Bulls take comfort from low U.S. Treasury yields to keep pouring money into stocks

With few obvious catalysts for U.S. stocks to add to their record-breaking ascent of the past year, some investors have looked to the bond-market for reassurance.

Such optimists have pointed out that the ultra-low level of U.S. Treasury yields could suggest relative valuations still favor stocks, and that therefore investors should keep pouring money into equities even as more skeptical analysts struggle to see how equities can keep rising on the basis of corporate earnings growth.

Analysts at Société Générale say U.S. stocks appear a much more attractive proposition over bonds thanks to the widening of the average equity risk premium, which measures the additional return investors are rewarded for owning equities over risk-free government debt. In recent months, this premium has risen due to the inability to bonds to sell off even though investors anticipate a stabilization in the global economy after the signing of the phase one U.S.-China trade deal earlier this month.

The benchmark 10-year Treasury note yield TMUBMUSD10Y, +0.00%  fell around 15 basis points this week to around a three-month low of 1.684%. This leaves it less than 40 basis points away from its all-time low of 1.32% set in June 2016.

As for stocks, the S&P 500 SPX, -0.90%  , Nasdaq Composite COMP, -0.93%   and Dow Jones Industrial Average DJIA, -0.58%   carved out record closing highs on Jan. 17. Since then, all three major benchmark indexes have recorded losses for the week, but are still positive for the year.

Citibank analysts calculate that stocks have a near 90% chance of recording gains over the next 12 months given current cyclically-adjusted price-to-earning ratios and forward swap contracts for the 10-year Treasury yield.

Citibank

Depressed U.S. bond yields also reflect easy financial conditions fostered by interest rate cuts and bond buying by the Federal

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The Dow is about to face its stiffest test in years

The Dow Jones Industrial Average increased more than 22% in 2019 and is already up 2.2% through three weeks of 2020, but it is about to face its biggest test of the young year, and potentially many years.

Nearly half of the 30 Dow DJIA, -0.58%  components are scheduled to report results from the holiday season in the coming week, which will be by far the busiest week of the earnings season.

There are 14 Dow companies expected to report, the most companies from the blue-chip index to report in a single week since at least 2014, a group that includes two trillion-dollar market caps in Apple Inc. AAPL, -0.29%  and Microsoft Corp MSFT, -1.01%

Plenty of non-Dow companies will throw their numbers in as well — 141 of the S&P 500 companies are expected to report, including Facebook Inc. FB, -0.83%  , Amazon.com Inc. AMZN, -1.22%  and Advanced Micro Devices Inc AMD, -2.63%  

Don’t miss: Earnings recession could end with a fourth-quarter comeback

The 85 members of the S&P 500 that have reported results thus far have seen net income fall by 0.3% on average from a year ago, though Credit Suisse Chief U.S. Equity Strategist Jonathan Golub said it’s tough to make broader inferences from early reports given different sectors tend to post results at different parts of the earnings cycle. More than a third of S&P 500 that have reported so far sit in the financials sector, which could skew those results.

The FactSet consensus currently calls for net income to fall by 1.9% for the S&P 500, based on a blend of reported results and analyst projections, which would mean the current earnings recession would swallow all of 2019’s results.

Here’s what to watch for in the week ahead.

The wave of Dow components

Apple

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China bans car use in virus-hit city as death toll tops 40

By Ken Moritsugu, The Associated Press on January 25, 2020.

BEIJING – The virus-hit Chinese city of Wuhan, already on lockdown, will ban most vehicles including private cars from the downtown area in a further bid to limit the spread of a new disease that has infected more than 1,000 people and killed 41.

State media said Saturday that only authorized vehicles to carry supplies and for other needs would be permitted after midnight.

Authorities shut down public transportation in the city earlier this week, as well as flights and trains out of the city. They are trying to prevent the virus from spreading in the city and to other part of the country.

The transportation bans have been expanded to 16 cities, with three more added Saturday, holding a population of more than 50 million people hostage to the disease.

In Wuhan, the city where the outbreak began, 6,000 taxis will be assigned to different neighbourhoods to help people get around if they need to, the the English-language China Daily newspaper said.

China’s biggest holiday, the Lunar New Year, unfolded in the shadow of the worrying new virus. Authorities cancelled a host of Lunar New Year events, and closed major tourist sites and movie theatres.

The National Health Commission reported a jump in the number of infected people to 1,287 with 41 deaths. The latest tally comes from 29 provinces and cities across China and includes 237 patients in serious condition. All 41 deaths have been in China, including 39 in Hubei province, the epicenter of the outbreak, and one each in Hebei and Heilongjiang provinces.

Health authorities in the city of Hechi in Guangxi province said that a 2-year-old girl from Wuhan had been diagnosed with the illness after arriving in the city.

Australia announced its first case

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Coronavirus outbreak: New York on high alert with over 1,200 infected worldwide

The deadly new coronavirus is continuing to spread across the globe, wreaking havoc in China, sickening a second person in the United States and leaving health officials on high alert in New York state.

Gov. Cuomo revealed Friday that three people were under observation in the state after potentially being exposed to the virus. The state Health Department at one point had as many as four cases under investigation, but one proved negative, Cuomo said.

Citing confidentiality, officials declined to say where in the state the three suspected cases were located.

No cases were so far being reported in New York City, where two international airports and a large Chinese immigrant population put residents at risk from an outbreak that began in Wuhan, China.

In other developments Friday:

The United States reported its second coronavirus patient, a Chicago woman in her 60s who was hospitalized and in isolation after returning from China. The first US patient, a man in his 30s who had also traveled to China, remained hospitalized north of Seattle.Earlier in the day, the US Centers for Disease Control and Prevention said 63 people across 22 states were being examined for possible coronavirus infection. Of those patients, 11, including a woman in New Jersey, have tested negative for the virus so far. The coronavirus death toll rose to 41. Of these, 39 died in Wuhan, with the remainder dying elsewhere in China.
Most of those who have died after contracting the virus were age 60 or older, and some had pre-existing medical conditions. The number infected worldwide rose to 1,287. The vast majority of the sick are in China. France is reporting three people ill with the virus, its first appearance in Europe. One was a 48-year-old man who passed through Wuhan before traveling to France on Wednesday. He was

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Hong Kong declares virus emergency, 2-week school closure

BEIJING (AP) — Hong Kong has declared the outbreak of a new virus an emergency and will close primary and secondary schools for two more weeks after the Lunar New Year holiday. City leader Carrie Lam also announced Saturday that trains and flights from the city of Wuhan would be blocked.

The outbreak began in Wuhan in central China and has spread to the rest of the country and overseas as people travel for the holiday. Hong Kong has confirmed five cases of the new illness. Most schools are off next week, and Lam said they would not re-open until Feb. 17.

The local South China Morning Post newspaper reported that a marathon in Hong Kong that was expected to draw 70,000 participants on Feb. 9 was canceled.

THIS IS A BREAKING NEWS UPDATE. The AP’s previous story is below.

The virus-hit Chinese city of Wuhan, already on lockdown, will ban most vehicles including private cars from the downtown area in a further bid to limit the spread of a new disease that has infected more than 1,000 people and killed 41.

State media said Saturday that only authorized vehicles to carry supplies and for other needs would be permitted after midnight.

Authorities shut down public transportation in the city earlier this week, as well as flights and trains out of the city. They are trying to prevent the virus from spreading in the city and to other part of the country.

The transportation bans have been expanded to 16 cities, with three more added Saturday, holding a population of more than 50 million people hostage to the disease.

In Wuhan, the city where the outbreak began, 6,000 taxis will be assigned to different neighborhoods to help people get around if they need to, the the English-language China Daily newspaper said.

China’s biggest holiday, the Lunar New Year, unfolded in the shadow of the worrying new virus. Authorities canceled a host of Lunar New Year events, and closed major tourist sites and movie theaters.

The National Health Commission reported a jump in the number of infected people to 1,287 with 41 deaths. The latest tally comes from 29 provinces and cities across China and includes 237 patients in serious condition. All 41 deaths have been in China, including 39 in Hubei province, the epicenter of the outbreak, and one each in Hebei and Heilongjiang provinces.

Health authorities in the city of Hechi in Guangxi province said that a 2-year-old girl from Wuhan had been diagnosed with the illness after arriving in the city.

Australia announced its first case Saturday, a Chinese man in his 50s who last week returned from China. Malaysia said three people tested positive Friday, all relatives of a father and son from Wuhan who had been diagnosed with the virus earlier in neighboring Singapore.

France said that three people had fallen ill with the virus — the disease’s first appearance in Europe. And the United States reported its second case, a Chicago woman in her 60s who was hospitalized in isolation after returning from China.

China added three cities to those cut off from transportation, bringing the total to 16 in Hubei province and covering a population greater than that of New York, London, Paris and Moscow combined.

The Chinese military dispatched 450 medical staff, some with experience in past outbreaks including SARS and Ebola, who arrived in Wuhan late Friday night to help treat the many patients hospitalized with viral pneumonia, the official Xinhua News Agency reported.

The new virus comes from a large family of what are known as coronaviruses, some causing nothing worse than a cold. Symptoms include cough and fever and in more severe cases shortness of breath and pneumonia, which can be fatal.

SARS, which started in China in late 2002 and killed more than 750 people, was a coronavirus.

Stocks slumped Friday on Wall Street as economic fears grew over the widening crisis. The Dow Jones Industrial Average lost 170 points and the S&P 500 posted its worst day in three months. Shares in health care companies were down, along with those in financial institutions, airlines and other tourism and travel industry businesses.

It is not clear how lethal the new coronavirus is, or even whether it is as dangerous as the ordinary flu, which kills tens of thousands of people every year in the U.S. alone.

The rapid increase in reported deaths and illnesses does not necessarily mean the crisis is getting worse. It could instead reflect better monitoring and reporting of the newly discovered virus, which can cause cold- and flu-like symptoms, including cough, fever and shortness of breath, but can worsen to pneumonia.

The National Health Commission said Saturday that it is bringing in medical teams from outside Hubei to help handle the outbreak, a day after videos circulating online showed throngs of frantic people in masks lined up for examinations and complaints that family members had been turned away at hospitals that were at capacity.

The Ministry of Commerce is coordinating an effort to supply more than 2 million masks and other products from elsewhere in the country, Xinhua said.

Wuhan is throwing up a 1,000-bed prefab hospital to deal with the crisis, to be completed Feb. 3. It will be modeled on a SARS hospital that was built in Beijing in just six days during the 2003 SARS outbreak.

In France, Health Minister Agnes Buzyn said that two infected patients had traveled in China and that France should brace for more such cases. A third case was announced in a statement from her ministry about three hours later.

“We see how difficult it is in today’s world to close the frontiers. In reality, it’s not possible,” she said. Buzyn said authorities are seeking to reach anyone who might have come in contact with the patients: “It’s important to control the fire as quickly as possible.”

In the U.S., the latest person confirmed to have the disease was reported to be doing well. The U.S. Centers for Disease Control and Prevention likewise said it is expecting more Americans to be diagnosed with the virus.

Still, “CDC believes that the immediate risk to the American public continues to be low at this time, but the situation continues to evolve rapidly,” said the agency’s Dr. Nancy Messonnier.

With Chinese authorities afraid that public gatherings will hasten the spread of the virus, the outbreak put a damper on Lunar New Year. Temples locked their doors, Beijing’s Forbidden City, Shanghai Disneyland and other major tourist destinations closed, and people canceled restaurant reservations ahead of the holiday, normally a time of family reunions, sightseeing trips, fireworks displays and other festivities in the country of 1.4 billion people.

The vast majority of cases have been in and around Wuhan or involved people who visited the city or had personal connections to those infected. About two dozen cases in all have been confirmed outside mainland China, nearly all of them in Asia: Hong Kong, Macao, South Korea, Japan, Singapore, Thailand, Taiwan, Vietnam, Nepal, Australia and Malaysia.

While most of the deaths have been older patients, a 36-year-old man in Hubei died on Thursday.

___

Associated Press researcher Henry Hou and video journalist Dake Kang in Beijing and writer Frank Jordans in Berlin contributed to this report.

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Coronavirus-hit Chinese city bans most cars from downtown

By Associated Press

BEIJING: The virus-hit Chinese city of Wuhan has banned most vehicles including private cars from the downtown area in a further bid to limit spread of the illness.

State media said Saturday that only authorized vehicles to carry supplies and for other needs would be permitted.

Public transportation was shut down earlier this week, as well as flights and trains out of the city.

Authorities are trying to prevent the virus from spreading in the city and to other parts of the country.

China’s most festive holiday began in the shadow of a worrying new virus Saturday as the death toll surpassed 40, an unprecedented lockdown that kept people from traveling was expanded to more than 50 million residents and authorities canceled a host of Lunar New Year events.

READ| China deploys military doctors to overwhelmed Coronavirus epicentre

The National Health Commission reported a jump in the number of infected people to 1,287 with 41 deaths. The latest tally comes from 29 provinces and cities across China and includes 237 patients in serious condition. All 41 deaths have been in China, including 39 in Hubei province, the epicenter of the outbreak, and one each in Hebei and Heilongjiang provinces.

Health authorities in the city of Hechi in Guangxi province said that a 2-year-old girl from Wuhan had been diagnosed with the illness after arriving in the city.

Australia announced its first case Saturday, a Chinese man in his 50s who last week returned from China. Malaysia said three people tested positive Friday, all relatives of a father and son from Wuhan who had been diagnosed with the virus earlier in neighboring Singapore.

France said that three people had fallen ill with the virus — the disease’s first appearance in Europe. And the United States reported its second case,

Read More Here...

Cramer's week ahead earnings: 'We've got a huge number of companies reporting next week'

As fears of the coronavirus grow, stock prices are likely to contract and investors should be prepared for buying opportunities, CNBC’s Jim Cramer said Friday.

“We’ve got a huge number of companies reporting next week, but the biggest story by far will be the coronavirus outbreak,” the “Mad Money” host said. “If a high-quality stock gets slammed, and that stock has nothing to do with travel or with China, then use the overall decline to pounce on it.”

The Dow Jones Industrial Average finished the week of trading in the red as worries about the spreading deadly disease helped bring the index down 170 points during the session. The S&P 500 and Nasdaq Composite also posted down weeks, declining almost 1% the same day a second person was diagnosed with coronavirus in the U.S.

The flu-like virus originated in China and has led to the death of 41 people and spread to more than 1,000 others globally.

“In the end, this market wants answers and the Chinese government is not being forthcoming about how the disease is contracted or how it can be treated,” said Cramer, who has warned that the epidemic could put a dent in the travel industry and associated businesses.

“Going into next week, this illness could eclipse the many earnings stories that we have coming up, because it is a big week,” he said.

Cramer went on to present his game plan for the week ahead:

Monday: D.R. Horton earnings

D.R. Horton, a large homebuilder, reports earnings for its first quarter of the 2020 fiscal year before the market opens. Wall Street is looking for $3.75 billion in revenue and 92 cents per share of earnings.

Tuesday: United Technologies, 3M, HCA Healthcare, Apple, AMD, Starbucks earnings

United Technologies reports fourth-quarter and

Read More Here...

Cramer's week ahead earnings: 'We've got a huge number of companies reporting next week'

As fears of the coronavirus grow, stock prices are likely to contract and investors should be prepared for buying opportunities, CNBC’s Jim Cramer said Friday.

“We’ve got a huge number of companies reporting next week, but the biggest story by far will be the coronavirus outbreak,” the “Mad Money” host said. “If a high-quality stock gets slammed, and that stock has nothing to do with travel or with China, then use the overall decline to pounce on it.”

The Dow Jones Industrial Average finished the week of trading in the red as worries about the spreading deadly disease helped bring the index down 170 points during the session. The S&P 500 and Nasdaq Composite also posted down weeks, declining almost 1% the same day a second person was diagnosed with coronavirus in the U.S.

The flu-like virus originated in China and has led to the death of 41 people and spread to more than 1,000 others globally.

“In the end, this market wants answers and the Chinese government is not being forthcoming about how the disease is contracted or how it can be treated,” said Cramer, who has warned that the epidemic could put a dent in the travel industry and associated businesses.

“Going into next week, this illness could eclipse the many earnings stories that we have coming up, because it is a big week,” he said.

Cramer went on to present his game plan for the week ahead:

Monday: D.R. Horton earnings

D.R. Horton, a large homebuilder, reports earnings for its first quarter of the 2020 fiscal year before the market opens. Wall Street is looking for $3.75 billion in revenue and 92 cents per share of earnings.

Tuesday: United Technologies, 3M, HCA Healthcare, Apple, AMD, Starbucks earnings

United Technologies reports fourth-quarter and

Read More Here...

Cramer's week ahead earnings: 'We've got a huge number of companies reporting next week'

As fears of the coronavirus grow, stock prices are likely to contract and investors should be prepared for buying opportunities, CNBC’s Jim Cramer said Friday.

“We’ve got a huge number of companies reporting next week, but the biggest story by far will be the coronavirus outbreak,” the “Mad Money” host said. “If a high-quality stock gets slammed, and that stock has nothing to do with travel or with China, then use the overall decline to pounce on it.”

The Dow Jones Industrial Average finished the week of trading in the red as worries about the spreading deadly disease helped bring the index down 170 points during the session. The S&P 500 and Nasdaq Composite also posted down weeks, declining almost 1% the same day a second person was diagnosed with coronavirus in the U.S.

The flu-like virus originated in China and has led to the death of 41 people and spread to more than 1,000 others globally.

“In the end, this market wants answers and the Chinese government is not being forthcoming about how the disease is contracted or how it can be treated,” said Cramer, who has warned that the epidemic could put a dent in the travel industry and associated businesses.

“Going into next week, this illness could eclipse the many earnings stories that we have coming up, because it is a big week,” he said.

Cramer went on to present his game plan for the week ahead:

Monday: D.R. Horton earnings

D.R. Horton, a large homebuilder, reports earnings for its first quarter of the 2020 fiscal year before the market opens. Wall Street is looking for $3.75 billion in revenue and 92 cents per share of earnings.

Tuesday: United Technologies, 3M, HCA Healthcare, Apple, AMD, Starbucks earnings

United Technologies reports fourth-quarter and

Read More Here...

Cramer's week ahead earnings: 'We've got a huge number of companies reporting next week'

As fears of the coronavirus grow, stock prices are likely to contract and investors should be prepared for buying opportunities, CNBC’s Jim Cramer said Friday.

“We’ve got a huge number of companies reporting next week, but the biggest story by far will be the coronavirus outbreak,” the “Mad Money” host said. “If a high-quality stock gets slammed, and that stock has nothing to do with travel or with China, then use the overall decline to pounce on it.”

The Dow Jones Industrial Average finished the week of trading in the red as worries about the spreading deadly disease helped bring the index down 170 points during the session. The S&P 500 and Nasdaq Composite also posted down weeks, declining almost 1% the same day a second person was diagnosed with coronavirus in the U.S.

The flu-like virus originated in China and has led to the death of 41 people and spread to more than 1,000 others globally.

“In the end, this market wants answers and the Chinese government is not being forthcoming about how the disease is contracted or how it can be treated,” said Cramer, who has warned that the epidemic could put a dent in the travel industry and associated businesses.

“Going into next week, this illness could eclipse the many earnings stories that we have coming up, because it is a big week,” he said.

Cramer went on to present his game plan for the week ahead:

Monday: D.R. Horton earnings

D.R. Horton, a large homebuilder, reports earnings for its first quarter of the 2020 fiscal year before the market opens. Wall Street is looking for $3.75 billion in revenue and 92 cents per share of earnings.

Tuesday: United Technologies, 3M, HCA Healthcare, Apple, AMD, Starbucks earnings

United Technologies reports fourth-quarter and

Read More Here...