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U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

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Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#81

Post by tryptophan »

hobbescotch wrote: post #12
iambateman wrote: post #4

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?

AFAIK stocks are up due to the announcements that the lock downs will be ending. However, the surge seems rather short sighted: you can coax stores into reopening, but you can’t force people to go out and shop in them like they used to.

I don't think many people, including me, will need much if any coaxing at all.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#83

Post by KirinDave »

hn_throwaway_99 wrote: post #17
iambateman wrote: post #4

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?

3 things: 1. People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year. 2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies. 3. The market…

On #2: No one is helped except perhaps medical supply companies. Folks are mistaking the durability of these companies in the face of SIP orders (due to their ability to function under WFH conditions).

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#85

Post by bachmeier »

hn_throwaway_99 wrote: post #17
iambateman wrote: post #4

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?

3 things: 1. People keep saying about the market being up recently, but skip the part about it still being down about 10% since the start of the year. 2. S&P is heavily weighted towards the strongest companies. Amazon, Apple, Facebook, Microsoft and Google account for 20% of S&P market cap. Most of those companies have been helped by the pandemic, or at least not hurt nearly as bad as smaller companies. 3. The market…

4. Government policy, both current and expected future.

I want to add emphasis on (2). The effects are not spread out uniformly across all businesses. The hard hit businesses including restaurants, bars, and hair and nail salons have seen almost all of their business evaporate. You're not going to find the corner nail salon in the S&P 500.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#86

Post by cwhiz »

iambateman wrote: post #4

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?

The S&P is a reflection of where traders are betting things will go. It is not a reflection of the economic reality at that moment in time. It's also down 10% YTD which is fairly substantial.

More important than anything though is that the market right now is absolutely rigged. It's not just irrational and forward looking, it is completely rigged. Central banks all over the world are directly propping up the market up. The market has never been more of a ponzi scheme for the rich than this exact moment in time.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#88

Post by ganeshkrishnan »

lisper wrote: post #70
steveeq1 wrote: post #57

Earlier quoted context omitted.

Better explanation: the fed is buying securities.

This. What you're seeing is the beginning of a massive currency inflation.

It's very hard to have currency based inflation especially for USD which is in very high demand.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#89

Post by JKCalhoun »

hobbescotch wrote: post #12
iambateman wrote: post #4

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?

AFAIK stocks are up due to the announcements that the lock downs will be ending. However, the surge seems rather short sighted: you can coax stores into reopening, but you can’t force people to go out and shop in them like they used to.

Worse, there are a lot more unemployed now who won't be shopping at all.

Re: U.S. Economy Shrinks at 4.8% Pace, Signaling Start of Recession

#90

Post by jariel »

freeone3000 wrote: post #9
iambateman wrote: post #4

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?

Stock market is essentially a sentiment graph. There's no need for it to be linked to any underlying useful metric - it's entirely likely people are investing in stocks simply because all other investments are worse.

Obviously sentiment is a factor, but there are a million analysts with very complicated and dense spreadsheets trying to include every single detail to come up with their forecasts. It's nut just instinct.
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