| Friday's Headlines 1. US markets close lower for the day and week 2. Oil keeps on slipping 3. Winnebago is cruising 4. Junk debt keeps piling up 5. What to watch for next week Markets Closed
Year-to-Date
 Markets Today U.S. markets proved susceptible to news headlines again today as the DJIA, S&P 500, and the Nasdaq all turned sharply lower as news that another case of the new coronavirus was found in the U.S., this one in Chicago. The Centers for Disease Control (CDC) said a third case in the U.S. may have also been discovered. China extended its travel ban across several large cities as more cases of the virus were discovered, effectively restricting 33 million people from moving about freely. Airline stocks and oil fell hard on the news, and the major U.S. equity markets fell close to 1% each, although the DJIA erased some of its losses on some rare good news for Boeing. Volatility, which has been notably quiet in recent months, came screaming back onto the scene as the VIX or Volatility Index jumped more than 20% today before settling at an increase of 12.5%. That signifies that some traders are placing more bets, or put options, that markets will continue to fall in the next 30 days.
Despite U.S. markets having their worst performing week of the year, the S&P 500 surpassed an important milestone. The S&P 500 has closed below its 10-day moving average just five times over the past 70 days, the fewest instances since 1972, according to FOREX.com. Active traders pay a lot of attention to moving averages because they help them identify trends and momentum within securities or market indexes. The trend, my friends, has been higher highs and new market records. The coronavirus health scare may derail that trend, or it could be a combination of other factors, of which there are many. But none have been able to derail this old bull yet.
Headlines:
 chart courtesy YCharts
Oil Keeps on Slipping Crude oil prices have slid further, and fears of a further spread of the coronavirus aren't helping matters. U.S. West Texas Intermediate, considered the benchmark for oil prices, fell 7.5%, its third week of declines. It is currently trading at its lowest levels since last May, when tariff concerns gripped commodity traders.
Despite production cuts by OPEC and its allies, which were meant to boost prices, demand has been sluggish which has depressed prices. Concerns about the coronavirus have hit oil prices especially hard given China's increased travel restrictions. China is the largest crude oil importer in the world, so less travel inside and out of the country could crimp demand.
As oil prices go, so go major oil exploration and production companies, as you can see in the chart above. While the S&P Crude Index (in purple) has fallen more than 11% so far in 2020, it's been dragging down shares of major oil companies like Exxon Mobil, Chevron, and Marathon.  Winnebago has the Wind at its Back One company that seems immune to all global concerns like viruses and trade wars is Winnebago (WGO). The Iowa-based company that boasts its flagship Winnebago-brand motor homes as well as boat maker Chris-Craft, hit another all-time high this week. The company reported its first-quarter 2020 results back in December, boasting sales growth of 19% and a 46% increase in free cash flow. Shares are up more than 95% in the past year.
Unlike several of the companies we have written about this week that have seen huge pops in their stocks, Winnebago's price appreciation seems tied to its fundamentals. It has solid products that are in demand from an aging U.S. population that has disposable income and time on its hands. Some consider motor home sales a key economic indicator of consumer health in the U.S. We give that theory some credence, but we are more impressed with the company's ability to deliver results that investors are appreciating for the right reasons.  Junk is Piling Up $1.2 trillion. That's the amount of debt U.S. non-financial speculative-grade companies have maturing in the next five years, according to Moody's. This figure is at a record high and up 14% from debt due during 2019-23.  Moody's warned Thursday that default risk is on the rise for those speculative-grade loans, bonds, and various related instruments maturing from 2020-24. While low interest rates have allowed spec-rated companies to continue to roll over all that debt (refinance it a lower interest rate), a slowdown in the economy or a reversal in Federal Reserve monetary policy could pose problems. "While a record amount of speculative-grade debt is set to mature in the next five years, declining credit quality points to potentially higher defaults during the next downturn," warned the credit rating agency. "At $750 billion, five-year loan and revolver maturities are the highest since the agency began tracking the figure. At the same time, loans issued by companies with corporate family ratings of B3 or lower rose to 36% of total bank maturities, up from 33% last year."
Oil and gas companies had the highest default rate in 2019 and hold 8% of speculative-grade debt.
Read more: Everything You Need to Know About Junk Bonds What to Expect Next Week Here's how different asset classes have been doing year-to-date:  Here are some of the key economic events on the calendar for the week ahead:
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(chart courtesy YCHARTS)  Biotech firm Adaptive Biotechnologies gained today after it priced a public offering, selling shares on behalf of some current investors including funds controlled by Viking Global Investors, Matrix Capital Management, and Senator Investment Group. Enterprise software provided Atlassian Corp rose after it reported substantial earnings and revenue growth.  Credit card company Discover Financial Services fell after it announced it was increasing expenses, while financial services company Synchrony Financial fell after it reported disappointing revenue. Word of the Day Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments. A bond is a debt or promises to pay investors interest payments and the return of invested principal in exchange for buying the bond. Junk bonds represent bonds issued by companies that are struggling financially and have a high risk of defaulting or not paying their interest payments or repaying the principal to investors.  Today in History January 24, 1848 Today in 1848, James Marshall discovered gold on Johann Sutter's property (later known as Sutter's mill, due to the sawmill Marshall was helping to construct) near Coloma, California. Because previous gold finds had been disappointing, his claims had been met with skepticism until they were endorsed by President James K. Polk in December of 1848. This led to an enormous wave of immigration which completely changed the population of California. In 1846, when California was still part of Mexico, there were 150,000 native Americans, 6500 Mexicans and Spaniards, and several hundred Americans living in California. By the end of 1849 the non-native population had increased to almost 100,000, two-thirds of whom were Americans. In 2005 dollars, about $200 million in gold was extracted in 1849, rising to $971 million in 1850, and peaking in 1852 at $1.9 billion in gold. This gold was accompanied by an enormous wave of violence against the region's native inhabitants, causing an estimated 120,000 native american deaths from disease, starvation, and murder wave over the course of the gold rush. By the mid-1850's, more and more people joined mining companies to work wages rather than trying to strike it rich on their own.
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Friday, January 24, 2020
Junked Up
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