Archives of “November 10, 2020” day

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Federal Reserve says assets may have a large decline if coronavirus is not contained

  
  Analysis
Major points from the report (Headlines via Reuters):

 

  •  business debt has risen sharply; reduction in economic activity has weakened ability to service debt
  • household loan defaults may rise
  • banks continue to be well-capitalized, though challenging conditions remain
  • strains in household, business sectors mitigated by government lending, relief and low interest rates
  • protracted slowdown could harm finances of even households with high credit scores, leading to defaults
  • sources of vulnerability in household, business sectors unevenly distributed
  • Fed includes climate change risks in financial stability report for first time
  • climate risks could result in more frequent, severe financial shocks
  • disruptions in global dollar funding markets are ‘important risk’ to financial system
  • fiscal stimulus, lower interest rates, emergency lending facilities and asset purchases supported stronger-than-expected economic recovery
  • uncertainty remains high and investor risk sentiment could shift quickly if recovery proves less promising or efforts to contain coronavirus disappoint
  • most banks’ common equity tier 1 (cet1) ratio recovered to pre-pandemic levels in the second quarter as demand for bank credit waned and earlier drawdowns were repaid
  • yields on corporate bonds dropped to historically low levels but remain elevated for airlines, energy and leisure industries heavily affected by pandemic
  • true status of bank loan credit quality is not reflected in loan delinquencies because of loss-mitigation programs, government stimulus payments, and ppp loans
  • delinquency rates on commercial mortgage-backed securities have spiked
  • as programs expire, some accounts in loss mitigation could result in higher bank delinquency rates later this year and early next year, followed by higher charge-off rates and losses
  • all told, a great deal of uncertainty about the future path of these losses remains
  • strength in housing sector reflects robust demand from households but downside risks remain, given unusually large number of mortgage loans in forbearance programs
  • leverage is at historically low levels at broker-dealers but is at post-2008 highs at life insurance companies
  • leverage remains elevated at hedge funds relative to past five years
  • funding strains on mortgage servicers eased after policy actions, but uncertainties remain
  • money markets have stabilized but would be vulnerable without the emergency facilities in place
  • outflows from long-term mutual funds that hold less liquid assets have mostly reversed
  • redemption waves had run-like characteristics that highlighted significant structural vulnerabilities in the sector
  • collateralized loan obligation fundamentals have improved but are still weak compared with pre-pandemic levels

NASDAQ tumbles into the close. Dow and S&P close higher but near session lows

  
Analysis, US Market

Dows best day since June 5

The major indices opened sharply higher on the back of the Pfizer news on a vaccine. The gains were led by the Dow industrial average the S&P index. The NASDAQ index went along for the ride early on. However, a late day selling pushed the NASDAQ into negative territory. The Dow industrial average and S&P index also close near session lows but still higher on the day.

  • All the major indices reached intraday all time record highs.
  • Dow had his best day since June 5
  • Covid gainers got hammered today including Zoom, Home Depot, Whirlpool, Amazon and Netflix

A look at the final numbers shows:

  • S&P index rose 41.06 points or 1.17% at 3550.50. The high price reached 3645.99. The low price extended to 3547.48
  • NASDAQ index fell -181.448 points or -1.53% at 11713.78. It’s high price reached 12108.06. The low price reached 11703.49
  • Dow industrial average rose 834.57 points or 2.95% at 29157.97. It’s high price reached 29933.83. The low price extended to 29130.66.
Some losers today included:
  • Zoom, -17.4%
  • Crowdstrike, -10.76%
  • Whirlpool, -10.4%
  • snowflake, -9.49%
  • Netflix, -8.56%
  • Square, -7.09%
  • Costco, -5.39%
  • Amazon, -5.06%
  • Facebook, -5.04%
  • Home Depot, -5.03%
winners included:
  • American Express, +21.43%
  • United Airlines, +19.23%
  • American Airlines, +15.18%
  • Bank of America, +14.27%
  • Boeing, +13.71%
  • J.P. Morgan, +13.62%
  • Walt Disney, +11.87%
  • Citigroup, +11.64%
  • PNC financial, +11.57%
  • Exxon Mobil, +10.34%
  • MasterCard, +9.93%
  • Southwest Airlines, +9.72%
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