A week to remember | Flow Traders Investment Competition | Week 20

Stocks registered huge losses during the whole week before recovering a bit on Friday after President Donald Trump declared a national emergency over the Coronavirus pandemic. The measure implies the government will open up access to US$ 50 Bn. for states and local areas affected by the outbreak. All three major indexes (S&P 500, Nasdaq, and Dow Jones) plunged around 10% on Thursday, suffering their worst sessions since Black Monday in 1987. During the week, the S&P 500 dropped 8.8%, the Dow Jones plunged 10.4%, and the Nasdaq tumbled 8.2%, while the VIX increased 37.9%. The Eurostoxx 50 index and the AEX index sank in the same way, both dropping 20% and 18.5%, respectively.
Earlier in the week, the three major indexes experienced tough times after the World Health Organization (WHO) classified the coronavirus outbreak as a pandemic for the first time. This context sent the US 10-year treasury yield below 0.4% for the first time, touching an all-time low of 0.347%. Moreover, yields on all maturities tumbled below 1%. On Thursday, the FED announced over US$ 1.0 Trn. in repo operations to address the recent disruptions.

In the same way, the failure of the OPEC+ to agree on production cuts caused the crude price to plunge below US$ 27 per barrel, its worst weekly decline since the Global Financial Crisis. Saudi Arabia launched an all-out price war by slashing the price of its crude to flood global markets with vast volumes of cheap oil. This measure was a response to Russia, which refused to cut output further.
Twitter strongly encouraged its employees to work from home. The firm will also provide reimbursement toward additional daycare expenses, home office set up costs, and continue to pay salaries to contractors. Companies such as Amazon and Google also issued similar directives during the last week.

As this report is published, the FED just rolled out a series of emergency measures including a cut in rates to 0%, asset purchase program (QE) for US$ 700 Bn., coordinated dollar swap lines with foreign banks and a credit facility for commercial banks to ease household and business lending. While earnings in this week are in the light side, some companies will be in the spotlight, such as Coupa Software (COUP) and Revlon (REV) on March 16; FedEx (FDX) on March 17; Children’s Place (PLCE) on March 19, and Tiffany (TIF) on March 20.

The Flow Traders Investment Competition was also exposed to this adverse context, and almost all of the teams registered losses. Next Generation managed to maintain the first place with a significant M2 of 7.28%. Concordia International and Omega Investments are still in the top three, but with an M2 of -7.27% and -8.02%, respectively. K2 Capital made the most significant jump this week, with a remarkable move of 18 places. MBA Investors had less of a good week and fell eight positions compared to last week.

Gino Beteta