MIEX Offical

It was another unprecedented week in an unprecedented time as COVID-19 and the coronavirus shuts down much of the world. Europe is the center of the fatalities as the pandemic overtaking China shifts West to the U.S. with New York reporting its highest single day fatalities.   We spare our thoughts for those who have fallen and pay our respect to front-line health workers fighting this global pandemic with coordinated daily rounds of open applause from doors, windows and balconies in town and cities across the world. In the U.K., Prince Charles, Prime Minister Boris Johnson, Health Minister Matt Hancock and Chief Medical Officer Chris Whitty have all tested positive for the coronavirus. The UK has had over 700,000 people volunteer to help with the health system and community support to fight the coronavirus. A front-line account from Dr. Kerry Kennedy Meltzer working in a New York hospital emergency department reports a 12-hour shift at the hospital treating you...

  Stocks rose slightly on Thursday morning after two straight days of gains following the Senate’s passage of a landmark economic stimulus bill to combat the economic impact of the coronavirus outbreak, despite shocking new data on record-breaking weekly unemployment claims. At Thursday’s open, the Dow Jones Industrial Average gained 2.5%, more than 500 points, while the S&P 500 was up 1.9% and the Nasdaq Composite gained 1.9%. Overnight futures trading was choppy, with Dow futures down more than 400 points at one point overnight and then up 100 points in the final minutes of the session. Weekly jobless claims surged to a staggering 3.28 million this week—3 million more than last week and more than quadruple the previous weekly record of 695,000.   Yields on one-month and three-month U.S. Treasury bills dropped below zero yesterday for the first time in more than four years yesterday, signaling that investors are still seeking out safe assets like fixed...

President Donald Trump and Vice President Mike Pence conducted a call with top Wall Street players on Tuesday to get their view on how efforts to deal with the coronavirus were impacting markets and the economy. On the call with Trump were Ken Griffin, the founder of hedge fund firm Citadel, Stephen Schwarzman, cofounder of private equity giant Blackstone Group, Robert Smith, founder of software investment firm Vista Equity, and Jeffrey Sprecher, chairman of the New York Stock Exchange, as well as hedge fund managers Paul Tudor Jones and Daniel Loeb. CNBC was first to report about the morning call, which was confirmed by Forbes. A source familiar with the call said it was wide ranging and included a discussion about the need to provide financial help to businesses, both large and small, struggling as commerce comes to a halt due to efforts across the nation to control the spread of Covid-19. The call was initially only going to involve Vice President Pence, but ...

As major indices have fallen 30% off the highs, with the potential for further declines, so what are the similarities and differences to 2008? A Much Faster Decline And Policy Reaction The most unique aspect to this market crisis is the sheer speed of the decline. The S&P 500 has dropped 30% in a month, in the crisis of 2008 a 30% drop from the market’s high took almost a year. If 2008’s decline was a Toyota Camry, this decline is a Ferrari. Government reaction too, has been swift. The Fed has already cut the effective fed funds rate to zero, with additional liquidity measures. Government stimulus also appears to be coming very soon. Events are moving on a more rapid timetable than 2008. Valuation Valuation is an important consideration too. Here, it is perhaps best to look at Shiller’s price earnings ratio. This smooths 10 years of earnings to arrive at an averaged, longer-term earnings number against which to value the markets. That’s helpful because we have no ide...

Bitcoin is, according to some, facing its first great test—whether it can perform as a store of value during a wider market crash. Bitcoin has, by this measure, failed spectacularly. The bitcoin price collapsed in the face of coronavirus-induced chaos, losing around half its value as traditional markets recorded historic falls. But this isn't make or break for bitcoin: bitcoin's success isn't judged by its price but by its digital scarcity in a time of helicopter money, quantitative easing (QE) and record low interest rates. Earlier this week, the U.S. Federal Reserve slashed interest rates to almost zero and fired a $1 trillion stimulus bazooka in an attempt to protect the world's largest economy from a coronavirus-induced shutdown. This followed similar interest rate cuts around the world as governments and central banks scrambled to reassure markets. The rushed action largely failed, with the Dow suffering its worst day since the Black Monday ma...

Sunday evening started with a bang in the U.S. with the Federal Reserve’s Federal Open Market Committee announcing its second emergency (intermeeting) rate cut in two weeks, with the Fed Funds target now set at 0% to 0.25%.  The markets quickly responded with a raspberry, as U.S. equity futures gyrated for a few minutes before hitting the “limit down” level of 5%.  The plethora of cash infusion measures that were also announced with the FOMC's rate cut have also thus far failed to move market sentiment. The Fed now has used up its ammunition.  There is really very little that the Fed or any other world central bank can do to ensure liquidity remains in the financial system.  Except for some weirdness in Thursday and Friday trading —which saw mortgage rates spike, for instance—this COVID-19 sell-off has been largely unaccompanied by any systemic financial system stress.  This isn't Lehman.  But that's the only scenario the Fed can stop.  Th...

So, let’s assume for a moment that you have already decided to “buy the dip” in stocks. Now what do you do? Do you simply buy an index ETF, like the SPDR S&P 500 ETF Trust (SPY) or is it time to go all out and buy individual stocks like Apple (AAPL), Tesla (TSLA) or Walt Disney (DIS). We all know that the ONLY way to generate outsized returns is to introduce significant “tracking error” and/or “active share” weightings into your portfolio but is it worth the risk?  Before we get started with whether it makes sense to take “Stocks risk” versus “Index risk”, lets quickly define tracking error and active share. I won’t bore you with the mathematical definitions for both but will touch on the concepts at a high level. Tracking error simply measures how much your portfolio returns vary from a benchmark/index. For argument’s sake, let’s say the benchmark is the S&P500. So, if you have a 5 stock portfolio made up of Apple (AAPL), Tesla (TSLA...

Last week OPEC conducted meetings with a coalition of partners that have worked together to limit oil production since 2016. It was widely reported that the group hoped to come to an agreement to reduce oil production by an additional 1.5 million barrels per day (BPD). The meetings came in the wake of reports from the IHS Markit Crude Oil Market Service that Q1 2020 world oil demand will decline by 3.8 million BPD from a year earlier. This will represent the largest quarterly demand decline ever reported. But this time one of the key partners of the coalition, Russia, refused to participate in additional cuts. They had previously signaled their resistance to additional production cuts in February when OPEC floated the idea. Oil prices plunged by nearly 10% following this surprise move by Russia. It had been widely expected they would go along with the plan, because the alternative seemed much worse. So what exactly are they thinking? The downside of this strategy for them was that...