Global markets plunge as coronavirus crisis rocks Italy

Welcome to Bull Sheet, a no-BS newsletter on what’s moving markets. Today, global finance and investing editor Bernhard Warner discusses the market’s latest swoon, and the stocks Warren Buffett really, really likes. You can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.

Good morning, and greetings from Italy, the new front line in this global health crisis. All indicators are pointing to one of the worst—if not the worst—trading sessions since the coronavirus outbreak first emerged in mid-January, with the Dow and S&P 500 pegged to open down about 2%. I’m seeing a “- 722” handle on Dow futures flash across my screen right now.

What’s moving markets? It’s all coronavirus.

Markets update

The Asian and European markets are deep in the red this morning, as are U.S. futures. The South Korean and Italian markets plunged on Monday as both countries deal with a spike in new infections. Samsung shut down key business operations in the country as the number of cases hit 763.

Here in Italy, the cases are confined to the country’s industrious north, which is triggering all kinds of concerns the stalled economy could plunge into recession in coming quarters. Local authorities, meanwhile, have locked down towns, companies have closed offices in Milan and beyond, and Venice called off carnival festivities. Italy’s main bourse is down 4.4% as I type.

European airlines, travel and leisure and automotive sectors are among the worst performers. Budget airline EasyJet sunk 11.5% in early trading. The benchmark Stoxx Europe 600 Index fell as much as 3.6%, the most since June 2016.

Looking out more broadly, the dollar is soaring, crude is falling and the 30-year U.S. Treasury hit an all-time low as investors flock to safe havens.

We’ll be following the coronavirus fallout all week. But I want to switch gears now to another big piece of news from over the weekend: Warren Buffett‘s annual letter to shareholders.

Buffett’s big bets

At the end of last week, speculation was rife that Warren Buffett would reveal a succession plan as the Berkshire Hathaway CEO nears his 90th birthday. News flash: the greatest stock-picker of his time isn’t going anywhere.

But there was still plenty of news in his annual letter, and in the accompanying 2019 full-year report. I’m going to touch on one: the big changes in Berkshire’s stock portfolio, subject of today’s chart.

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When the buy-and-hold Buffett piles into a company, it’s an enormous vote of confidence for that stock and for its management team. Conversely, when he reduces his holding it’s a warning that the company is on the wrong track.

So, who’s Buffett bullish on?

Let’s start at the top. Berkshire acquired 10.2 million shares of Visa, a stake worth a bit under $2 billion at year-end. Buffett is also long JP Morgan Chase and Bank of America, as the chart above shows. Berkshire increased its JP Morgan Chase holdings by 20% in the past year.

Buffett’s not sold on all his Big Finance bets, however. Berkshire cut back on Goldman Sachs and Wells Fargo, by one-third and nearly one-quarter, respectively. It also sold off some Apple shares.

On most normal days, that kind of news would weigh heavily on those particular stocks. But the coronavirus contagion is the giant gravitational pull on the markets these days. It’s taking everything down with it—even Buffett’s more beloved holdings.

That’s it for me. I’ll see you here tomorrow, everyone. Buona giornata.

Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com