With coronavirus fears giving the market pause from all-time highs, the credit market is showing a bigger warning sign.
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| |  Good morning. With coronavirus fears giving the market pause from all-time highs, the credit market is showing a bigger warning sign. The 3-year Treasury yield fell below the 10-year yield, a phenomenon known as inversion.
A slight inversion in the yield curve last year led to a slowdown in the market's performance. While a brief inversion isn't necessarily a sign of a big market drop ahead, it's still a sign that investors should remain a bit cautious. Don't be surprised to see a market pullback this year. If the curve inverts further, it may be prudent to start pricing in a recession… but we're not there yet.
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| | |  | DOW 28,256.03 | -2.09% | | | | S&P 3,225.52 | -1.77% | | | | NASDAQ 9,150.94 | -1.59% | | | | | *As of market close | | | • | Stocks skidded into the weekend, as investors re-evaluated the impact of the coronavirus. | | | • | Oil declined 1 percent, closing at $51.62 per barrel. | | | • | Gold rallied 0.2 percent, moving to $1,592 per ounce. | | | • | Cryptocurrencies declined, with Bitcoin dropping 1.8 percent to $9,329. | | | | | | | | |
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| Two Chinese Stocks to Target Now | |
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Clearly, the coronavirus outbreak still has a long way to go.
With the number of infected still rising, as well as the tragic death toll, markets will be pricing in any developments—good or bad—for some time to come.
For investors, that may mean it's time to take a pause on Chinese stocks. While many looked attractive with the signed phase one trade deal, the coronavirus could lead to a slowdown for China's economy now.
» FULL STORY |
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| Insider Trading Reports: Pfizer Inc (PFE) | |
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Scott Gottlieb, a director at Pfizer (PFE), recently added 1,000 shares to his holdings. Coming at a cost of just over $37,000, the buy increased his total stake by one-third.
This is the second time Gottlieb has bought in the past year, starting with a stake of zero.
In the past few years, insiders, mostly in the C-suite, have been sellers of shares, often selling as many as 150,000 shares at a clip.
» FULL STORY |
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| Unusual Options Activity: Visa (V) | |
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January 2021 $235 call options on Visa (V) saw a four-fold rise in volume, going from 200 contracts to over 750.
The bet, expiring 347 days, is that shares will move higher from around $200 by about 17 percent.
The buyer also paid about $4.75 per share, so they'll only make a profit at expiration if shares hit new all-time highs of $240. The buy comes after shares dropped slightly after lackluster earnings numbers.
» FULL STORY |
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| TOP | | | AMZN | 7.379% | | | | CL | 6.204% | | | | IBM | 5.089% | | | | CHTR | 4.966% | | | | EMN | 2.473% | | | BOTTOM | | | BR | 7.964% | | | | LYB | 6.699% | | | | CE | 6.071% | | | | EW | 6.031% | | | | QRVO | 5.305% | | | |
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| If we think of the economy as being roughly in equilibrium, the natural question is what it would take to shock the system. For the moment, I think negative risks are more likely than positive ones. But with the economy as stable as it is, it would take a very large shock indeed to materially alter the economy's basic trajectory. |
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- Eric Winograd, senior economist at AllianceBernstein, on why the U.S. economy looks stable with low inflation and modest growth, and why events like the coronavirus outbreak could affect stocks to the downside.  |
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