Priced to perfection

FRI, FEB 28, 2020

YOUR AFTERNOON NEWS UPDATE AND MARKET ACTION FROM CNBC

AS OF FRI, FEB 28, 2020 • 05:15 ET

DJIA		25409.36
		-1.39%	-357.28

S&P 500		2954.22
		-0.82%	-24.54

NASDAQ		8567.37
		+0.01%	+0.89

EDITOR'S NOTE

I actually thought the correction would come sooner than this, since the CNN "Fear & Greed" gauge has been warning "Extreme Greed" since the end of last year.

Instead, we got a melt-up. The manic action in stocks like Tesla and Virgin Galactic was indeed a warning that the market overall was getting overbought. I mean for heaven's sake I now follow "pricelesstay" on Instagram (the college girl-turned Tesla daytrader). There was a strange abundance of year-end stories about "here come the Roaring Twenties again." And perhaps the clearest sign of exuberance was the classic contraindicator: Davos. The Davos Plutocrats Warm Up to Trump, was the New York Times headline, saying "Tax cuts and a record stock market speak volumes."

Well, now it's a record for fastest 10% drop from the all-time highs ever.

I think that backdrop is super important for putting this nasty selloff in context. It was overdue. Now, it's arrived. So what's next? Could it get a lot worse before it gets better? Sure. But I think it's always useful to ask yourself: what happens after the bad thing happens? Don't get caught up being scared of a generalized "bad thing." Think it through: what if there's a recession? What if it's just 1% growth? When are you buying, and what?

Does it really make sense to buy Clorox at all-time-highs right now, for example? Everyone I know is stocking up on bleach wipes (which aren't actually how the company recommends killing germs) and such. Might help Clorox now, but my guess is after this no one will need to buy sanitizing supplies for awhile. For years, maybe.

I could be wrong, obviously, but my point is don't just follow the herd. And don't assume everything happening in the market is coronavirus-related, as opposed to a needed readjustment after a strong rally.

And finally, always keep in mind that events like this don't happen in a vacuum: it gets bad enough and authorities start handing out $1,000 cash to people (seriously, Hong Kong is doing it). It's not just "bad thing happens, end of story." What happens if we get a fiscal and/or monetary policy response? Etc.

What a wild week it's been. We'll have the very latest for you, as always, at 1 p.m.

See you then!

Kelly

P.S. Click here to subscribe to The Exchange podcast and never miss a show.

Kelly Evans
Twitter: @KellyCNBC

Instagram: @realkellyevans

KEY STORIES

The Dow just lost 12% in one week. Here's why and what likely happens next

Stocks suffered a historic pullback this week as the coronavirus spread outside of China, spooking investors and traders out of equities.

Trump says the coronavirus is the Democrats' 'new hoax'

President Donald Trump said Friday that Democrats are using the virulent coronavirus as a "hoax" to damage him and his administration.

New coronavirus case in California is 'evidence of community transmission,' county health officials say

The Santa Clara Public Health Department announced a third case of coronavirus in the county possibly transmitted through community spread, which brings the total number of coronavirus cases in California to 10 and the total number of cases in the U.S. to 63.

Coronavirus live updates: China manufacturing shows record contraction, Trump calls outbreak a 'hoax'

U.S. stocks capped their worst week since the financial crisis as coronavirus cases climbed to 83,800 and deaths topped 2,864.

Cramer's week ahead: 'Get ready for another rough day on Monday'

CNBC's Jim Cramer gave a preview of the corporate earnings and economic data that he has circled on his calendar next week.

'This is the time to go shopping,' trader says—here are the tech and energy stocks he recommends

Microsoft, Apple and Chevron look like buys as their stocks fall alongside the broader market, says Bill Baruch, founder and president of Blue Line Capital.

Elliott Management's Paul Singer seeks to replace Twitter CEO Jack Dorsey, source says

Elliott Management founder and billionaire investor Paul SInger is seeking to replace TWitter CEO Jack Dorsey, a person familiar with the matter told CNBC Friday

Tony Romo reaches historic, long-term deal with CBS Sports, source says

Former Dallas Cowboys quarterback Tony Romo agreed to a long-term deal with CBS Sports, a source confirmed to CNBC.

3M ramps up N95 respirator production as demand surges from global coronavirus outbreak

From the streets of Beijing to Milan Fashion Week, people around the world are turning to protective masks and respirators to try and reduce the risk of infection amid the global outbreak of coronavirus.