CAP STRAT Market Update - February 2020

Global stocks began the month in “rally mode” after shaking off initial coronavirus fears during the last couple weeks of January. Alarming news about the spread of the Covid-19 virus outside of China and revenue warnings from many large companies citing severe supply chain disruptions in Asia due to the virus sparked a pullback which turned into a rapid sell-off in the final week of the month.

As we sit here today, the S&P 500 Index has fallen over 15% in just 7 trading days and is now back down to levels last seen in fall 2019. The rapid and indiscriminate “sell now, ask questions later” nature of the sell-off suggests its potential as much about systematic de-risking from algorithmic traders and hedge funds as it is about real coronavirus fears.

As long-term, fundamental investors we believe the market and economic fears related to the coronavirus will be transitory. The question is how long?

We are actively monitoring this rapidly evolving situation and the impact of the COVID-19 on the global economy. CAP STRAT's Mike Rarey, CFA explains what we're keeping top of mind and what we need to see at this point to feel comfortable about buying equities.

Email the CAP STRAT Team with any questions at researchteam@capstratig.com! Or call us at 630.320.5100.

http://capstratig.com/

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