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Old 03-15-2020, 04:56 PM   #21
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To make payroll?
It's something I've wondered about as well, after hearing over and over how government "should be run like a business." Well, I guess it is, since businesses cannot seem to operate based on income and cash flow, and instead have to borrow money for their most basic functions.

I admit I am know little about business, but it seems to me that neither individuals nor governments should try to run their financial lives "like a business."
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Old 03-15-2020, 04:59 PM   #22
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It's something I've wondered about as well, after hearing over and over how government "should be run like a business." Well, I guess it is, since businesses cannot seem to operate based on income and cash flow, and instead have to borrow money for their most basic functions.

I admit I am know little about business, but it seems to me that neither individuals nor governments should try to run their financial lives "like a business."
Gross overstatement. As a business owner who runs a tight ship. You’re wrong.
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Old 03-15-2020, 05:01 PM   #23
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Gross overstatement. As a business owner who runs a tight ship. You’re wrong.
Good, I'm glad to hear it. I'd like the situation to involve less borrowing.
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Old 03-15-2020, 05:06 PM   #24
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10 year note is up and stock market is now at limit down. The 10 year note briefly popped above 1% (no big deal). Rate inversion is completely gone. It it holds, the bond market is signaling a weak economic recovery in 12-18 months (rates are still historically low). We will continue t be in a period of low interest rates for the foreseeable future. It's safe to say we are now in a recession/depression and it will be temporary. The bond market predicted a recession and the coronavirus pandemic just accelerated it. The market will not sustain a rally until the virus is under control and businesses are starting to open which may be about 2 - 3 months away. A full recovery won't happen until a vaccine is available or people adapt to a changing world. Equity markets still have to price a world with lower economic output and no more bullets to fire from the Federal reserve other than more quantitative easing (buying mortgage bonds).

Just my views...
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Old 03-15-2020, 05:09 PM   #25
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Well the announcement was moved up from Wed to try and calm the markets for tomorrow.
Again where is all the testing and results?
yep... it's all about the markets.
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Old 03-15-2020, 05:22 PM   #26
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Another way to look at this is the Fed is confirming what the bond market needs and already priced. Not doing this would be the equivalent of tightening, which would be worse.
I am no economist, but wouldn't this be a bit like the tail wagging the dog? Historically, are bond market yields a good predictor of Fed interest rate directions?

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Old 03-15-2020, 05:30 PM   #27
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But isn’t cutting rate to 0% a sign they expect more than just a mild recession? Seems they are doing more damage than helping.
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Old 03-15-2020, 05:36 PM   #28
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Lower rates mean my bonds just went up. Just what I needed when my stocks went down -
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Old 03-15-2020, 05:51 PM   #29
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Lower rates mean my bonds just went up. Just what I needed when my stocks went down -
If you're 20% bonds, the amount they increase won't begin to offset the decline in equities.
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Old 03-15-2020, 05:51 PM   #30
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Tomorrow the washout day? Or just one of many gut wrenching days down until we hit the washout day? Enquiring minds want to know.
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Old 03-15-2020, 05:53 PM   #31
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If you're 20% bonds, the amount they increase won't begin to offset the decline in equities.
I am 80% bonds/fixed income and I can attest that they don’t make up for a free fall. They help though. As of today (who knows tomorrow) I am down 5.5%.
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Old 03-15-2020, 06:01 PM   #32
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In afraid it may be the first of many washout days. Until tonight I've been concerned but this may be reaching a higher level on several fronts. Time to turn off the news and hideout.
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Old 03-15-2020, 06:06 PM   #33
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Tomorrow the washout day? Or just one of many gut wrenching days down until we hit the washout day? Enquiring minds want to know.
Predicting market moves is always a wild guess but this weekend has been very eventful and could lead to a washout tomorrow .....
*The fed move signals things are worse than we think.
*The closing of restaurants, bars, schools, travel etc is accelerating. I believe virtually all dining/entertainment etc will be closed by the end of the week and the entire travel industry will dry up.

The market has three circuit breakers after the open tomorrow (-7,-13-20) and I would not be at all surprised if the last two breakers are tested.
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Old 03-15-2020, 06:24 PM   #34
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I am 80% bonds/fixed income and I can attest that they don’t make up for a free fall. They help though. As of today (who knows tomorrow) I am down 5.5%.
With bonds, the first thing to go are low yield bonds with premiums over par as funds sell to raise cash. If you buy bonds or preferred shares over par, you risk the capital loss in any case. I find that the best strategy is to time your bond purchases during these sell-offs and always buy below par at a decent spread between treasuries, and float your cash in MM funds while waiting.
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Old 03-15-2020, 06:28 PM   #35
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I had predicted the stock market wouldn't recover for at least 2 years, probably longer. At this point, I'm now pushing that out even further.
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Old 03-15-2020, 06:29 PM   #36
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My guess is the demand for ammunition now might be approaching the demand for toilet paper. People are really scared right now. They have lost a lot of money and their jobs and businesses are on the line. Debt heavy businesses are going to need a lot of help to get past dramatic drops in revenue. The market sees this and discounts the future skimpy revenues at a much higher rate.
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Old 03-15-2020, 06:31 PM   #37
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I am 80% bonds/fixed income and I can attest that they don’t make up for a free fall. They help though. As of today (who knows tomorrow) I am down 5.5%.
How did you make any money last year at 80% bonds
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Old 03-15-2020, 06:34 PM   #38
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But isn’t cutting rate to 0% a sign they expect more than just a mild recession? Seems they are doing more damage than helping.
The FED would like to keep the stock market up. Please stop to think where the economy was BEFORE this started to happen. The Budget deficit was 1 Trillion annually, The Fed had begun a 500 million addition to their assets to keep liquidity open for hedge funds. Corporate debt as a percentage to GDP was at an all time high more than 30 percent of all listed companies had a net loss over the 3 years ending 12/31/2019. 80 percent of all IPO's last year were companies with no net profit.

Now take the economic implications of the population being restricted, Oil dropping 60 percent and tax revenue drying up. FED has to get to zero to allow debt to have no additional economic impact to borrowers, who is pretty much everyone. There is no other choice for the FED. They so far have announced the net total of 2 trillion dollars of purchasing assets under various programs, this total will swell in the coming year and rates are never going up if the FED can help it, noone can afford an interest payment.
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Old 03-15-2020, 06:43 PM   #39
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Now take the economic implications of the population being restricted, Oil dropping 60 percent and tax revenue drying up. FED has to get to zero to allow debt to have no additional economic impact to borrowers, who is pretty much everyone. There is no other choice for the FED. They so far have announced the net total of 2 trillion dollars of purchasing assets under various programs, this total will swell in the coming year and rates are never going up if the FED can help it, noone can afford an interest payment.
So where does this leave us in the long run?
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Old 03-15-2020, 06:48 PM   #40
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So where does this leave us in the long run?
Will have to see how the next year plays out. Eventually no matter what the market does there will be bargains available, but I am still waiting one year or 1300 or 3100 on S&P500 before I buy anything myself.
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