Stock market spirals as coronavirus fears persist— Here's what to watch - CNBC

The stock market is suffering its worst week since the financial crisis.

The S&P 500 is down more than 12% since Monday, its largest weekly decline since October 2008.

Here's what nine market experts are watching now.

Volatile markets

Mark Grant, chief global market strategist of B. Riley FBR, says he has found a way to make profits even in this volatile market.

I don't see any bounce in yields coming any time soon. In fact, the 2-year [yield] is so low that even if the Fed cut twice at 25 basis points, it's already been impacted in the market. One of the things that I think is the most interesting in this environment is ... I have been able to take profits in this kind of market ... I have been able to take some profits in some of the bonds they own because my strategy is half investment-grade bonds and half closed-end funds, paying monthly over 10%.

Chinese economic uncertainty

Krishna Memani, former vice chair of investments at Invesco, says to fall back as an investor given Chinese manufacturing uncertainties.

If things are going to turn around, it's going to turn around because we are seeing a bottoming on the impact — a bottoming in terms of the activity level. ... That is actually going to come from China, because China has dealt with this situation the longest. We'll get Chinese PMI. If the PMI is in the 40s as opposed to 30s, I think the market bottoms out. But we don't know that just yet. So, as an investor you are in a risk management mode, and what risk management requires you to do is to basically fall back and wait. ... Stay alive to play another day.

Ready to buy

Jim Cramer, host of CNBC's "Mad Money," says you have to be ready to sell certain stocks.

When I think about what to do, I say, you can't sell unless you have travel [or] leisure. Those aren't going to work. Autos won't work. Clearly airlines won't work. So, if you're full up and don't have any capital, it's still not too late to sell those, but you have to be ready for some index buying here just because it's the hardest thing to buy in the world.

Market surprise

Stephanie Link, contributor for CNBC, says the only surprise in this market downturn is the pace of the decline.

It's not surprising that the market went down because ... the virus has gotten so expanded. The surprise has been the speed of the decline. To lose $6 trillion in market cap in six days, that's remarkable. So, I don't know when we're going to bottom. But I'm looking at an RSI on the S&P at 20 ... but a VIX at 47. To me it seems a bit extreme. And then I look at what happened at the Shanghai index, it fell 14% the beginning of the year and then it bounced on Feb. 3. It's up 14% and 2% off its highs. So that could happen to us.

Volumes increasing

Jon Najarian, co-founder of Najarian Family Office, says volume increase in the rally is reflected in the dip.

We've just been seeing selling and volumes accelerating on any rally, people were selling rallies. Now actually on dips, we're seeing likewise. Volumes surge. On our computers we're seeing volumes surge, like for instance the QQQs. ... So, we'd seen the selling pressure for six straight days, every rally was sold, right? Now today is the first time, after that big pop in the VIX, when we're seeing buying or volumes increase, also on the dip. Not just up at the top, so that's a good sign. ... We needed to get to that cathartic sort of flush, and a VIX at $49.50 certainly feels a lot closer.

Do not act yet

Rob Sechan, managing director of UBS, says it is not yet advisable to take action.

You need a plan of action. ...  I actually think there is some risk of action too early when it's not supported by the economic data. ... I think there's a number of catalysts — one is progression in containment, right? You get some progression in containment, there could be valuation catalyst here at any point and technically markets are oversold. ... When you have fear gripping the market like we have today, any time somebody is fearful — public speaking, anything like that — they are not going to make decisions rationally, and I think we have to make rational decisions right now.

Adding to the risk

Shannon Saccocia, chief investment officer of Boston Private Wealth, believes you can add to the risk with stocks.

I think you have to consider why we're selling and when the uncertainty is different than, say, the financial crisis or what we're facing now, the uncertainty is that we have something that we cannot anchor to a particular situation. So that creates a lot of difficulty when you're thinking about your overall asset allocation and you're thinking about whether it's time to add risk or decrease your risk to the overall portfolio. ... If you need to have money that is garnered from your portfolio, you're not getting it in bonds, and so for me I feel comfortable adding to stocks here. I think that based on our expectations for the next five to 10 years, we believe that stocks will continue to move higher. ... I believe that you can add to risk here, thoughtfully, and that's how we've done it.

Bonds vs. stocks

Brenda Vingiello, chief investment officer at Sand Hill Global Advisors, says stocks are set to outperform bonds.

If you look at where bonds are today, for people that have a diversified allocation, what do you think is going to work over the next 12 months? Is it going to be stocks vs. bonds if you're putting a dollar to work today? And our view would be that it's likely to be stocks that outperform bonds over that period. Assuming that this overall panic subsides. ... I think it's probably going to be an announcement from the World Health Organization calling this officially a pandemic and you get kind of a max fear moment. And maybe that's the moment, a line in the sand is drawn, and we start to get some more constructive buying going on.

Market reassessment

Dan Greenhaus, managing director at Solus Alternative Asset Management, says the outcome of the election could lead to a reassessment of how investors view earnings.

I want to be crystal clear: I am making no political comment right now whatsoever except to accept the market's assumption that a Bernie Sanders presidency is worse for the market than a Donald Trump presidency. And if we accept what the market says — not what I'm saying — then the V-shaped rebound out of this comes right into the Democratic Convention where you're nominating someone who the market believes is not as friendly. ... So, if you believe that the virus reduces the odds of a Trump reelection and increases the odds of a Bernie election ... then you have to reassess how you view earnings over not just the next four quarters but the next eight [to] 12 and thereafter.

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February 29, 2020 at 04:20AM
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Stock market spirals as coronavirus fears persist— Here's what to watch - CNBC
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