Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Trading halted as U.S. stocks plummet

axios.com

Post reply on HN
Print view View original

51–60 of 1001 posts

Re: Trading halted as U.S. stocks plummet

#51

Post by jurassic »

cm2187 wrote: post #23
aazaa wrote: post #10

This will be blamed on COVID-19, but the problems go much deeper. Last year the Fed lost control of the repo market. the event was widely discounted at the time as an end-of-tax-year fluke. It wasn't. Six month ago, the yield curve inverted. People who should have known better said "this time is different." Speculators have been trained over the course of 10+ years to buy the dip. The Fed has your back. What we're se…

I kind of think that the Fed will not let this go too far in the middle of an election year, particularly given Trump. But yeah, the market was clearly overextended, and stock price growth was accelerating.

It's really not up to the Fed; they had an emergency rate cut last week and it was just a minor blip on the overall downward slide. This is a demand-driven crisis, not a liquidity crisis or credit crunch like 2008. Monetary policy isn't going to get you very far this time.

Re: Trading halted as U.S. stocks plummet

#52

Post by rtkwe »

aswanson wrote: post #39
aazaa wrote: post #10

This will be blamed on COVID-19, but the problems go much deeper. Last year the Fed lost control of the repo market. the event was widely discounted at the time as an end-of-tax-year fluke. It wasn't. Six month ago, the yield curve inverted. People who should have known better said "this time is different." Speculators have been trained over the course of 10+ years to buy the dip. The Fed has your back. What we're se…

Correction is way overdue. Problem is, Fed has no ammo left with interest rates at near zero. We're in for rough days, people.

Only if restricted to the relatively arms length levers like interest rates. There's still plenty of room for more drastic measures like buying stock directly in companies like Japan has done or huge prop ups like a new WPA.

Re: Trading halted as U.S. stocks plummet

#54

Post by sebastianconcpt »

I wonder how different things would be if instead of those stepped halts, a super high granular delay is injected into the system. Like instead of halting, making it go on but in "slow-motion". And depending on the strength of the drop, the slow-motion factor to inject in the system.

I say this because halting tries to "cool down" emotion but it still "feels like" panic while making it all go slow would "feel kind of crappy yet normal" hence "buying" time to cool things down while still working.

Wouldn't that reward going up and penalize/protect going down?

Re: Trading halted as U.S. stocks plummet

#55

Post by throw0101a »

whatshisface wrote: post #21
aazaa wrote: post #10

This will be blamed on COVID-19, but the problems go much deeper. Last year the Fed lost control of the repo market. the event was widely discounted at the time as an end-of-tax-year fluke. It wasn't. Six month ago, the yield curve inverted. People who should have known better said "this time is different." Speculators have been trained over the course of 10+ years to buy the dip. The Fed has your back. What we're se…

> Six month ago, the yield curve inverted. People who should have known better said "this time is different." How does your story jive with the fact that the yield curves went back to normal? Either they are an indicator or they aren't.

> Either they are an indicator or they aren't.

Because:

* https://yourlogicalfallacyis.com/black-or-white

The link is statistical and not causal:

> Shortly after 6 a.m. ET on Wednesday, the yield on the 10-year U.S. Treasury bond dipped below the yield on the 2-year U.S. Treasury as the 10-year fell 1 basis point below the 2-year. The yield curve inversion has a strong track record of predicting a recession; each of the last seven recessions (dating back to 1969) were preceded by the 10-year falling below the 2-year.

* https://finance.yahoo.com/news/yield-curve-inverts-for-first...

Bond rates are like a thermometer or barometer. So the fact that (economic) storm clouds are gathering are not caused by the measuring instrument (bond rates), but rather the metric is reading the (business) atmosphere.

Re: Trading halted as U.S. stocks plummet

#56

Post by adventured »

aswanson wrote: post #39
aazaa wrote: post #10

This will be blamed on COVID-19, but the problems go much deeper. Last year the Fed lost control of the repo market. the event was widely discounted at the time as an end-of-tax-year fluke. It wasn't. Six month ago, the yield curve inverted. People who should have known better said "this time is different." Speculators have been trained over the course of 10+ years to buy the dip. The Fed has your back. What we're se…

Correction is way overdue. Problem is, Fed has no ammo left with interest rates at near zero. We're in for rough days, people.

The Fed has as much ammo as there is wealth held in dollars. Which is to say, a lot.

First, there is negative rates. Punishing people for holding cash. The ECB and Bank of Japan have done a lot of pioneering work there, the Fed will have already extensively studied what they did, what worked, what didn't work.

Second, they have QE, monetizing debt & debasing dollar wealth, which is exactly what they'll unleash for the next recession. Inflation isn't much of a concern right now, so they'll feel free to 'print' rather wildly.

Annual budget deficits will blowout, probably up to $2 trillion or more, with the next recession, so the Fed will have to print dramatically to fund that regardless.

Re: Trading halted as U.S. stocks plummet

#57

Post by rwmj »

throwaway3157 wrote: post #5

For those unaware, this is common practice -- it a control that is working as intended. The trading was halted for 15 minutes

Isn't this bad for price discovery? I mean, if stocks go down X% that's good for people who want to buy stocks cheaply and/or discover the true price.

Re: Trading halted as U.S. stocks plummet

#58

Post by aaronblohowiak »

aswanson wrote: post #39
aazaa wrote: post #10

This will be blamed on COVID-19, but the problems go much deeper. Last year the Fed lost control of the repo market. the event was widely discounted at the time as an end-of-tax-year fluke. It wasn't. Six month ago, the yield curve inverted. People who should have known better said "this time is different." Speculators have been trained over the course of 10+ years to buy the dip. The Fed has your back. What we're se…

Correction is way overdue. Problem is, Fed has no ammo left with interest rates at near zero. We're in for rough days, people.

The yield on the 10 year... Now is the perfect time to finance a bunch of govt spending (not that I expect this admin to embrace fiscal policy)

Re: Trading halted as U.S. stocks plummet

#59

Post by snarf21 »

aazaa wrote: post #10

This will be blamed on COVID-19, but the problems go much deeper. Last year the Fed lost control of the repo market. the event was widely discounted at the time as an end-of-tax-year fluke. It wasn't. Six month ago, the yield curve inverted. People who should have known better said "this time is different." Speculators have been trained over the course of 10+ years to buy the dip. The Fed has your back. What we're se…

You are correct. Equities have been propped up by free money for too long. I thought we would have to wait until the election to trigger this correction but better sooner than later. However, the Fed needs to raise rates and we need fiscal policy to fix this, not monetary. There is still too much money out there with nowhere to go. A ton of that money is going to come right back in and run it back up some. At least they are buying the dip even if earnings will crater.
Post reply on HN