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3 Things Under the Radar This Week

Economy Feb 29, 2020 05:33AM ET
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By Yasin Ebrahim and Kim Khan

Investing.com - It was no ordinary week on Wall Street. The broader market recorded its fastest correction in history and its biggest loss since the Financial Crisis as the spread of the coronavirus gathered pace.

But there are questions on how much the Federal Open Market Committee really can help equities.

Retail sales may be the helping hand to the U.S. economy and there’s evidence some market players just don’t know which ticker is the right one.

Here are three things that flew under the radar this week.

1. Little Hope Fed's Easing Medicine a Match for Coronavirus Fallout

Wall Street’s fast-paced selling strengthened calls for a Federal Reserve rescue mission. And at long last, Fed Chairman Jerome Powell appeared to answer the call -- at least partly.

In what may be the strongest indication yet that rate cuts are coming soon, Powell flagged the coronavirus as "evolving risk" and pledged to support the broader economy.

Powell said the "fundamentals of the U.S. economy remain strong," but vowed that the central bank would use its tools and "act as appropriate to support the economy," as "the coronavirus poses evolving risks to economic activity"

But with the bulk of damage from the outbreak, particularly in China, expected to hit supply more than demand, some have cast doubt on the power of monetary policy to take on the virus-led crisis.

"The problem with doing monetary stimulus is that it will have limited impact on the effects of the virus," said Jens Peter Sorensen, chief analyst at Danske Bank A/S, in Copenhagen. "The Covid-19 virus is keeping people from work, the supply chain is disrupted and tourists are not going to Italy. Monetary policy can do very little."

While others agree that monetary policy will do little to speed up the opening factories and ease travel restrictions, they argue that not only inaction, but a lack of bold action from the Fed may prove economically detrimental.

"Although moderate Fed rate cuts are unlikely to be very powerful, the committee will probably be reluctant to disappoint market expectations for substantial rate cuts for fear of tightening financial conditions further," Goldman Sachs said in a note.

The investment bank said it expected the Fed to cut interest rates by 75 basis points by June, with first cut coming as soon as March.

2. Shoppers Gonna Shop?

With Covid-19 threatening to become a pandemic and countries looking at various quarantine measures, service-heavy economies are looking at a sharp drop in economic activity.

But the U.S. National Retail Federation released a report this week that expresses confidence that the consumer will remain resilient, even in the face of Black Swan events.

Retail sales will rise 3.5% to 4.1% to between $3.93 trillion and $3.95 trillion in 2020, the NRF said. Online sales will be up between 12% and 15%.

“With gains in household income and wealth, lower interest rates and strong consumer confidence, we expect another healthy year ahead,” NRF President and CEO Matthew Shay said in a statement.

“There are always wild cards we cannot control like coronavirus and a politically charged election year,” Shay said. “But when it comes to the fundamentals, our economy is sound and consumers continue to lead the way.”

On Friday, the University of Michigan said its February consumer sentiment index came in at 101, up from 99.8 in January.

3. Pushing the Panic Button

Is Covid-19 dealing with not just “panic selling,” but also “panic buying”?

The money pouring into any stock with Zoom in the name says so.

With companies facing possibly protracted times with employees staying at home, video conferencing will be essential to keeping businesses running. With that in mind, investors have been buying shares of Zoom Video Communications (NASDAQ:ZM).

The company “is widely considered the leader in modern enterprise video communications, with an easy, reliable cloud platform for video and audio conferencing, online meetings, chat and webinars,” Investing.com's Jesse Cohen wrote.

The stock is up about 40% year to date.

But less-than-fastidious buyers have also been snapping up shares of Zoom Technologies (OTC:ZOOM), an over-the-counter stock that isn’t really in business anymore and hasn’t reported earnings since 2011.

Because it has the catchier ticker of “ZOOM,” it’s up 140% in the last five trading days.

While Zoom Technologies has seen ancillary benefits, Constellation Brands (NYSE:STZ) is dealing with reports of consumers being afraid of its Corona beer due to the similarity of the beer’s name and the coronavirus.

But Constellation said reports sales are plunging are “unfounded” and that sales of Corona are climbing in the U.S.

3 Things Under the Radar This Week
 

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Comments (27)
Rana Hamid
Rana Hamid Mar 01, 2020 11:52AM ET
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Big Game.
Ronald D.
Ronald D. Mar 01, 2020 11:25AM ET
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It's a political  crisis for  one  man;not a  medical one for a  nation. Glad  we've stable genius in the lead(?).
Sumanta Mukherjee
Sumanta Mukherjee Mar 01, 2020 4:01AM ET
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what will be next week
Dany Elcano
Dany Elcano Mar 01, 2020 4:01AM ET
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High volatility, for sure.
Mundo da Lua
Mundo da Lua Feb 29, 2020 11:41PM ET
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Whoever seeks Knowledge in countless subjects, obviously not all, finds the truth when they want and knows how to search within the internet, I repeat, just want. The internet is a territory with immeasurable wealth of information. This Investing.com page is an example of this wealth of information.
Mundo da Lua
Mundo da Lua Feb 29, 2020 11:41PM ET
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This Investing.com page is an example of this wealth of information. I will give you an example that is directly linked to the debate and I believe that it is a part of the truth that everyone is looking for. We can '' deduce '' that it was not CHINA that initiated the spread of CoVid 19. Because, I believe that the Chinese are not stupid enough to put at risk all their industrial production that feeds factories and consumers all over the planet. Going further, we know that 15 days before the first case of Covid 19 appeared, which was on 11/02/2019 and not at the end of December as the media reproduces. We know that in mid-October 2019 the World Military Games took place in Wuhan City.
Mundo da Lua
Mundo da Lua Feb 29, 2020 11:41PM ET
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YES, WORLD MILITARY GAMES. We also know that the virus can be spread with a simple spray. And finally, I can say with conviction that this widespread ********attack was very well planned, as the virus appeared precisely in the city of Wuhan, which is a GREAT RAILWAY HUB. There are many pieces of this puzzle, but some pieces have been on the board for a long time. Today, for example, Chinese scientists have identified a protein that only exists in the HIV virus, in the structure of CoVid 19. A discovery that had already been made by Indian scientists more than a month ago.
Timothy Carpenter
Timothy Carpenter Feb 29, 2020 10:53PM ET
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Consumer confidence? 2% Inflation? Virus dropping the market? Come on ,man! Just enjoy a nice recession balancing and the 84% owners of the market will let us back in. Right after them!
Erik Sukmawan
Erik Sukmawan Feb 29, 2020 10:44PM ET
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Israeli scientists: 'In a few weeks, we will have coronavirus vaccine
Mundo da Lua
Mundo da Lua Feb 29, 2020 9:57PM ET
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Please release the first part of my comment, as it makes no sense for the second part to be posted and the first in moderation. Thanks
Mundo da Lua
Mundo da Lua Feb 29, 2020 9:56PM ET
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Continuing ...                                                                                                                                               We also know that the virus can be spread with a simple spray. And finally, I can say with conviction that this '' spread '' was very well planned because the virus appeared exactly in the city of Wuhan, which is a LARGE RAILWAY HUB. There are many pieces of this puzzle, but some pieces have been on the board for a long time. Today, for example Chinese scientists have identified a protein that only exists in the HIV virus, and it helps it to be more lethal and contagious ... in the structure of CoVid 19. In one detail, Indian scientists had discovered this more than a month ago.
xolani alex
xolani alex Feb 29, 2020 9:05PM ET
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but Netflix ended below -1% though
Dany Elcano
Dany Elcano Feb 29, 2020 9:01PM ET
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COV 19 is just only an excuse to crash markets. No doubt it's making pain to the global economy, but not as much as the index are reflecting...
Mundo da Lua
Mundo da Lua Feb 29, 2020 9:01PM ET
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It's not an excuse ... it's a truth that has gotten out of hand.
Dany Elcano
Dany Elcano Feb 29, 2020 9:01PM ET
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We'll see few week, even few days, later...
 
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