Dow 15,000 very likely as coronavirus pandemic hits U.S. economy: strategist

Author: firehawk   |   Latest post: Thu, 16 Apr 2020, 10:18 PM


Dow 15,000 very likely as coronavirus pandemic hits U.S. economy: strategist

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Veteran markets strategist James McDonald, CEO of Hercules Investments, is staying with a call that he has had throughout the coronavirus pandemic fueled bear market, now going on two months.

That is, at least one more major course correction is ahead for equities as investors realize — once and for all — the U.S. economy is in a severe recession that won’t end anytime soon. It’s a call he has reiterated several times as a guest on Yahoo Finance’sThe First Trade.

By McDonald’s math, he continues to see downside risk to the Dow Jones Industrial Average to 15,000 from its current perch just above 21,000. He thinks the economy could begin to show signs of life in the fourth quarter of this year — but until that starts to show up somewhere in the markets or economic data, he prefers putting on trades that profit from extreme volatility and downside.

Yahoo Finance highlights a call such as this because, well, McDonald has been dead right so far. Moreover, April has lived up to its billing in the early going as potentially lethal to stocks because of dreadful economic data nobody on Wall Street has ever seen before.

March non-farm payrolls plunged 701,000. The U.S. unemployment rate rose to 4.4%. The leisure and hospitality sector shed 459,000 jobs. Keep in mind this jobs data only reflects survey data up to March 12. The April employment report is widely expected to show a massive spike in job losses that reflects the 10 million people that have filed for unemployment benefits in the past two weeks.

After flirting between gains and losses in the morning, the Dow fell nearly 500 points by afternoon trading. The action in the markets today indicates investors haven’t fully grasped how much the coronavirus is derailing the U.S. economy.

Long-time economic forecaster Bethan Ann Bovino, chief U.S. economist at S&P, thinks the April employment report could show 8 million in headline job losses.

“We’re looking at close to 17 million jobs lost. So I don’t think it’s going to end in April,” Bovin said on The First Trade. Bovin adds she wouldn’t be surprised if there are 15 million jobs lost in April.

McDonald isn’t out on an island with his concerns on the market. Many strategists Yahoo Finance has talked with this week suggest the two-week long rally in stocks from the late March lows looks overdone. The pros point to not only souring economic data globally, but also the approaching earnings season as a source of downside risk.

“The market theoretically should be down even more when you lose over 700,000 jobs in one month with the worst yet to come. I think the market is braced for a lot of bad news. I don’t think the market is more or less pricing in a two-month shutdown,” BNY Mellon chief strategist Alicia Levine says.


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  2 people like this.
firehawk death toll is peaking .....

more than 1300 yesterday, highest!
05/04/2020 3:44 PM
RainT read
05/04/2020 3:47 PM
KAQ4468 easily below 15k
05/04/2020 7:01 PM
Lucky81 Donnie will force J.powell to start the printer to support.
05/04/2020 7:33 PM
Lucky81 Full of manipulation
05/04/2020 7:33 PM
Lucky81 Tweet magician.
05/04/2020 7:34 PM
Alex™ Dun worry. Monday 930pm gap up again.

The more they have job losses, the higher the dow goes.
05/04/2020 7:35 PM
Lucky81 The most ridiculous thing.
05/04/2020 7:36 PM
Lucky81 FBMKLCI 2000 with half of company go bankrupt.
05/04/2020 7:37 PM
Lucky81 Always tweet something when market unfavourable to him.
05/04/2020 7:38 PM
stklearner hope got more disaster scenarios come out..its not what we fear & know that will kill us, its what we dont know & dont fear...
05/04/2020 7:39 PM
KAQ4468 Later trump will mampus due to corona

05/04/2020 7:39 PM
enning22 Dow 15,000 is just a joke, don.t take it seriously.
07/04/2020 6:51 PM
firehawk death toll is peaking .....
more than 1600 yesterday, highest!

the day before was lower, and US markets surged,
but yesterday it came back, DJ opened +900pts, but ended -26pts!
08/04/2020 9:53 AM
Junichiro Posted by KAQ4468 > Apr 5, 2020 7:39 PM | Report Abuse

Later trump will mampus due to corona

Trump won't mampus. In fact, it is trying to change th narrative to survive. Did you not hear his comments like "I am not responsible at all". He blames Obama. "China is not transparent with its statistics". He blames China which in fact he could have acted on S.Korea's statistics.
08/04/2020 10:06 AM
laychee Yesterday Trump said covid peaked (after 2 days of slow down in spreading and death). Market rallied. I see many counters with record buy volume.

Last night New York and Spain recorded worsen covid situation.

Reverse gear mode. Who knows, New York cases may drop today and Trump will jump out and talk up the market again.
08/04/2020 10:15 AM

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