Category: Investing

David Rosenberg: There’s only a 20% chance stocks have hit bottom — if the past 10 recession bear markets are any guide

What I love about our business is the eternal optimism. There will be growth in the spring, as Chauncey Gardiner would say. Google “Picking a Market Bottom” and you get 309 million results. Oh, but google “Picking a Market Peak” and all you get is 138 million.

In any event, if picking bottoms is your thing, I have news for you: In the markets, as in life, the higher you are, the harder the fall. It’s also never about historical per cent changes cycle by cycle, but the reversal from the prior market condition.

In this case, establishing a range of scenarios is most helpful and involves assessing how much of the previous bull market is unwound in the next bear phase. We looked at prior recession-era bear markets back to the Great Depression. On average, 83 per cent of the prior bull market is reversed in the bear market

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Dow falls almost 1,000 points, TSX, 500 to close as investors brace for ‘very, very painful’ coronavirus shutdown

The U.S. benchmark S&P 500 stock index fell more than 4 per cent on Wednesday after a dire warning on the U.S. death toll from the coronavirus sent investors running from even the most defensive equities.

The Dow Jones Industrial Average fell 973.65 points, or 4.44 per cent, to 20,943.51, the S&P 500 lost 114.09 points, or 4.41 per cent, to 2,470.5 and the Nasdaq Composite dropped 339.52 points, or 4.41 per cent, to 7,360.58.

The Toronto Stock Exchange’s S&P/TSX composite index closed down 3.8 per cent at 12,876.37, with shares of security software company BlackBerry Ltd falling nearly 18 per cent after dismal quarterly results.

Economic data showed U.S. manufacturing activity contracted less than expected in March, but disruptions caused by the coronavirus pandemic pushed new orders received by factories to an 11-year low, reinforcing economists’ views that the economy was in recession.

Also, business closures as authorities tried

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Oil stocks surge after Keystone deal, but sector isn’t out of the woods yet

The Canadian energy sector has offered its investors little in the way of hope since a global oil price war made the price of a barrel of the country’s crude cheaper than a pint of beer, forcing companies to slash dividends and threatening the continuity of others.

But amid a torrent of bad news, the energy sector was quietly rallying as the S&P/TSX Capped Energy Index had gained more than 34 per cent in nearly two weeks. So when it finally delivered good news on Tuesday, investors loudly voiced their excitement in the form of investment dollars.

TC Energy Corp. announced that it will be going ahead with the construction of the Keystone XL pipeline in early April after the Alberta government bought a US$1.1 billion equity stake in the project and said it would be providing another US$6 billion through a loan guarantee.

On the back of that news,

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North American stocks rebound on news of five-minute coronavirus test and vaccine candidate

U.S. stocks rallied as investors saw glimmers of optimism in efforts to deliver rapid testing for the new coronavirus. The dollar rose.

The S&P 500 Index climbed for the fourth time in five days, rising 17 per cent over the last week, with health-care shares among the biggest gainers. The Nasdaq 100 advanced nearly 4 per cent, leading the rebound among benchmarks from Friday’s losses. Abbott Laboratories surged after unveiling a five-minute COVID-19 test and Johnson & Johnson announced a vaccine candidate for the virus.

The S&P/TSX composite index rose 350.76 points, or 2.76 per cent, to 13,038.50.

Crude fell more than 5 per cent even after Trump spoke with Russia’s Vladimir Putin about falling oil prices. The 10-year Treasury yield rose, while the dollar was on course to snap a four-session losing streak. Gold dipped.

Investors are grappling with the reality that the world’s biggest economy will stay crippled

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Coronavirus market crash was the fastest on record: Here’s how to keep that in perspective

In bear markets, we’re overwhelmed by what we don’t know. Everything gets turned on its head. Long-held assumptions go out the window. And we’re left with a whole new set of questions.

Bob Hager, my former partner at PH&N, said, “With every bear market, there are always unknowable concerns, and every time we’re told that this bear market is different.”

In the current crisis, we’re working on two big questions that weren’t even on the radar a month ago. Namely, how long will the economic disruption go on, and what will the new normal look like after the recovery.

As we wrestle with these and other unknowables, it’s useful to lay out what we do know. As investors, we have new information and some time-tested truths to work with.

What we know this time

Markets have adjusted swiftly to the new reality. In fact, the speed of the drop was

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Stimulus propels stocks to best week since 2009

U.S. stocks weathered a late-Friday plunge to post their best week in over 10 years, buoyed by an unprecedented stimulus package meant to blunt the economic impact of the coronavirus pandemic. Treasuries gained and oil slipped.

The S&P 500 Index climbed 10 per cent this week, its biggest gain since March 2009, on the strength of a record three-day rally. But that rally sputtered Friday, and the benchmark plunged just minutes before the close, illustrating how tenuous any gains can be, even with a US$2 trillion spending deal heading to the president’s desk for his signature. The S&P remains 25 per cent below its February record, and the Cboe Volatility Index is on track for a 10th straight close above 60. It averaged 18.7 in the past year. The Dow Jones Industrial Average had its best week since 1938, even as all but two of its 30 members declined Friday.

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