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Old 06-05-2020, 11:57 AM   #461
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The markets numbers are base on future projections, not current numbers only. The numbers are positive so the market views things are on the rebound. Any number of things can happen in the near future to bring it down and vice versa to keep it going up. Seems like a lot of people on this board are very pessimistic.
Yes. Pessimism is very high, here and elsewhere. Cash levels are elevated. Interest rates rock bottom. Oil cheap. Demand pent-up.

All of these are bullish.
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Old 06-05-2020, 12:19 PM   #462
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Originally Posted by Montecfo View Post
Yes. Pessimism is very high, here and elsewhere. Cash levels are elevated. Interest rates rock bottom. Oil cheap. Demand pent-up.

All of these are bullish.
Agree.
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Old 06-05-2020, 12:53 PM   #463
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The unemployment numbers are misleading by any stretch of the imagination. We have hit the bottom because the powers to be will not allow the market to go there again.
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Old 06-05-2020, 01:07 PM   #464
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The unemployment numbers are misleading by any stretch of the imagination. We have hit the bottom because the powers to be will not allow the market to go there again.
Eventually the Fed could take their foot off the gas with pressure from Main St vs. Wall St and the delicate house of cards could tumble.

In the meantime, celebrate 13% unemployment....
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Old 06-05-2020, 01:20 PM   #465
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In the meantime, celebrate 13% unemployment....
Historically, the unemployment rate was defined by people who couldn't find jobs. Because of the special circumstances, "unemployment" was expanded to include people who were displaced because their business/employer had to shut down temporarily. It also didn't help that the government offered incentives to file for unemployment by increasing payments, which exaggerated the situation. (This btw was the right thing to do because it was the fastest way to help people who got displaced).

So IMHO I think the unemployment rate has been artificially too high. A better question is what's the true unemployment rate (whether or not to include the underemployed) and how does that compare to pre-covid days? I don't believe that this number is anywhere near 13%, as I think the majority will go back to work. I could believe ticking up to as high as 8% but we won't know until we have a vaccine.
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Old 06-05-2020, 01:25 PM   #466
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Historically, the unemployment rate was defined by people who couldn't find jobs. Because of the special circumstances, "unemployment" was expanded to include people who were displaced because their business/employer had to shut down temporarily. It also didn't help that the government offered incentives to file for unemployment by increasing payments, which exaggerated the situation.

So IMHO I think it has been artificially too high. A better question is what's the true unemployment rate (whether or not to include the underemployed) and how does that compare to pre-covid days? I don't believe that this number is 13%, as I think the majority will go back to work. I could believe ticking up to as high as 8% but we won't know until we have a vaccine.
Fair enough.
Perhaps if permanent jobs lost could truly be identified, that could be another metric of comparison.
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Old 06-05-2020, 01:31 PM   #467
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Perhaps if permanent jobs lost could truly be identified, that could be another metric of comparison.
Yes, if they had enough time to create a "temporary displaced" category then what'd you see is a sharp rise in this category during the shutdown, followed by a sharp decline when they opened up the economy, which began to occur in May. And when businesses permanently closed, people would then be categorized into "unemployed".

Again, they unfortunately didn't have the time because they were in a mad rush to help displaced people, but it would have brought a bit more clarity and less sensationalism, and perhaps there would be a tad less pessimism.
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Old 06-05-2020, 02:31 PM   #468
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No I think the Fed is now in business to prop up the stock market and that will not be changing. The printing press has infinity ink . Investors also now know and expect to be protected. Great time to be rich.
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Old 06-05-2020, 02:47 PM   #469
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Originally Posted by mckittri2000 View Post
The markets numbers are base on future projections, not current numbers only. The numbers are positive so the market views things are on the rebound. Any number of things can happen in the near future to bring it down and vice versa to keep it going up. Seems like a lot of people on this board are very pessimistic.
Laughable, but have at it. By most every measure I can see, the market is now overvalued more than it was at the peak of the dotcom bubble. Bon chance.
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Old 06-05-2020, 02:48 PM   #470
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No I think the Fed is now in business to prop up the stock market and that will not be changing. The printing press has infinity ink . Investors also now know and expect to be protected. Great time to be rich.
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Old 06-05-2020, 03:01 PM   #471
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No I think the Fed is now in business to prop up the stock market and that will not be changing. The printing press has infinity ink . Investors also now know and expect to be protected. Great time to be rich.
I disagree. The fed is there 1) to provide liquidity, including as the lender of last resort and 2) to mitigate against economic stock through monetary policy. How well they do this is reflected in confidence in the stock market, but they don't "prop" the stock market directly. Rather than these vague accusations, can you list what specific actions they have taken that are counter to #1 or #2 or actions where they bought stocks directly to increase stock prices?
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Old 06-05-2020, 03:12 PM   #472
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Yes, if they had enough time to create a "temporary displaced" category then what'd you see is a sharp rise in this category during the shutdown, followed by a sharp decline when they opened up the economy, which began to occur in May. And when businesses permanently closed, people would then be categorized into "unemployed".
I thought I saw on CNBC or somewhere about two weeks ago that about 88% of the unemployed were in this "temporarily displaced" sort of situation rather than permanent job loss. I thought they said that this number came from the government jobs report, and the implication was that these people might snap back to work quickly since they're sort of in a limbo state or furloughed rather than indefinitely put out of work. Unfortunately, I didn't save the cite or link, sorry.

CNBC today (I watch at the gym while doing treadmill) said that about half of the net job gains in today's report were in hospitality and leisure, which makes sense - as places reopen there are people who are starting to eat out, shop, go on trips, etc. I know there will be a period of time where a large percentage of people will still be wary. Historically I think the polio situation would be a good comparison - as the Salk vaccine was rolled out, people probably took some amount of time to decide it was safe enough to go to swimming pools etc. I'm not saying anything here about a COVID vaccine, just that there will be some sort of decay function as people decide things have gotten "safe enough" to do stuff, whatever that level is for each individual and state (and it obviously varies tremendously).
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Old 06-05-2020, 03:14 PM   #473
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Many of my 2021 and 2022 corporate bonds/notes have moved up so far above par that the YTM is now .52%. There is no point in holding those to maturity so I will be unloading those next week. I have a high yield note from Advanced Micro Devices (August 2022 7.5% coupon) that I bought in March for $98 and it closed today at $113.25. No point in holding that one either as it will depreciated to $100 over the next two years.

The most heavily shorted stocks were spiking today. Even Hertz Global Holdings who filed for bankruptcy and their bonds are trading at 30 cents on the dollar as they re-structure but their stock jumped as much as 155% today before closing up 71%. I guess the buyers of the stock fail to realize that bond holders get paid first and the stock will end up worthless after they restructure.
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Old 06-05-2020, 03:21 PM   #474
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Many of my 2021 and 2022 corporate bonds/notes have moved up so far above par that the YTM is now .52%. There is no point in holding those to maturity so I will be unloading those next week. I have a high yield note from Advanced Micro Devices (August 2022 7.5% coupon) that I bought in March for $98 and it closed today at $113.25. No point in holding that one either as it will depreciated to $100 over the next two years.

The most heavily shorted stocks were spiking today. Even Hertz Global Holdings who filed for bankruptcy and their bonds are trading at 30 cents on the dollar as they re-structure but their stock jumped as much as 155% today before closing up 71%. I guess the buyers of the stock fail to realize that bond holders get paid first and the stock will end up worthless after their restructure.
The muppets chasing hertz.speaks volumes.
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Old 06-05-2020, 03:34 PM   #475
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The muppets chasing hertz.speaks volumes.
The muppets are also chasing near bankrupt retailers, mall operators, airlines, energy companies. Even Chesapeake energy popped 75.6% today and their bonds are trading at 3-5 cents on the dollar. The company even warned that they may not be in business too much longer a couple of weeks ago:

https://www.wsj.com/articles/shale-d...il-11589204463
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Old 06-05-2020, 03:42 PM   #476
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OXY was up 25% today also. That's nuts!
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Old 06-05-2020, 03:59 PM   #477
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The muppets are also chasing near bankrupt retailers, mall operators, airlines, energy companies. Even Chesapeake energy popped 75.6% today and their bonds are trading at 3-5 cents on the dollar. The company even warned that they may not be in business too much longer a couple of weeks ago:

https://www.wsj.com/articles/shale-d...il-11589204463
Amazing. Well, it will all end in tears. I am having flashbacks to 1999.
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Old 06-05-2020, 04:00 PM   #478
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I disagree. The fed is there 1) to provide liquidity, including as the lender of last resort and 2) to mitigate against economic stock through monetary policy. How well they do this is reflected in confidence in the stock market, but they don't "prop" the stock market directly. Rather than these vague accusations, can you list what specific actions they have taken that are counter to #1 or #2 or actions where they bought stocks directly to increase stock prices?
I have to disagree. The Fed is not as independent as in the past and Powell has been under previous tremendous pressure to satisfy his bosses.
There were likely strong suggestions to influence policy which INDIRECTLY props the stock market and can also be good for certain parts of the economy. No negative comments on the Fed now, except an occasional reference on negative rates.
So Powell will keep acting in tow.
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Old 06-05-2020, 04:12 PM   #479
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Amazing. Well, it will all end in tears. I am having flashbacks to 1999.
I think this will be quite different from 1999. We will see a tidal wave of bankruptcies over the next 12 months like never before.
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Old 06-05-2020, 04:14 PM   #480
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The markets numbers are base on future projections, not current numbers only. The numbers are positive so the market views things are on the rebound. Any number of things can happen in the near future to bring it down and vice versa to keep it going up. Seems like a lot of people on this board are very pessimistic.
Agree. Perhaps they have a (in)vested interest.
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