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Nah, it signals exactly nothing. If there was no Coronavirus, then maybe. With Coronavirus it is just as likely that the economy is going to rebound once the worst of the virus passes. People stopped buying stuff but rest assured, they will make up for it when they finally can.
One year ago, if you had asked me what would happen if we printed $4T+ (that's 20% of GDP for perspective) out of thin air and injected it into the economy, I would've told you massive hyperinflation and immediate collapse of the dollar. Instead, we see the US Dollar Index strengthening over the last 6 months [1]. The dominance of the United States as a global hegemonic superpower truly cannot be overstated; I'm in a…
This policy does cause real suffering, and some would argue never really normalised the economy or led to growth for most of the economy.
Nah, it signals exactly nothing. If there was no Coronavirus, then maybe. With Coronavirus it is just as likely that the economy is going to rebound once the worst of the virus passes. People stopped buying stuff but rest assured, they will make up for it when they finally can.
Apart from the people who were laid off, or spent their savings because they had no income, or lost their businesses because they couldn't pay their debts, or ... well, it's a long list.
People who think the world is just on pause and everything will bounce back to normal in a few months need to look outside of their filter bubbles.
Given that that Jan and Feb seemed largely fine, the rate of decline in March was probably around 3x the quarter's headline figure -- call it -15%, give or take. April was much worse, without a doubt. Anything between a -25% and -50% GDP decline seems possible for April.
Earlier quoted context omitted.
In this market good news is neutral and bad news is good.
There's a mistaken belief on WSB and elsewhere that bad news should make stocks go down. Stocks go up when the market thinks they'll be more valuable in the future, that's all there is to it. The cash will flow into the assets that provide the greatest returns, and right now that's stocks. Since treasuries provide almost no return, and corporate bonds are at high risk of default, the money will move into stocks becau…
The fact that treasuries are providing no return tells you that most money is invested there "safely".
The problem of course is that the USG should be making sure small companies don't fail, because that's the actual driver of the economy both for employment and consumption.
I wish I could say I disagree, but to be perfectly honest, I was fully expecting a recession last year. As someone may have already mentioned though, between FED basically keeping the market afloat, stimulus working its way through the economy and dollar still riding as a safe haven, it is not that surprising that US economy did not crash, while a good chunk of population is at home and out of commission. The thing t…
Why?
I understand that the economy and the market are different but I'm so confused. The S&P is up ~12% this month, despite massive unemployment, a shrinking economy, and serious long-term questions about the outlook. Is most of the 12% just market speculation that the virus issue will pass without a long-term earnings hit?
Given that that Jan and Feb seemed largely fine, the rate of decline in March was probably around 3x the quarter's headline figure -- call it -15%, give or take. April was much worse, without a doubt. Anything between a -25% and -50% GDP decline seems possible for April.
Nah, it signals exactly nothing. If there was no Coronavirus, then maybe. With Coronavirus it is just as likely that the economy is going to rebound once the worst of the virus passes. People stopped buying stuff but rest assured, they will make up for it when they finally can.
Maybe pump up the economy with trillions of dollars in credit but doesn't this sound like a bubble waiting to pop?
I understand that the economy and the market are different but I'm so confused. The S&P is up ~12% this month, despite massive unemployment, a shrinking economy, and serious long-term questions about the outlook. Is most of the 12% just market speculation that the virus issue will pass without a long-term earnings hit?
It is a bet on the continued support of the market by the Fed. If you're interested in preserving purchasing power 15 years from now, would you rather hold dollars or things today? As a value investor, all of my theses were blown out of the water by the unprecedented Fed intervention. It is an environment in which the fundamentals are uncertain. I'm standing pat and waiting for things to make sense before moving agai…