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Fed cuts half point in emergency move amid spreading virus

bloomberg.com

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Re: Fed cuts half point in emergency move amid spreading virus

#111

Post by skybrian »

mywittyname wrote: post #60
scottmcf wrote: post #39

Earlier quoted context omitted.

We are in/at the start of an actual financial crisis, people just haven't internalized that yet.

Who could have known that using debt to purchase back stock for the purposes of artificially increasing company value without building value would cause a crisis?

It would be bad if they needed cash and couldn't borrow, but on the other hand borrowing just got cheaper.

What evidence is there that companies who previously bought stock and issued debt are low on cash?

Re: Fed cuts half point in emergency move amid spreading virus

#112

Post by [deleted] »

airstrike wrote: post #27

From what I gather after spending more time than I'm willing to admit listening to every finance talking head out there, the consensus on the street seems to be that this will result in a temporary market recovery followed by the continued deterioration of stock prices given that fiscal or monetary* policy can't really affect the real economy in the near term* i.e. if the supply chain is indeed impacted due to COVID-…

[deleted]

Re: Fed cuts half point in emergency move amid spreading virus

#113

Post by airstrike »

samvher wrote: post #104
JumpCrisscross wrote: post #68

Earlier quoted context omitted.

> fiscal policy can't really affect the real economy Fiscal policy ( e.g. the government buying tanks) absolutely affects the real economy. The central bank doesn't control fiscal policy. It controls monetary policy. Monetary policy also affects the real economy, just indirectly.

Right. And from what I understand, even if monetary policy does not directly solve virus or supply chain issues, it can make life easier for corporations loaded with debt (there are many) which might get into trouble as the economy deteriorates.

I mean, it's not like rates were high to begin with. It may make a little bit of a difference for each company, but they are certainly way more concerned about their ability to generate cash to pay their interest if you assume a significant drop in demand.

Re: Fed cuts half point in emergency move amid spreading virus

#114

Post by airstrike »

lawrenceyan wrote: post #100
airstrike wrote: post #27

From what I gather after spending more time than I'm willing to admit listening to every finance talking head out there, the consensus on the street seems to be that this will result in a temporary market recovery followed by the continued deterioration of stock prices given that fiscal or monetary* policy can't really affect the real economy in the near term* i.e. if the supply chain is indeed impacted due to COVID-…

> given that fiscal policy can't really affect the real economy i.e. if the supply chain is indeed impacted due to COVID-19, no amount of fiscal stimulus can make up for the time / productivity losses The fact that you don't know the difference between fiscal and monetary policy, FYI changing interest rates is monetary policy , makes me strongly doubt that you know what you're talking about.

I've edited the post accordingly, it was a brain fart moment... But thanks for your sincere feedback

Re: Fed cuts half point in emergency move amid spreading virus

#115

Post by chewz »

atq2119 wrote: post #47
ptyyy wrote: post #5

We're basically running out of tools to combat an actual financial crisis. https://www.investopedia.com/terms/l/liquiditytrap.asp

Only because the toolset is artificially restricted for ideological reasons. Fiscal responses (having the government spend actual money, either on things like infrastructure it by just handing it out to the population, which will then largely spend that money as they see fit) rather than monetary policy responses (reduce rates and hope that people will borrow more) are known to work well in most cases. The Corona vir…

> toolset is artificially restricted for ideological reasons

Not in Hong-Kong. [1]

[1] https://edition.cnn.com/2020/02/26/economy/hong-kong-budget-...

Re: Fed cuts half point in emergency move amid spreading virus

#116

Post by learc83 »

bluedevil2k wrote: post #103
learc83 wrote: post #86

Earlier quoted context omitted.

It doesn't matter how much debt we are in provided the rate of return for the investment is greater than the interest on the new debt. And that's without considering that inflation is very low, so we can print our way out of some of it.

I find it ironic that the people who say "the government should just spend tons of money because the debt doesn't matter" and don't care about punting the problem to the next generation are the same ones who say how irresponsible the Baby Boomers are for punting the environment problem to the next generation.

And you managed to both completely avoid my point and bring up generational politics.

Re: Fed cuts half point in emergency move amid spreading virus

#117

Post by lotsofpulp »

mullingitover wrote: post #106
rbinv wrote: post #72

Earlier quoted context omitted.

What would be the endgame here?

What's the term for when the government owns all the industries?

Also, what is it when everyone owns them (in varying ownership percentages of course) via index ETFs?

Re: Fed cuts half point in emergency move amid spreading virus

#118

Post by scarmig »

mbesto wrote: post #110
aazaa wrote: post #51

For those saying the Fed is running out of ammunition, study what the Bank of Japan has done. It owns close to 80% of the Japanese ETF market currently, with no end to the expansion of balance sheet in sight. After buying long treasuries, it's not unreasonable to imagine the Fed buying stocks, either individual issues or ETFs. The President would be for it, and it would be hard to drum up any opposition to it in cong…

> For those saying the Fed is running out of ammunition, study what the Bank of Japan has done. Oh you mean the economy that has been stagnate for 20 years?

If I were a Japanese retail investor in 1990 in his 30s, what would have been the best strategy? Just stay out of domestic markets and focus on areas with potential for growth?

Re: Fed cuts half point in emergency move amid spreading virus

#119

Post by airstrike »

ISL wrote: post #93
airstrike wrote: post #27

From what I gather after spending more time than I'm willing to admit listening to every finance talking head out there, the consensus on the street seems to be that this will result in a temporary market recovery followed by the continued deterioration of stock prices given that fiscal or monetary* policy can't really affect the real economy in the near term* i.e. if the supply chain is indeed impacted due to COVID-…

The incubation period is not 25-30 days. The mean incubation period is 5-6 days, range 1-14 days. Source: Page 12, paragraph 2. https://www.who.int/docs/default-source/coronaviruse/who-chi...

See https://www.medrxiv.org/content/10.1101/2020.02.06.20020974v...

> The median incubation period was 3.0 days (range, 0 to 24.0 days)

Edited my post to include that source

Re: Fed cuts half point in emergency move amid spreading virus

#120

Post by fauigerzigerk »

rsync wrote: post #97
airstrike wrote: post #27

From what I gather after spending more time than I'm willing to admit listening to every finance talking head out there, the consensus on the street seems to be that this will result in a temporary market recovery followed by the continued deterioration of stock prices given that fiscal or monetary* policy can't really affect the real economy in the near term* i.e. if the supply chain is indeed impacted due to COVID-…

" ... I'm still slightly bearish on the whole situation due to the combination of the virus' absurdly high infection rate[0] and its ridiculous ~25-30 day incubation period ..." You're right to highlight those aspects of the virus and I find them noteworthy as well. However, the statistics I am most interested in is mortality rate and rate of asymptomatic infections. I note with interest that among the 700+ infected…

What I'm most interested in is the hospitalisation rate and if we can slow down infections enough for hospitals to be able to cope.

I think the death rate will ultimately depend on whether everyone who needs hospital treatment can get it. And that's why I think the Diamond Princess may not be representative of what happens in the real world.

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