Taming the Bull

Global markets are mixed and Goldman sees a good chance of a correction

The Express | Insight Before the Bell By Caleb Silver, Editor in Chief & Deborah D'Souza, News Editor  Thursday's Headlines 1. Global markets are mixed day after U.S. record highs 2. Britain hit the high streets in January 3. Goldman thinks a market correction is probable 4. Virgin Galactic's wild ride     Markets Today Global markets are much less buoyant today even as the daily number of new cases of novel coronavirus in China fell for the third straight day. Chinese stocks rose around 2% on the central bank cutting the one-year and five-year loan prime rates. The Japanese yen has been sliding against the dollar amid recession worries and coronavirus fears and analysts are wondering if it can regain its safe haven status. U.S. futures are slightly lower after both the S&P 500 and Nasdaq closed at record highs on Wednesday. On the data front today, we'll see U.S. jobless claims and the Philadelphia Fed Report.    Google Trends data shows more people than ever are looking up Michael Bloomberg's net worth after last night's explosive Democratic debate. FYI Forbes says it's $64.2 billion.    Headlines: Norwegian Cruise Line, the world's third-largest cruise company, beat earnings and revenue estimates. The known direct impact of the coronavirus outbreak to full year 2020 adjusted EPS is expected to be approximately $0.75. It includes customer incentive compensation and 40 canceled, modified or redeployed Asia voyages. U.K. retail volumes rebounded by 0.9% in January 2020 after falling the previous two months. The amount spent rose 1.2% from December. Categories that saw the biggest increases in sales volumes were textile, clothing and footwear stores and foodstuffs. Fuel purchases dropped 5.7% as the price rose 2.3 pence per liter. UBS, the world's largest wealth manager, has tapped Ralph Hamers as its next CEO starting November 1. Hamers is the chief executive of ING Group and will be replacing Sergio P. Ermotti who served for nine years. During Ermotti's tenure, the 105-year-old bank's tangible book value has grown 6% annually.  L Brands is nearing a deal to sell control of Victoria's Secret to Sycamore Partners, according to a Wall Street Journal report. The deal, which values the struggling lingerie brand at $1.1 billion, would give the private equity firm a 55% stake and L Brand a 45% stake. Sycamore Partners is expected to take the business private. LB shares are around 10% lower this morning. A new polymer 20 pound currency note has entered circulation in Britain. Featuring a portrait of artist JMW Turner (1775 - 1851) and his painting The Fighting Temeraire, it has two see-through windows and a two color foil which make it very difficult to counterfeit, according to the Bank of England.      Image Courtesy: Bank of England         SPONSORED BY SMARTASSET Financial Advisor Mistakes to Avoid Choosing a financial advisor is a major decision that can determine your financial trajectory for years to come. SmartAsset offers tips on common mistakes to avoid. Learn More »           The Big Story Goldman Issues Correction Warning The U.S. stock market has surged despite the situation in China, but Goldman Sachs warned that investors may be over-optimistic.   "We believe the greater risk is that the impact of the coronavirus on earnings may well be underestimated in current stock prices, suggesting that the risks of a correction are high," wrote analyst Peter Oppenheimer in a note published yesterday. "Equity markets are looking increasingly exposed to near-term downward surprises to earnings growth."   Oppenheimer added that while a sustained bear market does not look likely, a near-term correction is looking much more probable. A correction is a decline of 10% or greater in the price of a security from its most recent peak, while a bear market is a decline of 20%.   According to the latest BofA Fund Manager Survey, investor sentiment is less bullish in February than last month. However, Michael Hartnett, chief investment strategist at BofA, said investors are still "irrationally bullish."   Read more: 6 Common Portfolio Protection Strategies     Image Courtesy: The New Yorker/Virgin Galactic The Big Number: 223.38% Speaking of bull, that's how much shares in Richard Branson's Virgin Galactic have risen so far this year. To put it in perspective, stock darling Tesla has managed a comparatively paltry 119.31%. The aerospace company promised to take anyone willing to pay $250,000 for a ticket into space and now has a market cap of over $7 billion. Pre-market trading suggests the stock isn't ready to blast off once again today.   What's behind this rise? No one knows for sure, but on Feb. 13 the company announced it had completed a vital step on its path to commercial service. Spaceship VSS Unity successfully landed at the headquarters in New Mexico from the manufacturing facilities in California.    The experts at S3 Partners say what we're witnessing isn't a short squeeze, but the stock is definitely a candidate for one if the parabolic rally continues. Short sellers have been piling into SPCE – shares shorted have increased by 3 million over the last month and 857,000 over the last week. They've lost $257 million in 2020 and the fee to borrow shares has risen from 6.79% to 11.83% over the last month. Stock loan availability is also low. "Once we see shorts covering there may be a race for the exits as the buys-to-cover become a second stage to SPCE's rally," said Managing Director of Predictive Analytics Ihor Dusaniwsky in the note.   Read more: Investing vs. Speculating: What's the Difference?     More coverage: Cannabis Stocks Appear Ready to Test Recent Highs Here's why cannabis stocks may have bottomed out. Gain exposure through these two leading pot companies or a marijuana-themed ETF. Read Now »   Charts Suggest Small-Cap Value Stocks Are Headed Higher This article looks at how traders could position themselves to profit from a likely move higher in small-cap value stocks. Read Now »   Wingstop Investors Hit the Exits After Profit Shortfall Wingstop stock has sold off more than 5% in Wednesday's pre-market after the company missed profit estimates by a wide margin. Read Now »   Gold Trades Above $1,600 for the First Time Since 2013 Gold futures and the gold fund have rallied to seven-year highs in reaction to a dovish Fed and the coronavirus outbreak. Read Now »   How can we improve The Express? Tell us at theexpress@investopedia.com Enjoy The Express?  Copy and share the link below to invite friends to sign up: https://link.investopedia.com/join/53o/00-fwd-theexpress CONNECT WITH INVESTOPEDIA Email sent to:  geezers.mail@gmail.com. To view online click here . To update your newsletter preferences or unsubscribe, click here.   114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC. All Rights Reserved | Privacy Policy