A Very Crazy January Is Finally In The Books
As the first January of the new decade is now in the books, mostly everyone can agree that it was full of news that was devastating, unexpected, sad and concerning. Let's take a glimpse at some of the notable events that unfolded during the first month of the new decade.
The biggest story this month has quickly become the outbreak of novel coronavirus, provisionally named 2019-nCoV, in China and subsequently, throughout the world. As it currently stands, the virus has killed more than 360 people and infected more than 17,000 as the tally grows exponentially. The Philippines reported a death over the weekend as a result of the virus, making it the first death outside of China. The virus has now spread to more than 20 countries outside of China, with human-to-human contact reported in China, Germany, Thailand, Taiwan, Japan and the United States.
The Australia bushfires, which technically began in June, continued to wreak havoc on the island nation throughout January. The fires, which have so far burned more than 46 million acres, or about 72,000 square miles, have destroyed nearly 6,000 buildings and killed at least 34 people. It's estimated that one billion animals have been killed in the fires, with some endangered species possibly driven to extinction. The cost of the fires is expected to surpass $4.5 billion, while costing the country more than $1 billion in lost tourism revenue.
Just three days into the month, major general Qasem Soleimani of Iran's Islamic Revolutionary Guard Corps, was killed in a surprise drone attack in Baghdad, Iraq that was approved by United States President Donald Trump. Soleimani was widely considered the second-most powerful person in Iran behind Ayatollah Khamenei. Iran responded with a series of missile attacks that initially caused no casualties or injuries. However, the U.S. now reports 64 soldiers were wounded in the attacks. While some speculate advanced warning may have been provided to the U.S. so Iran could avenge Soleimani's death, at the time fears were growing that World War III was imminent, with worries about a military draft and WW3 trending on Twitter for days.
Last week, NBA star Kobe Bryant and eight others, including his 13-year old daughter, passed away in a helicopter crash in Calabasas, California. While investigators are still analyzing what caused the accident, poor visibility and lack of a terrain awareness and warning system may have contributed to the fatal crash. The death instantly shocked the world as Bryant was one of the most popular and greatest athletes of all time.
In terms of the financial markets, everything was seemingly going well until this past week when coronavirus fears finally spooked the markets. With not-QE continuing to boost the markets into the new year, the Dow Jones Industrial Average, S&P 500 and NASDAQ Composite all hit fresh all-time highs day after day for the first few weeks of the month.
The Dow Jones Industrial Average and S&P 500 finished the month down 0.1% and 0.2%, respectively, while the NASDAQ Composite gained 2.0% on the month. It marked the first losing month for the Dow Jones Industrial Average and S&P 500 since August.
According to the Stock Trader’s Almanac, going all the way back to 1950, when the S&P 500 has a positive return in January, the full-year return was also positive 86% of the time.
As January was seemingly a very unusual month, there are two interesting points to note. As Market Crumbs wrote last week, this year's Chinese New Year brought in the Year of the Rat. The last Year of the Rat was during 2008, when the global financial crisis roiled the world. Second, the S&P 500 made its low of 666.79 on March 6, 2009. If you multiply that number by 5, you get 3,333.95. The S&P 500's all-time high from January 22 of this year was 3,337.77. While the market could easily continue its run, and contrary to what many believe given the last ten years, markets do not go up forever. In the off chance the market made its high for this cycle, it's interesting it could be at a level that is nearly exactly five times the low made more than ten years ago.
If they cut guidance, the stock could rise. Apple is closing all 42 of its stores and corporate offices in China until February 9 amidst the outbreak of coronavirus. "Out of an abundance of caution and based on the latest advice from leading health experts, we’re closing all our corporate offices, stores, and contact centers in mainland China through February 9," Apple said in a statement. Sales in China hit more than $43 billion, or about 16% of Apple's total sales, in its most recent full year. If the closures cause the company to cut guidance, the stock could end up soaring. Last January, the company cut its sales guidance, causing the stock to rally more than 125% over the next 12 months.
James Bond will still have a car. Automaker Aston Martin, which is known for producing the car fictional spy James Bond drives, has landed £500MM, or about $660MM, in emergency funding. Lawrence Stroll will invest £182MM, or about $240MM, with the balance coming from existing investors. As part of the deal, Stroll's Formula 1 racing team, Racing Point, will be branded Aston Martin beginning in 2021. Stroll's investment, which will see him become executive chairman, comes as the luxury automaker struggles with sales. Current chairman, Penny Hughes, who will be stepping down said "The difficult trading performance in 2019 resulted in severe pressure on liquidity which has left the company with no alternative but to seek substantial additional equity financing."
Good luck with that. WeWork will name Sandeep Mathrani CEO, replacing co-CEOs Artie Minson and Sebastian Gunningham, who took over after co-founder Adam Neumann stepped down from the position last year. Mathrani is a real estate veteran, formerly serving as CEO at Brookfield Properties’ retail group, while also serving on the boards of the International Council of Shopping Centers and Host Hotels & Resorts, Inc. He has quite the task ahead of him, as WeWork disclosed leasing activity fell 93% in the fourth quarter.
All of them don't do it? The United States Federal Communication Commission (FCC) is planning to take action against at least one wireless carrier over the "apparent unauthorized sale of real-time location data from users." FCC Chairman Ajit Pai said in a letter to Congress that the agency "has concluded that one or more wireless carriers apparently violated federal law." "It’s chilling to consider what a black market could do with this data," FCC Commissioner Jessica Rosenworcel said. The four major U.S. carriers—AT&T, Verizon Communications, Sprint and T-Mobile US, did not comment. Previous research has found that data could be used to determine a user's location within a few hundred yards without their consent.
A hotel filled with nostalgia. Atari, the popular video game maker behind hits such as Pong and Asteroids, has teamed up with GSD Group to build video game-themed Atari Hotels in the United States. The first location will break ground this year in Phoenix, AZ. The hotels will feature augmented and virtual reality experiences, as well as venues and studios to accommodate esports events, which are becoming increasingly popular. "We are thrilled to partner with GSD Group and True North Studio to build the first-ever Atari branded hotels across the United States. Together we’ll build a space that will be much more than just a place to stay," said Fred Chesnais, CEO of Atari.