The major indices  are bouncing back from Friday’s drubbing.  China opened its markets today after being closed for the Chinese New Year and suffered losses of about 8%.  To help steam some of the losses from the coronavirus, the People’s Bank of China (PBOC), China’s central bank, said it would inject liquidity into the market to the tune of 1.2 trillion yuan, or $174 billion.  According to a Reuters report, "Chinese authorities have pledged to use various monetary policy tools to ensure liquidity remains reasonably ample and to support firms affected by the virus epidemic, which has so far claimed 305 lives, all but one in China." In addition, the chances of a loan prime rate cut in China on February 20 has increased significantly.

So what will Powell and Company do?  Are two rate cuts now on the table for 2020?

Iowa Caucus

With the impeachment all but in the rear-view mirror, the focus is back on the 2020 election. The Iowa Caucus is here, and Iowans will be the first state to pick their Democratic nominee for 2020.   

While the race is very close, Bernie Sanders is now tied or slightly ahead of Joe Biden as the front runner.  Predict IT, which allows people to buy shares for or against candidates, shows the money on Sanders.  A Bernie win will certainly catch Wall Street's attention.

Portfolio Approach

Today’s Session

The major indices are all in the green this morning, with the Dow erasing half of Friday's loss.  U.S. Treasuries are lower with the 2-yr at 1.34% and 10-yr at 1.54%. The dollar index is up 0.3% to 97.69. Oil is relatively flat with WTI crude is up 0.1% to $51.62 per barrel. That might change as  Saudi Arabia may push for temporary production cuts in in the face of the coronavirus. 

Investors will be awaiting the latest release of the ISM Manufacturing Index for January and Construction Spending for December will be released at 10:00 a.m. ET.