BVA Value Momentum Portfolio Strategy - Year-to-Date Performance as of February 29, 2020:

BVA Value Momentum Portfolio Strategy - Year-to-Date Performance as of February 29, 2020:

Year-to-date, the BVA Value Momentum Portfolio Strategy return is up 35.41% compared to a decline of 8.44% for the Morningstar US Market Index.

Since the start of the portfolio on January 2, 2019, the BVA Value Momentum Portfolio Strategy return is up 190.76% compared to an increase of 15.17% for the Morningstar US Market Index.

The stocks on the strategy list currently have a price to fair value of .75.

During February 11 stocks were forced out of the Portfolio due to a loss of momentum, as a result of the significant market decline. The decline was so broad based that I found no individual stocks meeting my criteria, to replace those which were forced out. Presently I find the most attractive opportunities in Volatility and Inverse ETFs (Exchange-Traded Funds). These investment vehicles were used in February to replace the stocks which were forced out of the Portfolio.

Market and Economic Commentary - Week Ending 02/29/2020

U.S. Stocks Tumble 11% in Worst Week Since the 2008 Financial Crisis:

The spread of the coronavirus rattled global financial markets, sending U.S. stocks to their worst week since the financial crisis more than a decade ago. Demand spiked for the safety of U.S. Treasuries.

The S&P 500 plunged 11% in the five days and the Dow Jones Industrial Average careened to the lowest since June, wiping out almost $3 trillion in value from American equities. U.S. Treasuires surged, pushing yields on the 10- and 30-year notes to record lows during the period. Oil plunged toward $45 a barrel in its biggest weekly rout since 2008.

The Markets got a boost Friday when Federal Reserve Chairman Jerome Powell said the central bank is monitoring the virus and will act as appropriate, adding that the “fundamentals of the economy remain strong.”

The S&P 500 fell 0.8% Friday, rallying back in the final 15 minutes of trading from losses that topped 3%. The index still dropped for a seventh day, its longest slide since 2016. The CBOE Volatility Index hit the highest in two years. The Nasdaq indexes ended higher.

U.S. equity markets shuddered as the World Health Organization raised its global risk level for the virus and a White House official suggested some schools could close. More major companies warned that disruptions could upend sales and profit forecasts. Germany said it will intensify border checks and Switzerland banned large events. Iran and South Korea revealed more infections while the first cases appeared in Mexico and Nigeria, Africa’s most populous country.

Downgrades to the global outlook keep rolling in and money markets now see three Federal Reserve interest-rate cuts this year.

Returns in the Markets for the week ending 02/29/2020 were as follows:

US Major Market Indexes (The first number is each category is the 1-week performance. The second number is the year-to-date performance)

Dow Jones 30 Industrial Average (-12.36%. -10.96%). S&P 500 (-11.40%, -8.56%). NASDAQ Index (-10.54%, -4.52%). US Small-Cap Index (-12.17%, -11.64%). CBOE Volatility Index, or Fear Gage, (+134.84%, +191.07%).

US Sector ETFs

Communication Services (-9.55%, -5.35%). Consumer Discretionary (-11.11%, -7.65%). Consumer Staples (-10.30%, -7.92%). Energy (-16.38%, -24.60%). Financial (-13.58%, -13.61%). Health Care (-10.46%, -9.08%). Industrials (-12.57%, -10.30%). Materials (-12.63%, -14.16%). Real Estate (-12.26%, -4.86%). Technology (-11.13%, -3.60%). Utilities (-11.59%, -3.78%).

Global Market ETFs

ACWI all-country World index (-10.08%, +8.82%). ACWX all-country World index ex US (-8.09%, -9.85%). AAXJ all-country Asia ex Japan (-4.38%, -7.02%). EWJ Japan (-6.48%, -10.60%). EZU Eurozone (-9.68%, -10.57%). ILF Latin America 40 Index (-9.95%, -17.63%). EEM Emerging Markets (-6.40%, -9.69%).

Commodities ETFs

DBC Commodity Tracking Index (-7.92%, -11.67%). DBA Commodities Agriculture (-4.51%, -7.91%). USO United States Oil (-15.32%, -26.23%). DBB Base Metals (-2.56%, -8.37%). IAU Gold (-4.87% +3.93%). BDRY Dry Bulk Shipping (-9.10%, -46.99%).

Bond Market In the bond market, the 10-year US Treasury interest rate went from 1.473 on February 21, to 1.163 on February 28, for a 21.05% decline on the week.

Currencies

In currencies, the US Dollar DXY Index went from 99.188 on February 21 to 98.081 on February 28.

Other Significant Events

Week Ahead

Investors will continue to assess the impact of coronavirus on the global economy next week, while the US Democratic primaries and the UK-EU trade negotiations will also dominate the news. Meanwhile, central banks in Australia, Malaysia and Canada will be deciding on interest rates, while important data to follow include the US jobs report, ISM PMI and trade balance; China foreign trade and Markit PMI; Germany factory orders; Japan consumer morale; and Australia Q4 GDP and trade.

China Services PMI Falls to Lowest on Record: NBS

The Official NBS Non-Manufacturing PMI in China tumbled to a record low of 29.6 in February 2020 from 54.1 in the prior month, amid mounting fears over the spread of COVID-19 cases that led to quarantine measures and travel restrictions. Both new orders (26.5 vs 50.6 in January) and overseas sales (26.8 vs 48.4) plummeted, while employment shrank much faster (37.9 vs 48.6). In terms of prices, input cost fell sharply (49.3 vs 53.3), with output charges slumping (43.9 vs 50.5). Finally, confidence plunged (40.0 vs 59.6).

China Manufacturing Shrinks at Record Pace: NBS

The Official NBS Manufacturing PMI in China plunged to a record low of 35.7 in February 2020 from 50.0 in the previous month and missing market expectations of 46, amid rapid spread of the coronavirus outbreak that disrupted the country's supply chain. Output (27.8 vs 51.3 in January), new orders (29.3 vs 51.4) and new export orders (28.7 vs 48.7) all slumped. Also, buying levels plummeted (29.3 vs 51.6) and employment contracted much steeper (31.8 vs 47.5). On the price front, input price inflation slowed (51.4 vs 53.8), while selling price dropped much steeper (44.3 vs 49.0). Looking ahead, business sentiment deteriorated sharply (41.8 vs 57.9).

European Stocks Drop Over 12% on the Week

European stocks fell further into correction territory on Friday with Stoxx 600 closing down 12.7% on the week, the most since October 2008 amid coronavirus fears. The DAX 30 slid 3.9% to 11,890, its lowest close since August; the FTSE 100 dropped 3.2% to 6,581, its lowest since July 2016 and the FTSE MIB tumbled 3.6% to 21,984, the lowest close since October. The CAC 40 lost 3.4% to 5,3910 and the IBEX 35 declined 2.9% to 8,723, both reaching the lowest level since August. For the week, the DAX 30 led losses (-12.4%), followed by the IBEX 35 (-12.1%); the CAC 40 (-11.9%), the FTSE MIB (-11.3%) and the FTSE 100 (-11.1%). In February, the FTSE 100 lost 9.7%; followed by the CAC 40 (-8.5%); the DAX 30 (-8.4%); the IBEX 35 (-7.2%) and the FTSE MIB (-5.4%).

UK FTSE 100 Suffers Worst Week Since 2008

The FTSE 100 plunged 216 points or 3.2% to finish at 6,581 Friday, its lowest level since July 2016. Considering full week, the index was down more than 11%, the worst weekly performance since October 2008 when it fell 21% due to the global financial crisis. The FTSE 250 index of medium-sized UK companies dropped 2.3% on the day and 11% on the week.

Japanese Stocks Post Worst Week in 4 Years

Japan's Nikkei 225 slumped 805 points or 3.7% to 21,143 on Friday, amid mounting fears over the worldwide spread of the COVID-19 cases, with the WHO warning that the global outbreak now reached a decisive points and had a pandemic potential. Prime Minister Shinzo Abe announced on Thursday that the government asked schools to close from Monday next week until the end of spring vacation, typically in early April. On the economic data front, Japan retail sales fell 0.4% yoy in January, the fourth straight month of drop. All sectors in the Nikkei index sank between 2 to 4%. For the week, the index plunged 9.6%, the worst week in 4 years.

Thank you and please stay tuned for more upcoming reports.

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Len Martinez is a Financial Consultant. Information in the "Bull Valley Advisor” newsletter should not be considered as investment advice or an offer to buy or sell securities. Data is derived from sources considered to be reliable including Morningstar, StockCharts.com, YAHOO Finance, FINVIZ, TipRanks, Investing.com, ECRI, OCED, gurufocus, Crestmont Research, Trading Economics and S2O. Results are not guaranteed. Len Martinez is not an RIA. The data is shown for informational purposes and should not be considered investment advice or an offer to buy or sell securities.