Right but only temporary no. The “service industry” had “decided” that the staffing levels 2 weeks ago were required to service the market. The fundamentals of the market hasn’t actually changed by this random event.
I’m sure I’m wrong here. You won’t get much argument from me. I’m just looking to better understand.
What? 2 weeks ago you didn’t have entire cities essentially shut down, with bars/restaurants/etc all closed.
Some restaurants are going to permanently fold after this if they can’t meet rent or debt payments. The cruise ship industry will take a medium term hit. A few people will default on mortgages.
A few? Not if unemployment goes to 20+ and people are out of work for 6+ months
People were already predicting a recession. For example, Elizabeth Warren last July. So, even if the economic effects of COVID-19 are ephemeral, you’re heading right into a recession, which can extend into a depression.
Here’s what she says in her anti-coronavirus plan:
Coronavirus will have significant and wide-ranging effects on our economy. Consumers will cut back on spending. Some firms will face a sudden loss of revenue and may face pressure to lay off workers. Uncertainty about the length of the crisis or its ultimate impacts will slow investment. There is also a growing tail risk in which lower oil prices lead to a wave of bankruptcies in the highly leveraged shale sector, which in turn affects employment, credit conditions, and bank stability.
Everybody’s always predicting a recession.
Unless no one is - and then sell everything instantly because a crash is imminent.
Lmao clovis.
My office is downtown, I pay $130 for parking, I get lunch out a couple times a week, wife and I go out for dinner a couple a week as well. If we need or want some item it’s usually easier to buy it in person than use Amazon. We throw excess cash into 401k/IRA/vanguard indexes regularly.
We will be doing none of that going forward for the next 2+ months. Gee, I wonder how that will affect the economy? 
This is apparently the report that convinced the US and UK to shut everything down. It’s a really good read and not too wonky for anyone who wants to know what to expect.
I’m not sure what this means for the markets - but this document pretty much lays out what we’re in for the next 18 months - cycles of lock down, then open up, then lock down again when cases spike.
I feel like our best bet, and I guess if I’m right we’re counting on House Dems, Senate Republicans and Trump to all agree on this, is to basically do our best to pause the economy where it is.
So like unemployment is 4%, keep it there. Everyone’s net worth and debt are currently X and Y, keep them there. That’s all, of course, give or take. If we do this, when we resume, nobody is any less interested in spending money (probably more so after a hellish year+), unemployment is under control, and our economy is ready to get moving again.
To me the best way to do this is to freeze all loans, and when we press play however many months left is how many months you have left. If people want to make payments at that time to cover the period that has passed, they may do so. This includes car loans, mortgages, etc.
Then you make sure people keep getting paid enough to cover remaining expenses, and this includes businesses. You could give every adult $1,000/mo and that might do it. You’re basically talking food, utilities, cable, phone, etc.
Obviously some people will get to keep working and making money plus the $1,000/mo, and others will be furloughed and living off of it. But I’m trying to take a wide angle lens at the whole thing.
It almost sounds like a get out of jail free card, right? But it’s not, the problem is that we are already running massive deficits and this would run us about 2.5 trillion dollars a year.
This is before even accounting for covering coronavirus testing. Our current deficit is $1 trillion, so that’s a big fucking amount to add to it and it would likely have an incredible amount of inflationary impact because we’d just be printing a shit ton of money. We could nix the Trump tax cuts, it could hurt the markets but then again this is still a decent buying opportunity, they’ll find a way to get some money into the markets.
The obvious way to do it to me is with a wealth tax, and maybe in this circumstance you could make that happen? Another way would be to pay everyone $1,000 a month but also increase payroll taxes, thus funneling the money more towards people who were furloughed.
On the other hand, if we only go two months, we’re looking at like 400-450 billion, and we can handle that as a one-time outlay.
The aspect of this that nobody is talking about enough IMO is raising ICU capacity. The charts in the modeling from that university in the UK are grim, in part because the red line for capacity is so fucking low.
Like, Mnuchin says unemployment could hit 20%. OK, how many can be put to work building ventilators? The UK is asking companies that normally make cars to make them.
If I’m POTUS, I’ve got my CDC, NIH, etc people hard at work already. I’m getting other cabinet secretaries to put stuff together that basically says if you build a ventilator, we’ll buy it. Like you’re not going to get stuck holding the bag if you build too many. Best case scenario: we get lucky, we get through this quicker, and we have a shit ton of ventilators to loan around the world to others and then throw back into storage when this is over. I want to exhaust all options. Normal ones, stripped down versions, anything in between. Can we save time in manufacturing if they are like unmarked with an on/off button and look mundane and shitty? Cool, I’m in. All options on companies, too. The normal manufacturers, anyone who makes anything adjacent (CPAP machines?), anyone who makes any machine that pushes air, anyone who has an assemblyline. Ford, sorry, cars aren’t being bought in the next six months much anyway, make us some ventilators. Boeing, try not to fuck this up like that last jet. Carrier? Let people sweat, build ventilators.
Circling back to the economy if we can lift the red line, we can ease the lockdowns, thus preserving our economy.
What we looking at today? Another 10%er?
I agree with some of the sentiment in here but one thing that doesn’t feel quite right is the idea of “pressing pause” on everyone’s economic situation. I understand that would be desirable, but I don’t think it’s achievable even with an effective use of public policy tools. The reason I say that is that for the working class a huge chunk (sometimes all) of their economic household worth is tied up in the PV of their future earnings. So an economic shut down for X months will destroy X months of that value permanently. The government has policy tools, but they don’t have the ability to create economic value out of nothing (caveat: in the short term - good policy can create economic value in the long term).
All that to say, saving the bottom lines of our most vulnerable is going to cost something. There won’t be a way to just freeze everyone where they were on March 1, 2020. That’s not to say things are hopeless. Some policies would be obviously hugely valuable right now:
Probably all of this goes in the same direction as what you had in mind, but i think it’s important to look through any tax/spend/monetary policy and recognize it for what is really is - a wealth transfer. Since we were arguably due for a massive wealth transfer before the Covid crisis this is a good time to jump in and make it happen. Of course the eDems are nowhere to be seen on this, they are looking out for their corporate overlords. But something will give if the public continues to panic as more bad news rolls in.
At least 5%, but who knows which way.
We’ve had 7 consecutive days of the DJIA being at least 1000 points (in some direction) from the previous day’s close.
I’m very concerned about this, because my net worth is heavily weighted towards cash, as it has to be for a live poker pro (gotta keep a certain amount liquid for a bankroll). I’ve gotta figure out the best way to hedge against this, and soon. I’ve been thinking about it for a couple days.
at this rate, oil may be free
Fuck, we just gonna trigger the circuit breakers every other day?
We’re going to look back at this daily graph and question whether this all actually happened. This is insane.
This is trivial in the grand scheme of things, but I do capital markets research for a living, and it’s basically going to become a default that all analyses just drop 2020 data altogether. Hopefully it’s just 2020.
$24 for a barrel of oil? Like I can either buy chicken parm and extra breadsticks at Olive Garden or an entire fucking barrel of oil? Seriously?
I’ve been relatively calm until now but I’m switching to full blown panic mode. Unless you work for the government or a company that somehow benefits from the Coronavirus, you should not be worried about retirement 20-30 years from now. You should be preparing to get through a Great Depression.
If you have plenty of cash to get through that then sure, keep working some extra money into the market as it goes down.
Ya I mean thats why i bought oil 3x etf yesterday. Obviously looking like a really dumb move but there has to be a bottom somewhere right? Lots of places (including USA) cant produce at anywhere near these prices. That will impact supply at some point. Or at least that’s what I’m consoling myself with.