Pantry Panic Buying
By Wed, Mar 4, 2020
Hey Scoopers,
Stock market optimism didn’t last too long, and all three indices returned to the red zone despite the Fed’s emergency interest rate cut – more on that in the “Overall Market” section.
Beyond the overall market, home builders are the unexpected winners of the coronavirus epidemic while credit card processors are the losers — more on that in the “What’s Up?” and “What’s Down?” sections.
Oh, by the way, have you heard of pantry panic buying? It’s the contribution of coronavirus to the everyday lingo — more on that in the “Water Cooler” section.
But, first, here is a recap of what happened in the market yesterday:
Market Recap
- U.S. markets: After only one day of recovery, stock market indices return to the business of falling. Scroll down to the “Overall Market” section to read more.
- Cryptocurrency: Bitcoin’s price is now hovering in the $8,000 range.
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The Fed Didn’t Save Us, Although It Tried.
Poor Federal Reserve … nothing makes the stock market happy… not even a 0.5% interest rate cut…
On Friday afternoon, the Federal Reserve made the announcement that it is ready to take all necessary measures to protect the economy from the impact of coronavirus. On Tuesday, it did precisely that. The market was up on Monday in celebration of the news, however, by the time the actual cut was announced, the optimism was already gone and the stock market went back to its panic mode.
In all fairness, the coronavirus impact on the economy is on the production side. The interest rate cut, typically, solves the issues related to the lack of demand in the economy. Moreover, commonly, an emergency rate cut is perceived as the stamp of approval that the economy is in danger. Nevertheless, the Fed wasn’t able to save the market with a cut immediately, even though it tried.
Homebuilders Won.
So, what happened?
Shares of homebuilder stocks were up in response to a lower interest rate. Lower interest rate means lower mortgage rate for new and refinances rates, and that means more business for homebuilders. Lennar (Ticker: LEN), PulteGroup (Ticker: PHM), D.R. Horton (Ticker: DHI) were among the homebuilder stocks that are the indirect winners of the coronavirus epidemic.
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Credit Card Processors Lost.
So, what happened?
Amidst slower-than-expected global travel and spending, credit card processors are the unexpected losers. Visa (Ticker: V) announced lower than expected cross-border revenue, and the stock fell more than 3%. Shares of Visa’s rival, Mastercard (Ticker: MA), followed suit with more than 4% on the same day for the same reason.
Pantry Panic Buying
So what happened?
Wife: Honey, what if the U.S. government announces we can’t go out anymore for months and we couldn’t buy food anymore?
Husband: Really? Are we there yet?
Wife: Well, I don’t know. But, isn’t it better to be on the safe side and buy some canned food, rice, dog food, water, and some snacks?
Husband: Don’t forget some nuts and chips and popcorn to have around while we are forced to stay home and watch Netflix (Ticker: NFLX) all day?
Wide: Yeh, we should fill up the pantry…
And, that’s how a “pantry-panic-buy” was born…
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
