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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

#101

Post by SamBam »

JKCalhoun wrote: post #63
hn_throwaway_99 wrote: post #17

Earlier quoted context omitted.

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…

> 1. People keep saying about the market being up recently So, down 10% from the previous bubble. > 2. S&P is heavily weighted towards the strongest companies Good point. Dow is also up almost as much though. > 3. The market is always very forward looking. I may be cynical, but I see perhaps 2 to 3 years to regain the jobs we are losing, to see the employment rate return to earlier levels. That's years of depressed s…

> So the market is looking to, what, 2025 or something?

Sure. People are basically betting that stock prices are cheap right now, and if they hold onto them for a few years they'll be back to where they were.

Look at the 2008 recession. If you bought then you'd be doing very well.

They're basically betting that the worst has already been priced-in. In a sense, they're probably betting that we won't get a totally calamitous re-opening of the shutdown, or a totally calamitous fall and winter next year. But, in any case, most people adhere to the idea that stock prices always go up eventually, and therefore they buy accordingly.

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

#102

Post by chefandy »

KirinDave wrote: post #83
hn_throwaway_99 wrote: post #17

Earlier quoted context omitted.

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).

https://www.theverge.com/2020/4/28/21239516/npd-consumer-spe...

"Sales of monitors increased by 73 percent compared to last year, PCs were up 53 percent, printers were up by 61 percent, and microphones were up by a massive 147 percent. Chromebook sales are also reportedly seeing triple-digit sales increases, which makes sense given how popular they are in classrooms.

Underpinning all this tech is a 70 percent increase in the sale of networking equipment. Although not detailed in Baker’s tweets, we’ve also seen a shortage of webcams, leading to skyrocketing prices."

It does look like some businesses besides medical equipment manufacturers have benefited. I'd be shocked if other things like sewing machines haven't seen huge growth in sales, also.

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

#103

Post by asah »

lisper wrote: post #97
ganeshkrishnan wrote: post #88

Earlier quoted context omitted.

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

Have you looked at the Fed's balance sheet lately? It is quite literally off the charts. https://www.federalreserve.gov/monetarypolicy/bst_recenttren... It is no harder to inflate the dollar than any other currency. Print enough of them, and the their price will go down. It's no different from any other commodity.

serious q: down relative to what other currency or asset? gold? bitcoin? real estate?

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

#104

Post by grey-area »

lmilcin wrote: post #34

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.

If global lockdowns were only for around 1 month, the world would probably bounce back with minimal impact.

If as looks likely they trail on for months, the second order effects will mean that unemployment and misery spread from industries like travel to every other industry (for example no airlines means no advertising on travel, which means Google takes a huge hit on profits Q2, which means they freeze acquisitions, which means funds are reluctant to invest in startups as there are no exits, which means startups in every industry stop advertising, which means Google suffers more).

So recovery may not be quick unfortunately, even well after Coronavirus is mostly over.

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

#105

Post by mancerayder »

grey-area wrote: post #42
nakedshorts wrote: post #33

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…

Bear in mind every other country in the world is also practicing competitive devaluation (hence USD relatively unchanged), and the unrest over global inflation post the 2008 binge of QE led to wars and revolutions across North Africa and the middle east. This policy does cause real suffering, and some would argue never really normalised the economy or led to growth for most of the economy.

Bear in mind every other country in the world is also practicing competitive devaluation (hence USD relatively unchanged), and the unrest over global inflation post the 2008 binge of QE led to wars and revolutions across North Africa and the middle east.

I'd love to read about the thesis/explanation you just outlined. Do you have a link or two on the specific topic of competitive devaluation v inflationary challenges and the global conflicts?

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

#106

Post by sseagull »

nutjob2 wrote: post #65
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?

It's a bear rally. This is the most optimistic market participants (bulls) buying at low prices and creating momentum that others follow. Waiting for them at higher prices are the pessimists (bears) ready to sell into the rally. Since there really hasn't been a capitulation, where everyone who would ever sell actually sold, it's likely the bears are still in control. I think some people are mistaking the extreme vola…

> Since there really hasn't been a capitulation, where everyone who would ever sell actually sold, it's likely the bears are still in control.

I have heard this before, but I am having trouble feeling this. How do you determine capitulation? We had several days where trading was halted for a time due to steep losses, and 3/16 was the second biggest percentage loss in history (for the Dow at least).

If that isn't capitulation, what is? Hitting the 20% circuit breaker a few days in a row? Only in 1987 has the market fallen more than 20% in a day.

One reason I think the market is rising is because "everyone who would ever sell actually sold". Therefore, only the eternal optimists are left; the pessimists are sitting this one out.

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

#107

Post by ganeshkrishnan »

nakedshorts wrote: post #33

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…

Printing money hasn't caused inflation since world war 1 and that's because the demand for USD is virtually unlimited. As long as the money printed comes back to the government as taxes, it's not an issue. Else it becomes a deficit. This was already theorized by modern money mechanics and this incident is proving it right

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

#108

Post by kgwgk »

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…

> 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.

It's also at the same level as one year ago. The economic situation, and outlook, is surely worse than one year ago? What has improved is the Fed inclination to make it true that stonks can only go up.

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

#109

Post by vikramkr »

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?

This month has been pretty good news for the economy. Vaccines entering trials, states passing the peak of infection, potential positive news with treatments, large amounts of government intervention indicating that the government and the fed are very focused on putting a floor on the economy, bernie sanders suspending his campaign, lowering how much influence he can have on the democratic platform, and so on and so forth. All things the market likes.

also, even if there is a decrease in earnings, interest rates are also lower, making stocks more attractive.

The market is still down from overall highs. We're not as far down as we were since we don't think it's going to be as bad anymore as we had feared. For 500 large cap stocks listed on US stock exchanges, perhaps about 12% better.

Also, in any recession situation, there's very high volatility. The days with highest stock gains tend to occur right before and during recessions. Even if there's a net downward trend, we'd expect things to be swinging all over the place as people keep overcompensating to the daily news

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

#110

Post by milesskorpen »

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…

Google and Facebook definitely are not being helped right now. Advertising is drying up.
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