 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief 
Monday's Headlines 1. US markets tumble despite Fed's historic policy moves 2. Airlines and cruise stocks rally on Trump's promises 3. What part of the cycle are we in? 4. When should investors buy back in? Markets Closed
 Markets Today Another day of brutal selling across major markets greeted investors Monday as U.S. lawmakers failed to reach a deal on a more than $1 trillion stimulus package targeted at small businesses, individuals facing layoffs, and industries hard hit by the coronavirus slowdown. The DJIA is now at its lowest levels since Nov, 2016. To be sure, the stimulus package won't arrest the economic devastation that is just beginning, but it will help stabilize the damage and prepare the economy for recovery if and when this health crisis abates. It would also be a bit of good news at a time where we could all use some.
A deal will eventually pass, and some sectors of the market are already reacting to it. Airline stocks, which have been destroyed in the past month, rallied today, as did shares of Boeing (BA), given President Trump's pledge to support the aircraft maker. Cruise ship stocks also rallied a bit, but severe damage has been done to that industry. Oil stocks also continued to get run over despite a slight uptick in crude oil prices.
The Federal Reserve, which does not require Congressional approval to make monetary policy moves, made a few big ones today.
The Fed expanded its purchase of government bonds through quantitative easing measures, and introduced plans to offer lending facilities to investment grade companies and provide financing for up to four years. It has essentially opened up its lending window to businesses in addition to banks, which is highly unusual. The hope is that these companies use the money to meet payroll and not lay off thousands of employees. The Fed also said it hopes to offer a Main Street Business lending program to support small and medium-sized businesses that don't have institutional credit ratings, but said it is awaiting on additional funds from the Treasury to roll that out. Read more on what the Fed announced today.
It's hard for investors to see how impactful these moves will be because they don't change the uncertainty businesses are facing as the economy grinds to a halt. We will, eventually. But for now, many are still smarting from the fastest 30% drop in the history of the stock market.
chart courtesy BankofAmerica 
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Headlines:
 What Part of the Cycle Are We In? It's hard to know given the velocity and the steepness of the sell-off for global markets and the economic slowdown around the world, but investment researchers are trying to figure it out.
Morgan Stanley's research team says we are closer to the end of the bear market than the beginning, which they said actually began in the middle of 2018. Given that we are in a recession and will be for at least another quarter, the stock market has already reacted to that reality by discounting future earnings. That doesn't mean the selling will end anytime soon. Investors are ruled by animal spirits, after all.
It does mean, however, that there will be rotational shifts in the stock market that are already taking place, which indicate that big investors are getting defensive with equity positions. We've seen sectors like utilities and consumer staples strengthen throughout the sell-off as they are typically thought of as recession resistant.
As far as the other signs that we are nearing the end of the bear market, Morgan Stanley's team points to these indicators:
From our perspective, a lot of these are coming into sight as volatility has tempered over the past few days and oil seems to have found a new range. The others, not so much. We put this handy guide together for our readers who are asking us a lot of questions about how to navigate their investments and personal finances in times of heavy volatility. Take a look. We hope it helps.
 chart courtesy OfDollarsandData
When Is the Right Time to Buy Again? We've been getting this question a lot lately, for obvious reasons.
It's a personal question and every investor needs to evaluate their needs, goals, and resources before they answer it. If you have some money to invest, and you can stand the losses, the question is really about math and time.
Nick Magguilli, the blogger behind Of Dollars and Data, wrote a terrific post that tackles that question. As Nick puts it, every dollar invested in the current market environment will grow to far more than one invested in months prior, assuming that the market eventually recovers.
Where does this upside come from? It comes from a simple mathematical fact: every percentage loss requires an even larger percentage gain to get back to even.
Losing 10% requires an 11.11% gain to recover, losing 20% requires a 25% gain to recover, and losing 50% requires a 100% gain (a doubling) to recover.
Investors need to ask themselves how long they expect the recovery to take. That answer defines your expected annual return on the money you invest today.
Since we know it will take a 50% rally to get back to recent market highs, the equation looks like this:
Expected Annual Return = (1.5)^(1/Number of Years to Recover) – 1
So, if you think the market recovery will take:
It's an interesting way of looking at this question, and it takes some of the fear and anxiety out of it... at least for me.
(chart courtesy YCHARTS)  Shares of Carnival Cruise Line are up by 20% today; during a recent interview with Axios on HBO, Carnival CEO Arnold Donald insisted that cruise ships aren't an inherently riskier environment for contracting the coronavirus. MGM Resorts' stock price has risen by more than 18% following the company's announcement to pledge $1 million for an employee emergency grant fund.  Shares of WEC Energy Group are down by just over 18% amid the ongoing outbreak causing numerous problems for the energy sector, such as supply chain disruptions and lessened demand. Nordstrom's stock price has fallen by nearly 16%; the department store chain was one of several to close many of its stores last week due concerns over the coronavirus. Word of the Day Term Asset Backed Lending FacilityTerm Asset-Backed Securities Loan Facility, or TALF, was a program created by the U.S. Federal Reserve in Nov. 2008 to boost consumer spending in order to help jump-start the economy. This was accomplished through the issuance of asset-backed securities. The collateral for these securities was made up of auto loans, student loans, credit card loans, equipment loans, floor plan loans, insurance premium finance loans, loans guaranteed by the Small Business Administration, residential mortgage servicing advances, or commercial mortgage loans. Backing for these loans came from funds provided by the Federal Reserve Bank of New York.  image courtesy U2.com
Today in History March 23rd, 1987: The Standard & Poor's 500 stock index closes above 300 for the first time, less than a year-and-a-half after breaking the 200 barrier. The index finishes the day at 301.16.
(Incidentally, U2's With or Without You was the Billboard top single of 1987. Not as cool as the S&P 500 hitting that 300 milestone, but pretty cool.)
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Monday, March 23, 2020
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