Virus Update
- China death toll at 2,715, Hubei province adds 52 fatalities
- Globally 2,769 have died and 81,170 people are now infected
- Brazilian patient initially tests positive, would be first South American case
South Korea confirmed 115 more coronavirus cases, bringing total infections to 1,261. A week ago, the country had only 51 cases. The country is emerging as a second coronavirus hot spot in Asia, as the outbreak in China starts to show signs of plateauing. About two dozen countries have levied restrictions on travelers from South Korea, while flights and tour-group trips to the nation are being canceled.
Italy’s coronavirus-linked deaths rose to 12 after a fatality was reported in the Emilia-Romagna region, the head of Civil Protection told a press conference. The total number of cases rose to 374, from 322 previously. Iran confirmed 44 additional infections, taking its total to 139, and the death toll there rose to 19. Bahrain reported a total of 26 cases and shut schools for two weeks, while Kuwait has reported 18 cases so far. 700 people are still confined in a hotel in Tenerife, the Canary Islands. Greece reported its first case. France said it found three more cases and reported a fatality.
With Thailand’s 40 total confirmed coronavirus cases, the country is at risk of entering “phase 3,” which is the highest level of outbreak advisory, the country’s health minister said.
More than one-quarter of businesses grappling with coronavirus in Asia say they’re setting up or using supply chains that reduce their reliance on China, according to a survey by the American Chamber of Commerce in Singapore.
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Americans should prepare for coronavirus crisis in U.S., CDC says “It’s not so much a question of if this will happen anymore but rather more a question of exactly when,” an official said.
As of Monday, only five U.S. states – California, Illinois, Nebraska, Nevada and Tennessee – have the capability to test for the virus, according to the Association of Public Health Laboratories (APHL). (Cumberland Advisors)
Port of Los Angeles Sees Coronavirus Impact Sharply Reducing Imports Shipping companies have canceled a quarter of sailings to the port as the impact of the outbreak in China affects business operations across the Pacific
(…) “The first quarter of this year I project that we’re going to be down 15% year-over-year, with a heavy bit of that related to the coronavirus,” he said. The decline has accelerated, he said, with February cargo volumes expected to be down 25% from the same month a year as the epidemic’s impact ripples through supply chains.
Los Angeles handled the equivalent of more than 705,000 containers last February, so the projected decline would mean about 176,000 fewer containers moving through the port this month. About 9.3 million boxes passed through the port in 2019. (…)
A.P. Moeller-Maersk A/S, the world’s biggest containership operator, has canceled more than 50 sailings from China to the rest of the world since late January.
The volume of loaded containers arriving at the neighboring ports of Los Angeles and Long Beach, which together handle nearly 38% of U.S. container imports, fell 3.9% in January from the year before. (…)
The steep drop-off in trans-Pacific container volumes at the Port of Los Angeles means that empty containers are piling up and a backlog of exports is building. As manufacturing operations in China kick back up and cargo shipments resume, “it’s going to be kind of a big pendulum swing,” Mr. Seroka said. (…)
China Lifts Import Restrictions on U.S. Farm Goods Chinese leaders have removed barriers on U.S. poultry, poultry products and pet food, along with other actions, U.S. officials say
Weak U.S. debt auction shows market sees even lower rates
The Treasury held an incredibly weak auction of 2-year government debt Tuesday that saw primary dealers, who are essentially on clean-up duty, take home their highest share of the auction since December 2018.
Even though yields on the 2-year note have fallen by nearly 40 basis points this year, traders are convinced that there is “certainly more room for yields to fall,” Ben Jeffery, rates analyst at BMO Capital Markets, tells Axios.
EARNINGS WATCH
Amid the chaos, the Q4’19 earnings season is coming to a close. We now have 445 reports in, a 71% beat rate and a +4.7% surprise factor.
Analysts, still in the dark on the eventual impact of COVID-19, continue to shave their 2020 estimates: to +2.9% in Q1 (+6.3% on Jan 1) and +6.0% in Q2 (+7.2%).
The S&P 500 earnings guidance ratio has been declining to its lowest level since 2015. Image: BofA US Quantitative Strategy (via Isabelnet)
Investors Grapple With Coronavirus Impact on Largest U.S. Firms The U.S. may have so far avoided the worst impacts of the virus. But for companies with major operations abroad, the calculus is changing quickly.
(…) S&P 500 companies collectively generate almost 30% of revenue in Asia and Europe, where coronavirus cases have been most prevalent so far. And many of the companies with more reliance on foreign sales have performed worse than average. (…)
John Authers: Don’t Mistake This Stocks Selloff for a Panic Investors are responding in a calm and orderly fashion to changing news on the coronavirus.
The U.S. stock market has sold off more than 7% over the last five trading days. This marks only the fourth time it has done so since the bull market got going in earnest after the debt ceiling crisis in 2011. After each of the three previous selloffs there was an immediate rebound.
Unfortunately, it is harder to see how we get such a rebound this time. Unlike the Chinese monetary authorities or the Federal Reserve, the coronavirus isn’t susceptible to financial pressure. Unlike Jay Powell, it cannot make a U-turn. And even if it stages a retreat it will take us a while to see it. So there is no obvious news headline that could sort things out. (…)
Rather than a panic, this is an orderly attempt to deal with a serious issue. Banks and investment groups are doing their best to work out the potential scale of the problem, and they are largely doing so sensibly. This is not a market panic. However, the headlines of the last few days are alarming, there is panic in populations that are directly affected, along with something close to it in areas that are still free of the virus. This can be described as a market correction of a real world panic. (…)
Lowry’s Research says yesterday’s “NY Volume was extremely heavy at 5.6 billion shares, suggesting a level of panic selling. Only 3.86% of NY stocks are now above their 10-DMAs, which is one measure of an oversold condition.”
The S&P 500 Index went through its 100-dma. Its 200-dma is at 3041which would be 20.75 on the Rule of 20 P/E. FYI, the 3 previous selloffs John Authers refers to above bottomed out at much lower valuation levels: 18.0 in 2015, 20.7 in March 2018 and 16.9 in December 2018. Remember that earnings were rising very strongly in 2018.
1 thought on “THE DAILY EDGE: 26 FEBRUARY 2020”
Denis, thank you for your good work in bringing us important news around the world. Not only financial, but also of public interest.
You are my best source of information.
I appreciate your time and your efforts.
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