The market is pricing in the Fed buying equities if it gets too bad. The market consensus is that there could be 30% unemployment but ATH prices in the S&P 500 because of the Fed buying. If the Fed refuses to do this, then reality will set in for the market.
Why is the stock market rallying when the economy is so bad?
621–630 of 898 posts
Re: Why is the stock market rallying when the economy is so bad?
#622Earlier quoted context omitted.
Megacaps don't just print money out of thin air. If you have a faltering middle class, who's gonna be there to spend money? Unless you institute some kind of universal basic income, I don't see people's buying power staying the same. Remember, 70% of the economy is driven by people buying shit.
What's the last 30%?
GDP = Consumption + Investment + Government spending + Net exports [0]
The investment component is dependent on companies' expectations about consumption (or other companies' investment, or government spending) in the future, and obviously the net export component depends on consumption in other countries. So in that sense the ~70% [1] due to direct consumption understates the true importance of consumer spending to GDP.
[0] https://en.wikipedia.org/wiki/Gross_domestic_product#Compone...
Re: Why is the stock market rallying when the economy is so bad?
#623Earlier quoted context omitted.
Individual assassinations don't change the system. How many rich people do you think have to be assassinated for the economic system that allows accumulated wealth inequality of this scale to change? Would killing Bill Gates or Warren Buffet somehow magically reconfigure how American society works? It's much harder to kill a system than it is to kill individual people. Like you hinted at, the American military has ha…
First, the military did eventually do quite well vs. isis, once proper resources were directed. Second, look at history to tell you what will happen if the rich get disappeared. This happened in many communist nations. Doctors, lawyers, professors, bankers, wealthy landowners were mostly murdered and their wealth stolen from them. Did it work well for those nations? Are they thriving today?
France did quite well after killing the aristocracy. Most 'communist' nations on the other hand did a lot more than kill the rich and take their wealth. Compared to the vast economic, social and political changes that happened in Soviet Russia or China etc., it seems that the part about what happened to the rich is unlikely to be very consequential in its impact.
Re: Why is the stock market rallying when the economy is so bad?
#624Earlier quoted context omitted.
How many blue collar millionaires do you know? My two anecdotes are one guy who opened a machine shop with his dad in their very lower middle class garage and one guy who worked his way up to having a few taco bell franchises from the bottom rung. If you don't know those kinds of millionaires, your perception of the world might be tinted by being in a career path that is popular for a certain category of children of…
The issue is not that these cases exist, but that they are sold as being the standard, which they're clearly not. To became wealthy coming from a poor background requires a lot of effort, sense of opportunity, and frankly, luck. But all this is sold as something at grasp to anyone in this country, which is clearly false.
I know a lot of Indian-Americans and Ukrainian-Americans for whom this is the norm.
Step one: arrive in the United States as a child.
Step two: a childhood of grinding poverty.
Step three: make tons of money in STEM.
It happens with extreme regularity. It is the rule, not the exception.
Ok - maybe I’m exaggerating a bit. I’m sure some of them don’t “make it.” Someone is staffing those food vans.
But it’s not unusual either.
Re: Why is the stock market rallying when the economy is so bad?
#625Earlier quoted context omitted.
First, the military did eventually do quite well vs. isis, once proper resources were directed. Second, look at history to tell you what will happen if the rich get disappeared. This happened in many communist nations. Doctors, lawyers, professors, bankers, wealthy landowners were mostly murdered and their wealth stolen from them. Did it work well for those nations? Are they thriving today?
France did quite well after killing the aristocracy. Most 'communist' nations on the other hand did a lot more than kill the rich and take their wealth. Compared to the vast economic, social and political changes that happened in Soviet Russia or China etc., it seems that the part about what happened to the rich is unlikely to be very consequential in its impact.
Huh? How can you just write off the unrealized potential like this?
Re: Why is the stock market rallying when the economy is so bad?
#626Earlier quoted context omitted.
I told the story of one person I knew who started working at Taco Bell in high school and then worked his way up to eventually owning a few of them. The response to that was, "Well, just a lottery winner" with no argument whatsoever. How can you have taken that seriously?
I'm out man. I feel like this is getting super adversarial and into the fray for HN. Sincerely - sorry if I offended.
[deleted]
Re: Why is the stock market rallying when the economy is so bad?
#627Earlier quoted context omitted.
Most every other developed nation has greater social mobility than the US [1]. Why can't the US reach Scandinavian levels of social mobility? [1] https://markets.businessinsider.com/news/stocks/ranked-the-s...
Advocates of big government love these metrics that have been put through the academic ringer, so-as to spit out whatever tortured output is expected. Why look at this kind of esoteric figure at all? Why not look at, you know, real numbers? Spending as percentage of GDP: Denmark - 52% of GDP Norway - 55% of GDP Finland - 53% of GDP Sweden - 50% of GDP Iceland - 42% of GDP Average - 50.5% USA - 22% of GDP What does al…
The US poverty rate is very misleading. It’s not the percent of people in poverty. It’s the percentage of people below a level of income at which not being impoverished is impossible.
Re: Why is the stock market rallying when the economy is so bad?
#628Earlier quoted context omitted.
I assume you're ignoring the discount rate entirely for simplicity? It doesn't seem like money ten years from now should be worth the same as money today. But I guess that implies that interest rates should go up eventually.
No, I think the OP addresses that obliquely here: > Interest rates are essentially zero
Interest Rates for very secure debt is essentially zero, but future corporate profit expectations are uncertain, so there would be some non-zero risk premium applied in the rate used for determining their present value.
Re: Why is the stock market rallying when the economy is so bad?
#629Earlier quoted context omitted.
At the current death rate, we're on track to reach 200k dead by early July. And that's only the deaths that are being counted. There is a substantial increase in overall mortality beyond the year to year average, beyond the confirmed Covid deaths. Considering that this disease is causing pulmonary embolisms, strokes, heart attacks, and other manifestations of out of control clotting even in healthy young people, we m…
There are considerable financial incentives to "fudge the numbers" regarding corona. It's to the point where if someone has a stroke, and he has corona, it will be counted as a "corona death".
For all ages with non-negligible COVID-19 mortality rates (i.e., everyone over ~60), the baseline total mortality rate over the course of a few weeks is orders of magnitude lower than the mortality rate for COVID-19 over that same time period. The amount by which attributing all deaths in COVID-19 patients to COVID-19 could overstate the true case fatality rate is negligible.
Re: Why is the stock market rallying when the economy is so bad?
#630Earlier quoted context omitted.
Seems very difficult to evade location and transaction tracking, both which governments have very easy access to, but the rank and file do not.
That’s assuming a French Revolution style uprising, which is probably unrealistic. What is very realistic, however, is an increase in “lone wolf” terrorist attacks targeted at rich and/or powerful people. You don’t need a thousand people rolling a guillotine down the street when one person with an off-the-shelf drone could inflict just as much damage. Sure the police would find them quick, but one thing the American…
Don't forget this is also the country where multiple right-wing militias came out of the woodworks and engaged in a standoff against rangers for multiple days over a herd of fucking cattle. And then proceeded to do the whole thing over again in a month long siege over some cabin in a national park.
My point being in any destabiliztion event these groups are certainly going to be active, and being that they also have the exact opposite political ethos to the average gulliotine advocate, I'm willing to bet any uprising is not going to be so simple.
Think less French Revolution, and more Autodefensas Unidas de Colombia