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Old 06-10-2020, 01:10 PM   #41
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It is quite possible that we have seen the economic bottom, and are now in recovery. I do think it will take a long time for the economy to reach the level prior to the pandemic, although the market is there basically now (the S&P 500 is even for the year). I am not surprised by the markets direction, but I am quite surprised by the amplitude.
But the bottom is where the top was just a few short months ago. Still very little understand of what is going on, except the fed pumping money like mad. So now everything is too big to fail? Got it.
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Old 06-10-2020, 01:24 PM   #42
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I'll raise my hand and say I do not understand the market these days. But my philosophy has always been that "nothing is free". If the Fed can pump trillions into the economy then there has to be a cost.....doesn't it? It sure seems that we have been able to avoid a cost to date. What can we expect? What will that cost be?
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Old 06-10-2020, 01:28 PM   #43
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I'll raise my hand and say I do not understand the market these days. But my philosophy has always been that "nothing is free". If the Fed can pump trillions into the economy then there has to be a cost.....doesn't it? It sure seems that we have been able to avoid a cost to date. What can we expect? What will that cost be?
Much like other things going on out there.... we just don't know.
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And the economy is not the welfare of the American people
Old 06-12-2020, 03:37 PM   #44
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And the economy is not the welfare of the American people

I think it does make a difference if we switch "we have to grow the economy" to "we have to grow the welfare of the American people." The two are not synonymous. We are seeing the difference play out during this epidemic.
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Old 06-12-2020, 04:07 PM   #45
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I'll raise my hand and say I do not understand the market these days. But my philosophy has always been that "nothing is free". If the Fed can pump trillions into the economy then there has to be a cost.....doesn't it? It sure seems that we have been able to avoid a cost to date. What can we expect? What will that cost be?
I think what the FED & Treasury are doing is the best argument I've ever seen for implementing Universal Income.
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Old 06-12-2020, 05:35 PM   #46
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The zer0% rate carrying over through 2022 is a diamond in the rough. Take advantage of the excellent borrowing rates. Yes, the stock market is a Leading Indicator...of dreams and fraud.
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Old 06-12-2020, 05:40 PM   #47
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I'll raise my hand and say I do not understand the market these days. But my philosophy has always been that "nothing is free". If the Fed can pump trillions into the economy then there has to be a cost.....doesn't it? It sure seems that we have been able to avoid a cost to date. What can we expect? What will that cost be?
One cost will be the eventual raising of taxes.
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Old 06-12-2020, 05:46 PM   #48
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It is a little frantic right now, but I think the market has recognized that the worst case scenario will not play out and most of America is going back to work. Once a vaccine is announced, another big surge will happen. I would disagree that the economy is weak or headed for a long recession. Much of what we have lost over the past 3 months is just waiting to be unleashed in the form of pent up demand. Elections are the big wild card, but if the economy gets back on track as fast as stocks, we will get 4 more years of business friendly administration.
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Old 06-12-2020, 08:33 PM   #49
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It is a little frantic right now, but I think the market has recognized that the worst case scenario will not play out and most of America is going back to work. Once a vaccine is announced, another big surge will happen. I would disagree that the economy is weak or headed for a long recession. Much of what we have lost over the past 3 months is just waiting to be unleashed in the form of pent up demand. Elections are the big wild card, but if the economy gets back on track as fast as stocks, we will get 4 more years of business friendly administration.
However there's no indication 'most' are going back to work yet. Over 20M still out of work and many working with pay cut. About 50% of households have lower income than Feb, which could trigger a secondary downward spiral not realized yet. And a (safe) vaccine is very unlikely within a couple years however some form of treatment that significantly reduces deaths is more likely.

Not saying what will happen but am saying literally no one does know and is being foolish if they claim they do. Pay attention to consumer confidence as one factor (not the factor).
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Old 06-13-2020, 05:27 AM   #50
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Iím watching the COVID 19 case counts closely for the first time in at least a month. Iím worried the recent easing of restrictions on travel and contact could cause a spike in new cases resulting in the possibility of some sort of round two of a quarantine. Iím hopeful this wonít happen but at least in my state cases have been going up recently. That may also be a function of higher rates of testing.

I think the stock market is tough to gauge right now. It is usually a leading indicator for how businesses expect for their earnings 6 to 12 months out. The problem is that many companies were having trouble estimating the impact of the pandemic on their future earnings. Several companies pulled guidance figures because they were worried the numbers were way off what theyíd actually see.

My allocation hasnít changed during this entire event. Iím happy to stay in the market and wait for a vaccine and the economic recovery that will happen once this virus is beat. Things will start to grow again as this artificial disruption resolves.

Trying to time the market to only catch that recovery stage is beyond my capabilities. Iíve learned that the time in the market is much more important and profitable than trying to time the market.
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Old 06-13-2020, 06:50 AM   #51
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However there's no indication 'most' are going back to work yet. Over 20M still out of work and many working with pay cut. About 50% of households have lower income than Feb, which could trigger a secondary downward spiral not realized yet. And a (safe) vaccine is very unlikely within a couple years however some form of treatment that significantly reduces deaths is more likely.

Not saying what will happen but am saying literally no one does know and is being foolish if they claim they do. Pay attention to consumer confidence as one factor (not the factor).
Most are back to work. We are a country of 300+ million. Even the strip mall type businesses are now reopening. Dozens of states have been largely open for a month, now. Shut downs will not be used, again, unless hospitals become overwhelmed and that is not happening. We have learned to live with the virus and the risks.

The stock market is a leading indicator and the employment numbers are a lagging indicator. Consumer confidence is not particularly useful during times of confusion and unrest, so it is a worthless indicator, right now.

Anecdotally, where I live (Washington state), traffic is back to normal and shopping trips are met with the pre-corona crowds. We are technically still in shut-down mode, but businesses are restarting, anyway.

There are several big cities that are still hurting due to the lack of tourism, restaurants and poor leadership, but the American economy is much wider and deeper than those enclaves.

Just a prediction, not a claim to certainty, but the market should trade side-ways with smaller moves up and down until the vaccine is announced towards the end of the year.
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Old 06-13-2020, 08:01 AM   #52
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However there's no indication 'most' are going back to work yet. Over 20M still out of work and many working with pay cut. About 50% of households have lower income than Feb, which could trigger a secondary downward spiral not realized yet. And a (safe) vaccine is very unlikely within a couple years however some form of treatment that significantly reduces deaths is more likely.

Not saying what will happen but am saying literally no one does know and is being foolish if they claim they do. Pay attention to consumer confidence as one factor (not the factor).
Your post is factual and a good response. Thanks for posting.
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Old 06-13-2020, 09:05 AM   #53
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Unemployed in thousands. The real unemployed may be 25M+ end of May because many left the labor force after losing job so are no longer counted as unemployed. About 164M were in labor force in Feb, it's down to about 158M end of May. So many left labor force, not counted as unemployed.

https://data.bls.gov/cgi-bin/surveymost?ln

Nearly half of US households have experienced a loss of income in some form, as job loss or pay cut. This may get worse when $600 unemployment boost ends. And for next year or so, employers may have the upper hand in salary/wage negotiations.


Consumer confidence is improving a bit for now but doesn't mean trend will continue...
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Old 06-13-2020, 09:40 AM   #54
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Most are back to work. We are a country of 300+ million. Even the strip mall type businesses are now reopening. Dozens of states have been largely open for a month, now. Shut downs will not be used, again, unless hospitals become overwhelmed and that is not happening. We have learned to live with the virus and the risks.

The stock market is a leading indicator and the employment numbers are a lagging indicator. Consumer confidence is not particularly useful during times of confusion and unrest, so it is a worthless indicator, right now.

Anecdotally, where I live (Washington state), traffic is back to normal and shopping trips are met with the pre-corona crowds. We are technically still in shut-down mode, but businesses are restarting, anyway.

There are several big cities that are still hurting due to the lack of tourism, restaurants and poor leadership, but the American economy is much wider and deeper than those enclaves.

Just a prediction, not a claim to certainty, but the market should trade side-ways with smaller moves up and down until the vaccine is announced towards the end of the year.
Certainly a positive view, especially ignoring consumer confidence.

I don't see it so positive, as I'm guessing there will be a big spike in cases and deaths (at over 116,000 deaths now) as all States open back up.
However I don't see much of a return to lockdown, as people need to learn to live with the Covid-19 (masks, distance, washing, etc).

I don't see big cities as enclaves, I see them as holding a large portion of the GDP.
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Old 06-13-2020, 09:50 AM   #55
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Various potential Employment scenarios as of end of May, not limited to these...


I put this together based on BLS employment data (up to May 31) and projections from wide range of economists from various schools of thought.
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Old 06-13-2020, 09:51 AM   #56
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Unemployed in thousands. The real unemployed may be 25M+ end of May because many left the labor force after losing job so are no longer counted as unemployed. About 164M were in labor force in Feb, it's down to about 158M end of May. So many left labor force, not counted as unemployed.

https://data.bls.gov/cgi-bin/surveymost?ln

Nearly half of US households have experienced a loss of income in some form, as job loss or pay cut. This may get worse when $600 unemployment boost ends. And for next year or so, employers may have the upper hand in salary/wage negotiations.


Consumer confidence is improving a bit for now but doesn't mean trend will continue...
Even 30 million unemployed would amount to less than 10 percent of the US population. Most Americans have returned to work; if they stopped working, at all. I agree that the economy took a big hit over the past few months, but as to the question of how the stock market reflects the economy, I think it is a much better indicator than backward looking employment numbers following a self-imposed shut-down.

Americans are going back to work in ever increasing numbers. This is not disputable in my opinion. Using your statistics, above, most households (more than half) did not even experience a "loss of income in some form, as job loss or pay cut". I have also read that savings rates are up, as well. We are still waiting on a vaccine, but once it is available, all of this will be in the rear view mirror. I think the stock market has it right going forward.
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Old 06-13-2020, 09:54 AM   #57
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Most are back to work. We are a country of 300+ million. Even the strip mall type businesses are now reopening. Dozens of states have been largely open for a month, now. Shut downs will not be used, again, unless hospitals become overwhelmed and that is not happening. We have learned to live with the virus and the risks.

The stock market is a leading indicator and the employment numbers are a lagging indicator. Consumer confidence is not particularly useful during times of confusion and unrest, so it is a worthless indicator, right now.

Anecdotally, where I live (Washington state), traffic is back to normal and shopping trips are met with the pre-corona crowds. We are technically still in shut-down mode, but businesses are restarting, anyway.

There are several big cities that are still hurting due to the lack of tourism, restaurants and poor leadership, but the American economy is much wider and deeper than those enclaves.

Just a prediction, not a claim to certainty, but the market should trade side-ways with smaller moves up and down until the vaccine is announced towards the end of the year.
Proof that the line between optimism and delusion can sometimes be very thin.
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Old 06-13-2020, 10:03 AM   #58
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Various potential Employment scenarios as of end of May, not limited to these...
If youíre going to post charts copied from another source you need to provide attribution.
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Old 06-13-2020, 10:06 AM   #59
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Certainly a positive view, especially ignoring consumer confidence.

I don't see it so positive, as I'm guessing there will be a big spike in cases and deaths (at over 116,000 deaths now) as all States open back up.
However I don't see much of a return to lockdown, as people need to learn to live with the Covid-19 (masks, distance, washing, etc).

I don't see big cities as enclaves, I see them as holding a large portion of the GDP.
No doubt that big cities are a large part of the GDP, but aside from tourism and service related businesses, much of the economic activity in our big cities has continued remotely from home. Financial services, for example. I have a friend who is a buyer for Boeing. He has simply worked from home during the shut-downs.

Many businesses never shut-down or actually grew during the past few months. The fact is that the shut-down crisis affected each state and county very differently. The stock market considers the whole economy, not just a handful of struggling cities. Looking backward at the short-term carnage following a crisis is a very weak indicator of our future pulling out of the crisis.
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Old 06-13-2020, 10:09 AM   #60
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Most Americans have returned to work; if they stopped working, at all.
Sorry I'm confused, are you trying to make the case that "most" of those who lost their jobs in the shutdown have now returned to full employment?

Or simply that most of the workforce is working...which is very very different.
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