• As we touched upon earlier, in times when fundamental analyses becomes largely useless, we are forced to look at technical type analyses. Here's one that suggests the market will be up tomorrow and the coming months after today's sell off.
  • The article shows that after the 10 times the S&P was down more than 5% on a Monday, the market was up on average 4.2% the next day and 12.7% 12 months later.
  • For all days (24 of them) when the S&P is down more than 5%, the market was up 1.6% the next day and up 6.2% 12 months later.
  • Looks like a clear sign to us to load the boat ... kidding, but still hopeful.
  • Good summary of comments on something we are all trying to figure out.  Here are some of the analyst views:
  • Bank of America: "one outcome is a collapse of the bond surge that has taken hold in fixed-income markets. The “clearest outcome of exogenous COVID-19 is collapse in bond yields, which once panic fades can induce huge rotation to ‘growth stocks’ and ‘bond proxies’; in equities"
  • Jefferies: “Huge drawdowns frequently represent the punch line and not the setup. But realistically, by the time the dread sets in, we are almost always already on our way back up". "While we found that the bounces tend to be swift and robust, more importantly, performance tends to be overwhelmingly positive over a (three-month) horizon".
  • Direxion: "We probably will see another down leg from here, but what we tend to see is, when everyone gets so bearish, that is when they miss out on opportunities".
   
  • Out of earnings, the company has laid out a product road map that analysts seem to believe will compete effectively with Intel and continue to drive strong growth (5 year plan calls for 20% annual growth) with an expectation that data center revs will double to 30%.
  • Management also indicated that they currently do not expect any disruptions from coronavirus.  They maintained 1Q guidance although think it may come at the low end.
  • CEO Lisa Su continues to have a lot of support on the Street, for good reason.
  • Stock was also upgraded to BUY this morning at Craig-Hallum.
  • We'd note that AMD stock has held up relatively well vs other semi conductor stocks down about 12% since early February. The stock is flat today.
  • After the stock took off last November/December with the hiring of a new CEO and CFO, and a growing belief that large investor Constellation Brands may buy the company, the stock is back approaching 52 week lows.
  • Further pushing down the stock today is the company's announcement that it is laying off 500 people, closing two greenhouses and cancelling plans for a third, all reflecting the glut of cannabis in the market.
  • Jefferies analyst says Canopy's annual production capacity is 500,000 kilograms, while industry sales is at 200,000 kilograms per year.
  • These (and likely closures to come) moves, as well as shifting to less costly outdoor production are about financial discipline and protecting margins.
  • It sounds to us like there are many shoes yet to drop.  Stay tuned.
  • Gold prices and stocks continue to move up as a safe haven in a historic low interest rate environment.
  • Good quote from the article: “Gold looks like one of the most attractive assets in this global environment, With US rates likely heading towards the zero lower bound.,” wrote Stephen Innes, chief market strategist at AxiCorp, in a Thursday research note.
  • Article also rightfully mentions institutional and individual investor allocations to gold will continue to increase.
  • Great run down on state of business of major Apple suppliers (mostly semi companies who have lowered guidance).  What's interesting are the concerns have somewhat shifted from supply chain related impacts to primarily reduced consumer demand driven earnings expectations.
  • From Skyworks: “Although COVID-19 has caused no significant disruption within Skyworks’ manufacturing operations to date, the current demand environment for our products has been negatively impacted by interruptions in global supply chains"
  • From Raymond James: “slower end demand follows the supply chain disruptions that occurred this quarter.”
  • Amphenol (sensor manufacturer): “given the uncertainty around the timing of a return to full production in China and the lack of visibility with respect to demand from customers in China.”
  • Foxconn: expects its factories to return to seasonal production levels assuming the virus doesn't get worse (in China).
  • NXP: saw the weakest activity around the extended Lunar New Year period but has observed “more normal order levels” in the past two weeks.
  • Jefferies analyst has sort of an interesting thesis on Match (owner of Match.com and Tinder) that coronovirus will impact dating. He actually lowered his growth rate on the company to 14% from 16%.
  • Other reasons he's cautious on the stock include an iOS subscription-management issue that could persist into this year and some "technical risk" as 200 million shares are released on to the market from the coming spin off out of IAC. Despite this, the analyst has a BUY rating and an $80 PT
  • We have liked the stock for a long time and think its worth a look given its down 25% since January.
  • Analyst sentiment for the stock remains strong with 12 of 15 covering analysts Buy rated (12/2019)
  • Interesting turnaround in gold prices (futures down 5% last week) after a monster run up the past year being a chosen safe haven in a low interest environment.
  • Article says selling gold is the "asset of choice for among investors to raise cash".
  • Also contributing is gold transactions in China and India are conducted face to face, which has likely been coronavirus impacted.
  • But, with central banks seemingly poised to lower rates, this should push gold prices up.
  • Writer notes that silver prices (down 12% last week) have been weak due to lower levels of global industrial production
  • If the coronavirus becomes wide spread in the US, article suggest that consumer companies could be hardest hit including retailers, restaurant operators, luxury-goods companies and movie chains.
  • With fourth quarter earnings mostly over, look for a growing number of companies pulling 1Q and 2020 guidance reflecting this uncertainty with consumers and the supply chain.
  • Big box retailers such as Target and Walmart could be among the first impacted by out of stocks.
  • Article also talks about the impact theater chains such as Imax and Cinemark, and potential issues facing toy manufacturer Hasbro relating to supply chain disruptions.
  • As coronavirus fears broadened over the weekend, along with more concerns that the pandemic could have a deeper, broader and longer impact on global commerce, while the stock markets sell off and oil is down 4%, money is piling into gold and treasuries (10 year is down to 1.372% today) .
  • At least with the gold trade, the metal and related stocks have had a big run, but probably a good idea to have exposure in a balanced portfolio.
  • These market moves will also put pressure on bank stocks, and could help housing stocks with continued low rates.