%, and the Dow Jones industrial average soared by 477 points or by 1.90% on Friday. United Airlines mainly led the gains and had the most substantial move in the airline industry. Norwegian Cruise Lines also soared over 18%. The energy sector mostly led the gains, with 7 of 9 sectors scored gains. 30-day price volatility dropped to 27.45 against the average of 26.08. The tech index, NASDAQ, closed below its 10,00 mark but gained 0.79%.
The surge in the new coronavirus infection rate in the US has become the biggest concern for investors, and this is denting the sentiment. For speculators, this is like Christmas coming early, and they have been labeling the stock market rally as one of the most underrated rallies in the history of trading.
Yes, valuations and S&P multiples didn’t make much sense with respect to the economic growth, but the hope among optimistic investors was that as the US economy begins to open up, multiples and valuations will adjust. But perhaps, what investors forgot to factor in what we are experiencing now: surge in coronavirus cases as the economy reopens.
As discussed previously, the fact is that the US never had complete control of the coronavirus in the first place. This is especially true if we compare the US management of the virus with other countries.
The concern is that what will happen if these coronavirus cases continue to rise, and the US has to shut down the country again? Steven Mnuchin, the Treasury secretary, has already said that the US isn’t ready to shut down the economy. Still, the reality is that if the health situation begins to get out of control, the US will have no other choice but to slam on the breaks. This particular scenario could bring the stocks down to their coronavirus lows.
But, again, I do not think that it will come to that point. I think it was natural for Coronavirus numbers to tick higher as the economy begins to reopen, and as long as the situation remains under control, the current sell-off in the S&P500 stocks and the Dow Jones industrial could be an opportunity for investors who sat on the sidelines during the coronavirus stock market rally.
The reason that I am saying this remains the same: the world is in a much better position today than a few months ago, a large number of countries have got the coronavirus situation under control, and the ones that have reopened their economies, coronavirus situation is firmly under control.
The chart below shows the worst one-week percentage drop for the S&P500 stocks and Dow Jones stocks since March.
S&P 500 stocks and Dow Jones stocks post worst weekly losses since March when the stock market … [+] crashed.
Measuring the market breadth is an important function as it provides a lot more detail about the strength of the stock market rally and it also helps traders to filter out the noise.
he S&P stocks breadth
The Dow Jones stocks breadth
Bottom line: There has been a massive shift in momentum and it is in still in favour of bears because a considerable percentage of stocks are below their 200-day moving average
Coronavirus cases have started to surge once again. The most worrying element is a considerable surge in numbers in China, which had not reported any new cases for the past 50 days until now. 80 new coronavirus cases have been reported in Beijing the weekend. Many of these were linked with fresh seafood and vegetable wholesale markets. This has raised the odds of another lockdown in China. Coronavirus cases also jumped more than 25,000 in the US. States such as Texas and Florida have recorded the biggest surge in numbers after reopening their economies. Overall, there have been over 2 million positive cases for Covid-19 in America—a bigger number than any other country—and over 100,000 people have lost their lives because of this virus.
On a global basis, Latin America, Brasil, and parts of the Middle East like Libya are facing their worst days of coronavirus. Additionally, the infection rate has started to go through the roof in India once again, a heavily populated country.
Oil Prices: Crude And Brent
Crude oil prices are under major pressure because of demand fear and surge in supply. Crude oil is down over 12% from its recent high of $40.41 formed on June 8th and Brent over 14%. The recent crude oil inventory data for the past two weeks confirmed an increase in supply. The fact is that the US oil industry has become so efficient, that the break-even for some of the shale oil companies is between $30 to $33 (approx). Thus, the moment the price starts to recover, it is easier for these shale oil producers to resume their production. Given the fact that the demand is still immensely weak, any increase in production remains a threat.
Author: Naeem Aslam