| Tuesday's Headlines 1. US markets plunge again as health officials warn of virus spread 2. Disney CEO Bob Iger steps down 3. US Treasury yields hit all-time lows 4. Airlines and cruise ship stocks get mauled Markets Closed
 Markets Today U.S. markets were poised to rally early Tuesday morning and recoup a bit of Monday's losses, which wiped out roughly $1.7 trillion worth of market cap from global stocks, but those gains faded fast and furiously. The DJIA, S&P 500, and the Nasdaq Composite plunged 3.15%, 3.0%, and 2.77%, respectively. Investors shunned stocks and piled into U.S. Treasurys, sending yields to record lows.
Health officials from the CDC said the spread of the virus into the U.S. was "inevitable", and started preparing the public for the worst-case scenario. "We are asking the American public to work with us to prepare for the expectation that this could be bad," said Dr. Nancy Messonnier, director of the CDC's National Center for Immunization and Respiratory Diseases on a conference call with reporters. The CDC will start human trials of vaccines in six weeks. The White House, meanwhile, put economic advisor Larry Kudlow on television to try to assuage investors by telling us that the virus is "contained", and, "... I won't say [it's] airtight, but it's pretty close to airtight," Kudlow told CNBC.
Nobody was buying that message, and the markets' losses steepened within moments of that comment. U.S. markets have fallen about 6.5% this week, and it's only Tuesday.
This could get worse. Headlines:
 chart courtesy YCharts
10-Year U.S. Treasury Yield Hits Record Low The pressure on U.S. equities and the flight to the relative safety of U.S. Treasurys has finally pushed the yield on the 10-year to a record low of 1.31%, before settling at 1.33%, a record closing low. The yield on the 30-year U.S. Treasury also closed at a record low of 1.80%. As fears continue to mount over the long-term effects of the coronavirus, traders have been increasing their bets that the Federal Reserve may cut interest rates to prop up the economy. According to CME's FedWatch Tool, traders are now pricing in a 60% chance of an interest rate cut at the Fed's April meeting. Traders estimate there is a 40% chance of three interest cuts before the end of 2020, which is a surprise turnaround from the sentiment at the beginning of the year.
chart courtesy CME  Airlines and Cruise Ship Stocks Run Aground Almost no sector has been spared from the recent sell-off in U.S. equities, but for airline and cruise line stocks, this has certainly been the winter of their discontent. These sectors are obviously vulnerable areas of the market given recent headlines of quarantined passengers on cruise ships as well as the sectors' dependence on global travel and discretionary consumer spending. No company has felt it more than Royal Caribbean Cruises (RCL), which has seen shares plummet more than 33% since the beginning of the year. It, along with Norwegian Cruise Line Holdings (NCLH), has cancelled dozens of cruises throughout Asia and Europe so far. Both have warned investors that their future earnings and revenue will be heavily impacted by the coronavirus. Investors are listening.
chart courtesy YCharts 
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(chart courtesy YCHARTS)  Winners were in short supply today as the markets dropped, but there were still some bright spots. The big winner today was Moderna, a biotech company that recently delivered the first batch of coronavirus vaccines to researchers for testing. HP Inc rose after announcing a very large buyback plan to help fend off a takeover from Xerox.  Stocks were down across the board but the losses were particularly acute among airlines and hotels as the continued spread of the coronavirus is expected to further curb travel. Cybersecurity firm Palo Alto Networks fell by nearly 17% after reporting disappointing earnings. Word of the Day Capitulation is when investors give up any previous gains in any security or market by selling their positions during periods of declines. Capitulation can happen at any time, but typically happens during high-volume trading and extended declines for securities. A market correction or bear market often leads investors to capitulate or panic sell. The term is derived from a military term meaning surrender.  MPI/Getty Images
Today in History February 25, 1862 Today in 1862 the U.S. Congress passed the Legal Tender Act, which authorized the federal government to print fiat money that would be treated as legal tender. This meant that it could produce money not backed by a commodity, such as silver, and that creditors would be legally required to accept the bills at face value. Before this, U.S. currency was commodity-backed, meaning that dollars could be exchanged for some amount of precious metal. The extreme expense of the U.S. Civil War required the U.S. government to increase the supply of money to keep up with the needs of war production. The act worked well, allowing the expansion of war production while ensuring there was an adequate supply of currency. New income and sales taxes ensured the government could pull money out of the economy to deal with inflation. This system of fiat money was abandoned after the Civil War. However, fiat currency was brought back, and is what we use today.
Source: https://www.history.com/this-day-in-history/legal-tender-act-passed
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Tuesday, February 25, 2020
Inevitable
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