Daily Archive: March 16, 2020

Five instant lessons investors can learn from the current market panic

The market correction over the past two-and-a-half weeks will go down as the fastest in history — no other period has experienced a greater than 20 per cent drop in such a short period of time.

We’re now in full panic mode with stocks being sold at steep discounts, banks blowing out client positions to cover margin shortfalls, ETFs offloading illiquid underlying positions and a plethora of quant funds all using the same trading algos that are flashing DEFCON 1.

The fact of the matter is that corrections happen, but the magnitude and speed of this one really makes one question the near-term outlook from here. That said, there are some important lessons to learn from all this that will help provide some longer-term perspective, something severely lacking amid the sensational headlines.

Understand the powerful influence of social media

“No, everybody is not panicking, it’s just that you’re only hearing

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Mexico government urges public to keep distance over coronavirus; president embraces crowds By Reuters

MEXICO CITY (Reuters) – Mexico’s health ministry reported more coronavirus cases on Sunday, urging people to maintain a “healthy distance” to avoid infection, even as the president held rallies in the country, shaking hands with and hugging dozens of people.

In contrast to the United States and much of Central America, Mexico has not imposed significant travel curbs to fight coronavirus, opting for a less intrusive approach.

Still, on Saturday, officials at the health ministry began ramping up measures aimed at containment, setting out an initiative known as “Sana Distancia” (Healthy Distance) to encourage the public to avoid infecting each other.

The health ministry said the Sana Distancia program would take effect for four weeks starting March 23 as the government brought forward Easter holidays to close schools early.

“It’s social distancing, it’s about distance to keep us healthy,” Ricardo Cortes, a health ministry official said in a Sunday evening

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Fed slashes rates to near zero, eases bank lending rules

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The Federal Reserve took emergency action Sunday and slashed its benchmark interest rate by a full percentage point to nearly zero and announced it would purchase more Treasury securities to encourage lending to try to offset the impact of the coronavirus outbreak. The central bank said the effects of the outbreak will weigh on economic activity in the near term and pose risks to the economic outlook. The central bank said it will keep rates at nearly zero until it feels confident the economy has weathered recent events.

The Fed also said it will purchase $500 billion of Treasury securities and $200 billion of mortgage-backed securities to smooth over market disruptions that have made it hard for banks and large investors to sell Treasuries.

The disruptions bumped up the … Read More