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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

#141

Post by Red_Leaves_Flyy »

bachmeier wrote: post #85
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…

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.

These four main points all point towards a looming consolidation in the hardest hit industries. As many companies go bust their assets will be auctioned for pennies and purchased by the big names in those industries, or new competitors diversifying their portfolios into an industry they otherwise couldn't afford to compete in or break into.

I'm not without hope, but I fear we're going to see a lot of otherwise great businesses (breweries, bakers, barbers, spas, bars, restaurants, etc) go under and not get replaced by businesses of the same caliber anytime soon. If my barber closes I'll keep cutting my own hair. Same with my favorite local bakeries, restaurants, breweries, etc. I certainly won't start eating Applebee's microwave dinners and sugarritas just because they're the only joint in town.

I've diverted a significant portion of my savings due to this pandemic towards my retirement, but that actually has a small deleterious effect on my local economy as it is not strongly exposed to greater market forces as I'm reducing the volatility of money in my locus. I'm sure that I am not be the only one making choices like this.

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

#142

Post by jhallenworld »

Kye wrote: post #8
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 list of companies on it should give you an idea: https://en.wikipedia.org/wiki/List_of_S%26P_500_companies It's mostly companies that do well in any market or have a habit of surviving massive market disruptions. Sort by founded date. Almost all of them are 2000 or older.

To add to this: even within the S&P-500, the better ones seem to do much better than the average ones, so the NASDAQ-100 outperforms the S&P-500.

As an investor: Very happy with my "QQQ" (NASDAQ-100 ETF) investment, but my more diverse retirement portfolio is nowhere near as good. I have recently been buying hard hit stocks that I think will survive over the long term: Disney, Marriott..

As an employee: well, the trick is to remain employed.

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

#143

Post by claydavisss »

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…

If markets were truly forward looking and near-omniscient, the dip to 18k would never have happened, because the far-looking and omniscient market would know that eventually covid and its impacts would be addressed.

Reality: the market is a 48-hour sentiment guess

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

#145

Post by aphextron »

nimbius wrote: post #98

This is anecdotal and it might come across as bitter and tonedeaf as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores. the fact that ANY market is completely detached from whats actually happening to Americans is frustrating. My job just cut benefits and hours but we're "essential." Remembe…

> No school means poor kids roam the street like packs of feral dogs asking for money for food around here.

I think this is possibly the single biggest long term problem we're going to face as a result of all this. Economic recessions will come and go. But missing 5/8ths of a school year is going to be absolutely devastating for this generation of kids. They will be left permanently behind without a serious concerted effort by every school district to make up for lost time. The bar (which is already dismally low) will have to be lowered further for them to graduate, and how/when will it ever be raised back again?

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

#146

Post by pravda »

JKCalhoun wrote: post #32
adrr wrote: post #21

Earlier quoted context omitted.

Fed is printing money and it needs to go somewhere. They are buying everyone’s distressed assets including dumping money into junk bond etfs.

Stock market is going up because it's going up. Wait 'til the music starts and there's a scramble for seats.

>Wait 'til the music starts and there's a scramble for seats.

You meant 'stops'.

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

#147

Post by spaceribs »

dudul wrote: post #112
nimbius wrote: post #98

This is anecdotal and it might come across as bitter and tonedeaf as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores. the fact that ANY market is completely detached from whats actually happening to Americans is frustrating. My job just cut benefits and hours but we're "essential." Remembe…

And this post is why I get so infuriated when I see all the blue-checkmarks on Twitter, calling people who want to go back to work "Selfish, stupid, idiot, etc". People don't want lockdown to stop because they need to go to their hairdresser, or because they need to go hangout at the pub, or whatever idiotic reason these privilege a-holes put in their tweets. People want to get back to work , because they need money…

blaming "Blue Checkmarks" for the fact that people are being victimized by capitalism during a pandemic makes me sick to my stomach. What a hopeless year this has been.

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

#148

Post by MattGaiser »

nimbius wrote: post #98

This is anecdotal and it might come across as bitter and tonedeaf as someone who is not in a STEM job and cant see the bigger picture very well. Im a diesel engine tech who repairs those big trucks carrying food and shit tickets to grocery stores. the fact that ANY market is completely detached from whats actually happening to Americans is frustrating. My job just cut benefits and hours but we're "essential." Remembe…

> Ive counted 2 furniture stores, a consignment shop, a few barber shops, and half the god damn bars

Retail like that is very underrepresented in the stock market, so those losses wouldn't be reflected.

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

#149

Post by Filligree »

res0nat0r wrote: post #120
dudul wrote: post #112

Earlier quoted context omitted.

And this post is why I get so infuriated when I see all the blue-checkmarks on Twitter, calling people who want to go back to work "Selfish, stupid, idiot, etc". People don't want lockdown to stop because they need to go to their hairdresser, or because they need to go hangout at the pub, or whatever idiotic reason these privilege a-holes put in their tweets. People want to get back to work , because they need money…

I understand their thinking because not working is causing a massive amount of collateral damage, but the virus doesn't care about any of that. If everyone goes back to normal too early, this all just starts over, and folks are forced to be inside even longer, there's just no way around it.

80-90% of people who catch this disease would survive without treatment. If America won't support people who might die of starvation when stuck at home, then the individually smartest response becomes to take their chance with the virus.

I don't need to explain what a 10-20% death rate would do to society, however.

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

#150

Post by lisper »

xxpor wrote: post #128
lisper wrote: post #97

Earlier quoted context omitted.

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.

Inflation has only been on a downward trend since the early 80s, despite what everyone predicted when Nixon closed the gold window.

That's because the economy has grown more or less apace with the money supply (or, more accurately, because the Fed has controlled the growth of the money supply to keep pace with the economy). Now we are pumping cash into a shrinking economy. You can't do that for very long without producing inflation.
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