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Afternoon Note

Several Trends

By Charles Payne, CEO & Principal Analyst
3/23/2020 1:28 PM

Message of the Market

A look at early winners in the market reveals several trends. Some I consider is investing, while the other buying is speculation.

Hasbro Inc

+17.33%

Wynn Resorts Ltd

+8.18%

Dollar Tree Inc

+7.96%

Darden Restaurants Inc

+6.09%

Mohawk Industries Inc

+5.05%

Norwegian Cruise Line Holdings Ltd

+4.36%

Tractor Supply Co

+4.35%

Marriott Intl A

+4.24%

Ulta Beauty, Inc

+4.12%

Home Depot Inc

+4.09%

Carmax Inc

+3.72%

Advance Auto Parts Inc

+2.95%

Chipotle Mexican Grill Inc.

+2.75%

Under Armour Inc A

+2.33%

Hilton Worldwide Holdings Inc

+2.27%

 

Belief the consumer will come back, and pent-up demand will be huge, continues to show up in the market. Even with its dire prediction of a 30.1% GDP decline in the second quarter, Morgan Stanley sees a 29.1% third quarter bounce, and 3.3% GDP for 2021, as the recovery will be faster than the Great Recession recovery.

Until this happens, investors are focused on buying up staples, and will probably overstock things like Clorox (CLX) long after the crisis has abated.

Consumer Discretionary names have been intriguing since last week, with many are to put in bottoms. 

Another investing trend is the China recovery, as that nation is predicting a huge rebound in the second quarter.

Communication Services is edging higher powered by

Note on Buying Most Broken names and sectors

Energy is getting crushed, and while there will be a big-time pop on news of a Russia & Saudi Arabia ceasefire, many oil names will never recover.

People movers are mixed and gets back to the notion of checking balance sheets.  Southwest Airlines (LUV) got two upgrades this morning, including a “strong buy” at Raymond James, while Carnival Cruise Line (CCL) was finally downgraded at Wells Fargo with a new target $6.00 from the prior target $55.00.

10:15

S&P 500 Index

 

-1.41%

Communication Services (XLC)

+0.11%

 

Consumer Discretionary (XLY)

+0.34%

 

Consumer Staples (XLP)

+0.03%

 

Energy (XLE)

 

-4.68%

Financials (XLF)

 

-2.94%

Health Care (XLV)

 

-2.30%

Industrials (XLI)

 

-1.77%

Materials (XLB)

 

-1.34%

Real Estate (XLRE)

 

-3.70%

Technology (XLK)

 

-0.35%

Utilities (XLU)

 

-4.05%

Putting Workers to Work?

WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM ITSELF. AT THE END OF THE 15 DAY PERIOD, WE WILL MAKE A DECISION AS TO WHICH WAY WE WANT TO GO!

President Trump tweet

At some point, people are going to have to go back to work because an economic depression would kill more people than the coronavirus and destroy the lives in ways unimaginable for generations of Americans.

Now there is speculation President Trump might be ready to lift certain restrictions at the end of his 15-day period for which he has asked for social distancing across the nation.  Medically, it might be too early given the limited medical resources and continued questions about incubation of the virus, but a new approach will have to be implemented sooner rather than later.

Today’s Session

One more thing about today’s session.  There has been more resolve today than seen in most sessions the last two weeks.  News of more coronavirus cases in New York derailed he market, which was within striking distance of going positive.  The headlines triggered algorithm selling, which could have become a tsunami of selling, but held up at a critical downside point.

Higher case count will continue to help lower the death rate, which is an important part of any decision to ask people to return to work, as the country focuses on targeted isolation and broader testing.

As of this morning, 23,900 cases in New York, New Jersey and Connecticut saw 192 deaths or 0.08%.  This number must come down, and I’m sure it will.

For now, the market is waiting for Congress to do more than bicker.


Comments
As long as Nancy Pelosi and dems keep trying to add non-virus pork items onto the aid bill, it will not pass and people will continue to die and/or go hungry!

L. WIlson on 3/23/2020 1:53:08 PM
What we need is for the FDA and CDC to quickly move forward with approval of broad therapeutic use of the anti-malaria drug hydroxychloroquine and antibiotic azithromycin given the promising results in France. These are low cost, long proven, safe drugs in their other applications. If the severity of symptoms and the lethality rate of CV among the most vulnerable can be knocked down significantly with these drugs, to the point where it is no more lethal than a common flu, then that will save hundreds of thousands of lives just in the US and allow the economy to be restarted. That would buy the time we need for a true vaccine without extended draconian isolation measures pushing the economy into a true depression.

P Bonesteele on 3/23/2020 2:43:18 PM
As usual Charles you bring a common sense perspective backed by history and data. I just love that. You know what I don’t love? The dysfunction of our “elected leaders” in Washington who won’t unify to pass phase 3 stimulus package.

Rick Kelly on 3/23/2020 2:46:29 PM
We miss you. I hope you are healthy and just being cautious.

Paula Holt on 3/23/2020 5:20:17 PM
Just being cautious,,,thanks Paula I'm back soon.  CP

Charles Payne on 3/23/2020 7:22:00 PM
Rich politicians. Lets remember them in November. They can't relate to the reality that the service industry is absolutely critical to our way of living. Restaurant workers have to pay their bills, and put food on the table.

jimmy on 3/23/2020 5:46:39 PM
I agree with you, Jimmy.  This is nuts I never thought we would see anything like this.  CP

Charles Payne on 3/23/2020 6:54:58 PM
 

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