Yesterday, the S&P 500 jumped up 7.03%. Meanwhile, the United States coronavirus death toll has passed 10,000 and egg prices have tripled since last month (per J.R. Whalen of the Minute Briefing podcast).
Today, as I write this on the morning of April 7, S&P futures are up almost another 3%.
What’s going on here?
The Increase in Coronavirus Deaths in Europe Is Slowing Down
On yesterday’s P.M. edition of the What’s News podcast, Annmarie Fertoli of The Wall Street Journal discussed the recent surge in the market.
Per Fertoli:
In Europe, strict containment measures appear to be helping slow the spread of the disease. Italy and Spain are each reporting fewer confirmed cases and deaths. Here in the U.S., the death toll from the coronavirus has now surpassed 10,000. Officials are predicting that this week will be America’s most difficult, with the number of infections in some of the worst hit cities, including New York, Detroit, and New Orleans, expected to peak in the coming days.
New York Governor Andrew Cuomo says the number of daily deaths has been effectively flat in the state for the past two days, suggesting that social distancing measures are working.
And on today’s A.M. episode of the podcast, Mark Garrison reports that “Dr. Anthony Fauci says he’s encouraged by what he’s seeing as lockdown orders spread. He said yesterday there’s a possibility there will be fewer than the 100,000 American deaths forecasters predicted.”
All of that is fantastic news, and it’s true.
NEW: Mon 6 April update of coronavirus trajectories
Daily new deaths:
• US has averaged 1,000 deaths per day over the last week
• Daily deaths in Italy & Spain peaked around 23-24 days after lockdown
• Suggests UK could peak in 7-10 daysLive charts: https://t.co/JxVd2cG7KI pic.twitter.com/qdGPCFqx7g
— John Burn-Murdoch (@jburnmurdoch) April 6, 2020
The rate at which the death toll is increasing in Italy, Spain, and France has clearly slowed down. And it appears to be peaking in the U.S.
And that raises the question: Is now the time to get back in the U.S. stock market?
Is Now the Time to Get Back in the Market?
Some sharp traders believe that the S&P 500 will trade in the 2,200-2,700 range for months to come.
https://twitter.com/TicTocTick/status/1247453260216037378
And if that’s the case, we’re near a temporary top. And, anecdotally, I know that a few sharp traders are extremely pessimistic about the market’s current pricing and expect that we will retest the lows we hit in March.
But I’m starting to be encouraged. A month ago, I said that I expected the market to flatten out before rebounding, and it has traded pretty much flat since then.
- Mar. 9, S&P 500 Closing Price: 2,746.56
- Apr. 6, S&P 500 Closing Price: 2,663.68
And last month I said that I expected the market to rebound when sports return — and now we have news that the PGA TOUR is making plans to return.
And MLB is creating a plan that calls for the 2020 season to start as early as May.
These are the signs of a stock market rebound.
My perspective on the market seems to change by the day. I have been mainly in cash for months, and even last night I was fairly down on the market’s future.
And we have a lot of reasons to be pessimistic about the future.
- U.S. coronavirus testing is still inadequate.
- Too many people are acting as if the coronavirus is a short-term problem.
- The post-coronavirus economic data coming out of China is discouraging.
- Stock buybacks will halt as a condition of the $2 trillion stimulus package.
- The U.S. might get screwed by the $1.2 trillion leveraged loan market.
- Our supply chain is probably vulnerable.
But these are the signs I told myself a month ago I would look for — and they are here.
The growth rate in the death toll is slowing down. The market is flattening out. The major sports leagues are planning to return.
I’m not a financial advisor, and I don’t suggest that you make any decisions based on anything I say or write … but I am ready to start buying.
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