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Author Topic: Global recession, supply issues and other COVID-19 consequences  (Read 48891 times)

Sigmetnow

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Re: Global recession
« Reply #100 on: March 12, 2020, 02:14:57 AM »
Dow Jones Industrial Average’s 11-Year Bull Run Ends
Blue-chip stock index drops more than 1,400 points, closing a bull run that started in 2009
Quote
The longest-ever bull market for U.S. stocks ended Wednesday.

The downturn, marked by a 20% decline from the most recent high for the Dow Jones Industrial Average, heightens fears that the economic expansion that began following the financial crisis could also be on its last legs. Stocks have crumbled, oil prices have tanked and U.S. government bond yields have plumbed record lows in the face of the rapidly spreading coronavirus.


The Dow closed at 23553.22, down 20.3% from its record of 29,551.42 reached Feb. 12. That ended the bull market that began March 9, 2009, one of the bleakest points of the crisis.
The S&P 500 is still shy of a bear market, down 19% from its Feb. 19 peak. It has shed about $5 trillion in market value; the benchmark closed down 4.9% for the day to 2741.38.

Share prices declined rapidly as coronavirus spread around the world and took hold in the U.S.
Schools are sending students home. Consumers are canceling vacation plans. And in New York City, the country’s financial center, banks have deployed contingency plans used during crises like the Sept. 11, 2001, terrorist attacks.

Wednesday’s stock-market declines accelerated after the World Health Organization declared the new coronavirus a pandemic and said it is “deeply concerned” by the “spread and severity” of the virus and by “alarming levels of inaction.” The Dow ended the day down 1464.94 points, or 5.9%, weighed down by an 18% drop in shares of Boeing.

Adding to the shock for investors: the speed of the market’s fall. The move from all-time high to bear-market territory was the fastest on record for the Dow, taking just 19 sessions.

In previous downturns, it has taken the index on average 136 trading days to enter a bear market from a recent high, according to Dow Jones Market Data. It has taken an additional 143 days from the bear-market entry to the low and 63 trading days from the low to exit from the bear market.


Unlike during prior market scares, Federal Reserve action has proved ineffective so far in bringing calm to investors.

Stocks briefly rallied at the start of the month after the Fed lowered interest rates by a half percentage point, executing its first inter-meeting rate cut since the 2008 financial crisis. But within minutes, the gains gave way to selling again, as traders questioned how effective central bank policy, as opposed to the development of a widely available vaccine or treatment, would be in fighting disease. ...
https://www.wsj.com/articles/global-markets-calmer-after-two-hectic-days-11583899913
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Tom_Mazanec

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Re: Global recession
« Reply #101 on: March 12, 2020, 11:33:01 AM »
Dow futures down 1226.
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Tom_Mazanec

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Re: Global recession
« Reply #102 on: March 12, 2020, 02:00:12 PM »
Era of Growth, Corona-Virus, Era of Decline. Discuss.
https://econimica.blogspot.com/2020/03/growth-corona-virus-decline-discuss.html
Quote
I'm going to suggest that the Corona-virus is more a window or a marker that separates what will be seen as the end of an era and the beginning of another.  Corona-virus is serious, global, and appears it will cause significant death and disruption.  There is likely to be 9 to 18 months of global pandemic with a potential of high infection and significant loss of life.  But after the pandemic, things are more likely to return to "normal".  Corona-virus itself isn't the problem (no more than Spanish Flu was in 1918/1919).  And it's the discussion of what is the "normal" we have seen over the past 7 decades versus the current and coming decades that I hope to spur.
To begin, the chart below shows the annual change in the under 60 year old US population (green line) versus annual change in 60+ year old US population (yellow line).  Also shown is annual US federal deficit split between public debt (red columns) and Intragovernmental (IG...blue columns representing Social Security, etc.), and lastly the federal funds rate (black line).  Simply, as population growth of the working age population slowed, first large scale legal and illegal immigration was utilized to maintain economic and financial growth.  However, since 2008, working age population growth has rapidly decelerated and immigration slowed...and in their place have come interest rate cuts to zero and accompanying massive debt (I show federal debt below, but corporate debt has also binged of the nearly free money to buy their own stock and pay dividends).  2019 was the first year in US history the working-age population declined...and of course all net US population growth now comes among the elderly.  The elderly who, on average, earn/spend half as much as during their peak years, are highly credit averse, and prefer to pay down existing mortgages and debt.  Oh, and 2020 births and immigration are trending even lower while Federal debt creation has the potentially to surpass the '08/'09 levels as Trump pushes for further tax cuts / infrastructure, etc. spending.
SHARKS (CROSSED OUT) MONGEESE (SIC) WITH FRICKIN LASER BEAMS ATTACHED TO THEIR HEADS

Sigmetnow

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Re: Global recession
« Reply #103 on: March 12, 2020, 02:48:41 PM »
US stock trading halted after S&P 500 drops 7%, hits circuit breakers
Quote
U.S. stocks hit critical circuit breaker levels on Thursday minutes after the opening bell for the second time this week as global markets plunged amid investor fears about the coronavirus global pandemic.
Just as they did on Monday, the S&P 500 hit the New York Stock Exchange's 7% threshold decline in morning trading, halting trade during regular market hours for 15 minutes to ensure order in the marketplace.

Trading will resume at 9:50 a.m. ET.

What is a 'circuit breaker'?

According to the New York Stock Exchange, a market trading halt occurs at "three circuit breaker thresholds" on the S&P 500 due to large declines and volatility. The exchange classifies this at three levels based on the preceding session's close in the S&P 500.

The rules, which apply to regular trading hours only, are as follows:

Level 1: If the S&P 500 drops 7%, trading will pause for 15 minutes.
Level 2: If the S&P 500 declines 13%, trading will again pause for 15 minutes if the drop occurs on or before 3:25 p.m. ET. There will be no halt if the drop happens after that.
Level 3: If the S&P 500 falls 20%, trading would halt for the remainder of the day.

The prior circuit breaker system was revamped after it failed to prevent the May 2010 flash crash when the Dow lost hundreds of points in just a few seconds. The current set of breakers were put into effect in February 2013.
https://www.cnbc.com/2020/03/12/stock-futures-hit-a-limit-down-trading-halt-for-a-second-time-this-week-heres-what-that-means.html
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Sigmetnow

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Re: Global recession
« Reply #104 on: March 12, 2020, 02:55:13 PM »
Era of Growth, Corona-Virus, Era of Decline. Discuss.
...


Might fit in well with the major loss of jobs due to automation and AI we know is imminent.  Now companies can blame it on the changes they had to make during the coronavirus outbreak.
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gerontocrat

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Re: Global recession
« Reply #105 on: March 12, 2020, 03:38:15 PM »
A headline from Bloomberg says it all...

3/11/2020
Nowhere to Hide:
Stocks and Bonds Suffer Losses Worse Than 2008
"Para a Causa do Povo a Luta Continua!"
"And that's all I'm going to say about that". Forrest Gump
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KiwiGriff

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Re: Global recession
« Reply #106 on: March 12, 2020, 05:34:32 PM »
Dow Jones Industrial Average

21,596.00 −1,957.22 (8.31%)
Animals can be driven crazy by placing too many in too small a pen. Homo sapiens is the only animal that voluntarily does this to himself.
Notebooks of Lazarus Long.
Robert Heinlein.

Tom_Mazanec

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Re: Global recession
« Reply #107 on: March 12, 2020, 06:22:58 PM »
The Real Reason Why the Dow Jones Crash Is Far From Over
https://www.ccn.com/the-real-reason-why-the-dow-jones-crash-is-far-from-over/
Quote
Dow Jones Industrial Averagw
With the Dow in a bear market, some investors are hoping for a bounce. Activity in the bond market suggests we may still reach further lows.
Dow Jones has rallied strongly on certain days, but fierce rallies are indicative of a bear market.
Widening credit spreads suggests bond markets are expecting stocks to continue heading lower.
The coronavirus outbreak will cripple the U.S. economy in the coming weeks, and the markets have not priced in this scenario.
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Re: Global recession
« Reply #108 on: March 12, 2020, 07:49:00 PM »
The 'really great depression' is gaining ground . Euro stocks have reached levels of 1997 already . the ftse100 fell 10% today and the dow jones is hovering down 2000 again . Cash rules even as it's value drains away .. b.c.
  St paddy's day cancelled !
2007 + 5 = 2012 + 4 = 2016 + 3 = 2019 + 2 = 2021 
 (phew)

TerryM

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Re: Global recession
« Reply #109 on: March 12, 2020, 08:02:49 PM »
^^
The Loonie is falling like a rock.
72.227 as we speak.
Terry

blumenkraft

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Re: Global recession
« Reply #110 on: March 12, 2020, 09:06:04 PM »
21.200,95 −2.352,27 (9,99 %)

Sigmetnow

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Re: Global recession
« Reply #111 on: March 12, 2020, 09:16:18 PM »
Thurs March 12, 2020  21,200.95-2,352.27 (-9.99%)
Dow plunges 10% in biggest one-day percentage drop since 1987
U.S. stocks tumbled more than 9% as Wall Street extended its historically ugly sell-off, with the S&P 500 and Nasdaq joining the Dow in entering a bear market.
Quote
In a televised address Wednesday night, Trump said he was suspending travel from certain areas of Europe to the U.S. for the next 30 days. He also announced plans for $50 billion of low interest loans to affected businesses and suggested a delay in the April 15 tax filing deadline.
However, the speech sparked widespread confusion — and failed to mollify panic-stricken investors. Major benchmarks sank deeper into correction territory at the open, triggering a circuit-breaker during the regular session shortly after 9:30 a.m. ET.
...
“President Trump’s address to the nation was symptomatic of the lack of policy coordination in the face of a global coronavirus pandemic,” Oxford Economics’ Gregory Daco said.
“Markets reacted negatively to what was perceived as a solemn but confused speech that placed blame on other nations, omitted to focus on immediate actions to relieve the most affected individuals, and lacked in concrete fiscal and health measures to address the economic and financial impact of the virus,” the analyst added.

The selloff suggests investors were hoping for much more — such as what Academy Securities’ Peter Tchir suggested should have been a worldwide fiscal stimulus plan coordinated among large economies.
“I'm disappointed with what we got,” Tchir added. And other market professionals were even more alarmed.
“The U.S. limiting entry to foreign nationals from Europe has the potential to cause another world depression again even if it is for reasons that seek to stop the spread of the coronavirus,” MUFG economist Chris Rupkey said.
“Business activity is going to hit the brakes around the world and stock markets around the world are in freefall as the spread of this deadly pandemic virus has the potential to slow the global economy to a crawl,” he added.
 ...
https://finance.yahoo.com/news/stock-market-news-live-march-12-013620137.html
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gerontocrat

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Re: Global recession
« Reply #112 on: March 12, 2020, 09:28:46 PM »
Gold price dropping by a lot despite safe haven status.
Why? Traders & investors selling gold to raise cash to meet margin calls etc.

Another casualty of just-in-time finances.
"Para a Causa do Povo a Luta Continua!"
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"Damn, I wanted to see what happened next" (Epitaph)

KiwiGriff

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Re: Global recession
« Reply #113 on: March 12, 2020, 09:56:22 PM »
Thanks for that gerontocrat
I was surprised that gold was falling it usually skyrockets in this sort of situation.
Animals can be driven crazy by placing too many in too small a pen. Homo sapiens is the only animal that voluntarily does this to himself.
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blumenkraft

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Re: Global recession
« Reply #114 on: March 12, 2020, 10:04:32 PM »
Gold price dropping by a lot despite safe haven status.

Same with bitcoin. It's insane. People sure love their fiat money...

SteveMDFP

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Re: Global recession
« Reply #115 on: March 12, 2020, 10:10:02 PM »
Gold price dropping by a lot despite safe haven status.
Why? Traders & investors selling gold to raise cash to meet margin calls etc.

Another casualty of just-in-time finances.

Yes, indeed.  In crises, people buy gold.  Except when they're forced to sell gold to meet obligations.  This also happened during the GFC.  It's a worrisome sign.  Not that my heart bleeds for those who own gold.  This is suggesting deep pain may be imminent for those who depend on a paycheck.

be cause

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Re: Global recession
« Reply #116 on: March 12, 2020, 10:19:11 PM »
Dow down 2015 .. worst day ever .. b.c.

Pointwise yes, percentagewise not at all. I remember 1987 October: 22% in a single day. This is nothing :)


it is now .. '87 was a one-off correction . This is a long steady decline until there is little value left .. hence my 'depression' .. pandemonium and pandemic beget panic . b.c.
2007 + 5 = 2012 + 4 = 2016 + 3 = 2019 + 2 = 2021 
 (phew)

bluice

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Re: Global recession
« Reply #117 on: March 12, 2020, 10:21:21 PM »
A global recession is now a certainty, but I’m starting to wonder whether we’ll end up in a full-blown depression? Central banks are out of ammo and the Trump administration is clueless and has no coherent policy how to manage the situation.

oren

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Re: Global recession
« Reply #118 on: March 13, 2020, 03:32:34 AM »
Bitcoin is down 44%. Another historic move in a week full of historic moves.
Though stock market moves do not necessarily reflect or forecast reflect recessions, this one is quite indicative of the economic disruption and uncertainty caused by the pandemic.

Ktb

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Re: Global recession
« Reply #119 on: March 13, 2020, 04:03:01 AM »
I'll never forget the words my 10th grade US history teacher said to us: "You kids are so lucky, you're going to graduate college about when the recession ends and land great jobs."

Well unfortunately for me, I took 5.5 years for undergrad, and now finishing my masters degree. Just in time for another recession. Looks like I missed the luck boat.
I have amazing news for you. Man is not alone on this planet. He is part of a community, upon which he depends absolutely.
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TerryM

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Re: Global recession
« Reply #120 on: March 13, 2020, 05:34:54 AM »
The American dollar is holding up very well. As a Canadian living on American investments my gains in currency exchange rates are so far more than covering the losses that the market is experiencing.


I lost ~1/3 of net worth in 2008-09 but the market has since made that up. I've enough to pay the taxes in both countries without selling anything off, and think things will turn around this time before I need to touch any capital.


Financially I'm still healthy, it's the rest of it that concerns me.
Terry

blumenkraft

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Re: Global recession
« Reply #121 on: March 13, 2020, 09:30:25 AM »

bluice

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Re: Global recession
« Reply #122 on: March 13, 2020, 09:33:01 AM »
Quite similar with the Lehman Brothers crash

blumenkraft

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Re: Global recession
« Reply #123 on: March 13, 2020, 09:35:13 AM »
Found a better one and changed the image, Bluice.

Looks like this is unprecedented.

johnm33

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Re: Global recession
« Reply #124 on: March 13, 2020, 09:46:17 AM »
"Central banks are out of ammo" They're never out of ammo, they can print to infinity or press a few keys to create fiat fortunes, the problem is that they are only concerned with making the banks whole, and the banks are blindly competing to hollow out their economies, what could go wrong?

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Re: Global recession
« Reply #125 on: March 13, 2020, 10:24:04 AM »
"Central banks are out of ammo" They're never out of ammo, they can print to infinity or press a few keys to create fiat fortunes, the problem is that they are only concerned with making the banks whole, and the banks are blindly competing to hollow out their economies, what could go wrong?
But if they print to infinity do we get ten digit hyperinflation?
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blumenkraft

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Re: Global recession
« Reply #126 on: March 13, 2020, 10:41:10 AM »
Did the billions and trillions they printed in order to make (illegal) war and save the (failed) financial system cause hyperinflation?

johnm33

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Re: Global recession
« Reply #127 on: March 13, 2020, 11:26:27 AM »
"Hyperinflation" For as long as $ remains the international means of exchange all that needs to be done is to create a demand for it, and to cause widespread destruction is a fine way to accomplish that, plus of course the rich must spend and consume like there's no tomorrow whilst keeping the poor starved of cash. Then there will always be enough demand [for money] and no oversupply of it for goods, just ever increasing asset values and poverty. A sort of sunlit version of hell.

Sigmetnow

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Re: Global recession
« Reply #128 on: March 13, 2020, 11:28:22 AM »
No, the Fed Did Not Just Give Stock Traders $1.5 Trillion
Quote
...The Fed is not jumping in to save the Dow Jones. It is not forking over money so traders can buy shares in Amazon. Rather, it’s using its short-term lending powers to prevent the all-important Treasury market from breaking down and creating another financial crisis.

Every single day, the world’s financial institutions fund themselves using transactions that use U.S. government debt as collateral. These are known as repurchase agreements, or repo deals. One party, like a bank or hedge fund, sells another some securities, usually Treasuries, but agrees to buy them back shortly thereafter at a small markup. It’s effectively a short-term loan with interest. Along with banks, hedge funds, and money market funds, the Fed also participates in the repo market to manage interest rates.

The key thing to realize is that if the repo market seizes up for some reason, much of the financial system ceases to function, since banks and others can’t get their daily funding. The 2008 financial crisis has sometimes been described as a “run on the repo market.”

If you want to picture it all, imagine a pawn shop, but instead of some guy handing over his Fender for a wad of cash, it’s Jamie Dimon walking in with his arms full of Treasuries and a contract that says he’ll buy them all back a day later. Sometimes, the pawnshop owner is Jerome Powell. And if the pawnshop shuts down, then everything goes to hell because Mr. Dimon can’t pay his bills. That’s the repo market, in a nutshell. …
https://slate.com/business/2020/03/federal-reserve-bond-market-wall-street-trillion.html

BUT, everything is far from wonderful.
From December 20219:

The Fed seems to have halted a potential crisis in the overnight lending market — for now
https://www.cnbc.com/2019/12/30/the-fed-seems-to-have-halted-a-potential-crisis-in-the-repo-market.html

From October 2019:
Opinion: The Federal Reserve is in stealth intervention mode
https://www.marketwatch.com/amp/story/guid/03BDDD9A-F676-11E9-8550-0570F53F9A58
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nanning

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Re: Global recession
« Reply #129 on: March 13, 2020, 02:50:29 PM »
Thank you johnm33 for your posts #124 and #127. Beautiful.
"It is preoccupation with possessions, more than anything else, that prevents us from living freely and nobly" - Bertrand Russell
"It is preoccupation with what other people from your groups think of you, that prevents you from living freely and nobly" - Nanning
Why do you keep accumulating stuff?

Sigmetnow

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Re: Global recession
« Reply #130 on: March 13, 2020, 07:25:07 PM »
Here’s what would happen if coronavirus forces the NYSE to close its trading floor
Quote
... Like many organizations, the NYSE has also arranged for employees not working on the floor to work from home.

Cunningham said the NYSE was prepared for the possibility that someone at the exchange or who works on the floor may contract coronavirus:  “If there is an outbreak, we can clean the floor and reopen pretty quickly as well, so that’s something we’re not planning to close the floor at this time, but as you mentioned, we could trade fully electronically.”

The trading floor consists of a mix of floor brokers, who execute orders on behalf of their clients, and designated market makers (DMMs), who are authorized to commit their own capital to provide liquidity and maintain fair and orderly markets. 

In the event the floor physically closed, those DMMs will be able to participate in trading activity remotely, including opening and closing auctions. If they cannot participate in any auction for any particular security, the NYSE itself would open the security.  The DMMs would continue to retain their obligations to provide quotes and maintain fair and orderly markets.


The CME, which runs the Chicago Mercantile Exchange, the largest futures exchange, announced Wednesday night it was closing its futures trading floor as a precaution. This was not a difficult decision:  There are only 54 traders left on the physical floor, according to CME CEO Terry Duffy, and they account for a fraction of the trading volume. CME will continue to trade electronically.

Longer-term, this revives the debate about the value of trading floors in an era of electronic trading. The message is still fairly consistent from the NYSE: DMMs and floor brokers add liquidity and are considered an important differentiator for the NYSE model. ...
https://www.cnbc.com/2020/03/13/heres-what-would-happen-if-coronavirus-forced-the-nyse-to-close-its-trading-floor.html
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Tom_Mazanec

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Re: Global recession
« Reply #131 on: March 13, 2020, 09:24:04 PM »
Think today’s Dow is good news?
2019 World Almanac page 71
Greatest percent gains were in order
3/15/1933
10/6/1931
10/30/1929
9/21/1932
10/13/2008
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blumenkraft

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Re: Global recession
« Reply #132 on: March 14, 2020, 09:11:43 AM »

El Cid

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Re: Global recession
« Reply #133 on: March 15, 2020, 10:44:06 AM »
This is really epic (meaning that on a stupidity scale of 1 to 100, at least 200):

Trump's happy tweet:

BIGGEST STOCK MARKET RISE IN HISTORY YESTERDAY!

This guy is an absolute idiot, I am always amazed at the things he says

El Cid

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Re: Global recession
« Reply #134 on: March 15, 2020, 07:19:57 PM »
This is almost as good:

https://www.marketwatch.com/story/its-a-great-time-to-go-out-california-republican-devin-nunes-talks-about-life-amid-the-coronavirus-pandemic-2020-03-15?mod=mw_latestnews

Republican Congressman says:
"If you’re healthy, you and your family, it’s a great time to just go out and go to a local restaurant, likely you can get in easily. ... [G]o to your local pub."

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Re: Global recession
« Reply #135 on: March 16, 2020, 01:11:53 AM »
So rate cuts are not working . Hardly surprising when it is virus testing that is needed . b.c.
2007 + 5 = 2012 + 4 = 2016 + 3 = 2019 + 2 = 2021 
 (phew)

Tom_Mazanec

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Re: Global recession
« Reply #136 on: March 16, 2020, 01:26:42 AM »
Dow futures down 1041 points.
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Sigmetnow

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Re: Global recession
« Reply #137 on: March 16, 2020, 01:49:03 AM »
Federal Reserve slashes interest rates to zero as part of wide-ranging emergency intervention
The Washington Post
The Fed took dramatic steps not seen since the 2008 financial crisis to bolster the U.S. economy in the face of coronavirus.
Quote

The Federal Reserve announced on Sunday it would drop interest rates to zero and buy at least $700 billion in government and mortgage-related bonds as part of a wide-ranging emergency action to protect the economy from the impact of the coronavirus outbreak.

The moves, the most dramatic by the U.S. central bank since the 2008 financial crisis, are aimed at keeping financial markets stable and borrowing costs as low as possible as businesses around the country shutter and the U.S. economy hurtles toward recession.

The Fed, led by Chairman Jerome H. Powell, effectively cut its benchmark by a full percentage-point to zero. The benchmark U.S. interest rate is now in a range of 0 to 0.25 percent, down from a range of 1 to 1.25 percent.

The Fed also announced it is restarting the crisis-era program of bond purchases known as “quantitative easing,” where the central bank buys hundreds of billions of dollars in bonds to further push down rates and keep markets flowing freely. To help Main Street, the Fed is also giving more generous loans to banks around the country so they can turn around and loan to small businesses and families in need of a lifeline.

“Economic policy experts must do what we can to ease hardships caused by the disruption," Powell said in a conference call Sunday evening. He said the coronavirus outbreak “will have a significant effect on economic activity in the near term.”
https://apple.news/AJ3LQlfbvR92s-tX46Oqvvw

—-
Fed slashes key interest rates to 0% and announces $700 billion QE program, dollar swap to address coronavirus panic
Published: March 15, 2020 at 5:28 p.m. ET
https://www.marketwatch.com/story/fed-slashes-key-interest-rates-to-0-and-announces-700-billion-qe-program-dollar-swap-to-address-coronavirus-panic-2020-03-15
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vox_mundi

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Re: Global recession
« Reply #138 on: March 16, 2020, 01:52:14 AM »
The Plumbing Behind World's Financial Markets is Creaking. Loudly
https://www.mobile.reuters.com/article/amp/idUSKBN2120NJ

Bankers, companies and individual investors are dashing to stock up on cash and other assets considered safe in a downturn to ride out the chaos. This sudden flight to safety is causing havoc in markets for bonds, currency and loans to a degree that hasn’t been seen since the financial crisis of a dozen years ago.

The key concern now, as in 2008, is liquidity: the ready availability of cash and other easily traded financial instruments - and of buyers and sellers who feel secure enough to do deals.

Investors are having trouble buying and selling U.S. Treasuries, considered the safest of all assets. It's a highly unusual occurrence for one of the world's most readily tradable financial instruments. Funding in U.S. dollars, the world's most traded currency, is getting harder to obtain outside the United States.

The cost of funding for money that companies use to make payrolls and other essential short-term needs is rising for weaker-rated firms in the United States. The premium investors pay to buy insurance on junk bonds is increasing. Banks are charging each other more for overnight loans, and companies are drawing down their lines of credit, in case they dry up later.

Taken together, warn some bankers, regulators and investors, these red flags are starting to paint a troubling picture for markets and the global economy: If banks, companies and consumers panic, they can set off a chain of retrenchment that spirals into a bigger funding crunch - and ultimately a deep recession.

Francesco Papadia, who oversaw the European Central Bank's market operations during the region's debt crisis a decade ago, said his biggest fear is that the "illiquidity of markets, generated by extreme uncertainty and panic reaction" could "lead to markets freezing, which is an economic life-threatening event."

"It does not seem to me we are there already, but we could get there quickly," Papadia said.

Investors and regulators have been alarmed, in particular, by liquidity problems in the $17 trillion U.S. Treasuries market.

There are several signs that something is off. Interest rates, or yields, on Treasuries and other bonds move in inverse relation to their prices: If prices fall, the yields rise. Changes are measured in basis points, or hundredths of a percent.

Typically, yields move a few basis points a day. Now, large and unusually quick swings in yields are making it hard for investors to execute orders. Traders said dealers on Wednesday and Thursday significantly widened the spread in price at which they were willing to buy and sell Treasury bonds - a sign of reduced liquidity.

Another alarming signal is the premium non-U.S. borrowers are willing to pay to access dollars, a widely watched gauge of a potential cash crunch. The three-month euro-dollar EURCBS3M=ICAP and dollar-yen JPYCBS3M=ICAP swap spreads surged to their widest since 2017, before dropping on Friday after central banks pumped in more cash.

A measure of the health of the banking system is flashing yellow. The Libor-OIS spread USDL-O0X3=R, which indicates the risk banks are attaching to lending money to one another, has jumped. The spread is now 76 basis points, up from about 13 basis point on Feb. 21, before the coronavirus crunch began in the West. In 2008, it peaked at around 365 basis points.

... An official at a major central bank said the situation is “pretty bad, as all stars are aligned in a negative way.”"Cracks will start to emerge soon,” the official said, “but whether they will develop into something systemic is still hard to say.”
“There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” ― Leonardo da Vinci

Insensible before the wave so soon released by callous fate. Affected most, they understand the least, and understanding, when it comes, invariably arrives too late

Sigmetnow

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Re: Global recession
« Reply #139 on: March 16, 2020, 02:02:31 AM »
Dow futures down 1041 points.

US stock futures hit 'limit down' after Fed cuts interest rate to zero
Quote
New York (CNN Business)Investors were unassuaged by news that the Federal Reserve is cutting interest rates to zero. US stock futures dropped 5% Sunday evening, hitting the "limit down," meaning they can't fall any further.

Dow (INDU) futures plummeted and were last down 1,041 points, or about 4.5%. S&P 500 (SPX) futures were down about 4.8% , while Nasdaq (COMP) futures were down 4.5%.

Last week all three indexes fell into a bear market, declining more than 20% from their recent peak.
The sharp decline in futures came after the Federal Reserve announced an emergency rate cut, and said it would purchase another $700 billion worth of Treasury bonds and mortgage-backed securities, in a bid to support the economy during the coronavirus pandemic.

The swifter-than-expected rate cut is designed to prevent the kind of credit crunch and financial market disruptions that occurred the last time the Fed had to cut rates all the way to the bottom.

"I don't think [the Fed] would have done this unless they felt the financial markets were at significant risk of freezing up tomorrow. They're very concerned the financial markets won't work. So I don't know how the markets take solace in this." Mark Zandi, chief economist of Moody's Analytics, told CNN Business.

The Fed last cut rates to zero during the global financial crisis just over a decade ago.
https://www.cnn.com/2020/03/15/investing/stock-futures-global/index.html
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vox_mundi

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Re: Global recession
« Reply #140 on: March 16, 2020, 02:14:14 AM »
“There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” ― Leonardo da Vinci

Insensible before the wave so soon released by callous fate. Affected most, they understand the least, and understanding, when it comes, invariably arrives too late

Sigmetnow

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Re: Global recession
« Reply #141 on: March 16, 2020, 02:42:00 AM »
.
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NevB

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Re: Global recession
« Reply #142 on: March 16, 2020, 01:07:52 PM »
Found a better one and changed the image, Bluice.

Looks like this is unprecedented.

Do you have a source?
 
I would like to share this with a friend and it would be better if it was sourced.

blumenkraft

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Re: Global recession
« Reply #143 on: March 16, 2020, 02:38:05 PM »
NevB, i got that from Reddit. IIRC it was at r/economics. Can't find it ATM. :-/

Tor Bejnar

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Re: Global recession
« Reply #144 on: March 16, 2020, 03:09:04 PM »
https://www.cnn.com/2020/03/15/investing/stock-futures-global/index.html
Quote
New York (CNN Business)US stocks opened sharply lower on Monday as investors grew concerned that the emergency policy measures by global central banks over the weekend meant the economy is in much worse shape than previously believed.
Instead of soothing the markets, another emergency interest rate cut from the Federal Reserve had the opposite effect.
The S&P 500 opened down 8.1%. The index hit a circuit breaker after falling more than 7%. Trading is now halted for 15 minutes.
The Dow opened 9.7%, or 2,250 points, lower and the Nasdaq Composite fell 6.1%.

Global stock markets also plunged Monday as data showed the outbreak has caused an unprecedented economic collapse in China.
Markets were battered across Asia, with Australia's benchmark index crashing nearly 10% in its worst day on record. In Europe, London's FTSE 100 (UKX) fell 8%, while France's CAC 40 (CAC40) plunged over 10% and Germany's DAX (DAX) dropped roughly 9%.
...
[emphasis added]

"Coming to an economy near you!"  :-\ :'(
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Sigmetnow

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Re: Global recession
« Reply #145 on: March 16, 2020, 04:05:35 PM »
Stock- market futures sink after emergency Fed rate cut — ‘if this doesn’t work, what will?’
Quote
U.S. stock-index futures fell sharply Sunday night following the Federal Reserve’s emergency decision to slash interest rates nearly to zero and buy $700 billion in Treasurys and mortgage-backed securities in an effort to quell financial market turmoil sparked by the global coronavirus pandemic.

“The Fed has thrown most its weight behind this move, offering almost everything it has to give, which raises the inevitable question — if this doesn’t work, what will?” said Seema Shah, chief strategist at Principal Global Investors. “The immediate negative reaction suggests markets are already worrying about that, and governments likely need to accelerate their fiscal action.”

Some observers argued that while the Fed’s moves were justified, the timing of the announcement ahead of the open of Asian markets late Sunday and in lieu of a policy meeting that had been sent for this week appeared desperate.

“When you have folks in power acting in a very panicky way, doing off-scheduled meetings and throwing everything they can at the situation, that doesn’t send a very reassuring signal to the general population.”
said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors, in an interview. …
https://www.marketwatch.com/story/stock-market-sinks-after-emergency-fed-rate-cut-if-this-doesnt-work-what-will-2020-03-15
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El Cid

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Re: Global recession
« Reply #146 on: March 16, 2020, 05:22:35 PM »
This is going to be an extremely deep, major recession. Some firms will go bankrupt. But there is also going to be a huge fiscal stimulus everywhere. 2021 will see very strong growth, 2022 as well.

If you buy stocks now you might regret it in a week or a month but will likely be very happy with your decision in 2 or 3 years. This is 2008/9 all over again. Buying after Lehman seemed stupid for a while but in retrospect it was a great decision.

blumenkraft

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Re: Global recession
« Reply #147 on: March 16, 2020, 05:24:43 PM »
"the time to buy is when there's blood in the streets."

... or a virus, for that matter.

The only question, how low will it go?

gerontocrat

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Re: Global recession
« Reply #148 on: March 16, 2020, 08:26:58 PM »
"the time to buy is when there's blood in the streets."

... or a virus, for that matter.

The only question, how low will it go?
After Sunday's concerted massive intervention by Central Banks, at 3 pm EDT on Monday 16 March we see.......

WTI crude down $ 2.64 at $ 29
S&P 500 down 26% in one month

see attached for more financial horror.


Bloomberg Headlines from the Commodities page https://www.bloomberg.com/markets/commodities

2 HOURS AGO Gold Falls Again After the Metal’s Worst Week in Four Decades

9:50 AM  Oil Slumps to Lowest Since 2016 as Demand Collapse Triggers Rout

2:13 AM  China’s Economy Suffers Historic Slump Due to Virus Shutdown

3/15/2020 Young Climate Activists Change Tactics as Virus Spreads

3/15/2020 Global Oil Use Heads for Record Annual Drop as Virus Spreads

The markets think the economic damage will be more than trivial ?
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Sigmetnow

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Re: Global recession
« Reply #149 on: March 16, 2020, 08:47:22 PM »
Bridgewater's Dalio says Fed has done all it can, targeted fiscal stimulus is needed
Quote
Dalio said the Fed has done all it can do as of now, and the next stage would be a coordinated policy with the government where the central bank buys assets used to fund deficits. Zero rates do not come without risks, and he has been worried the Fed would return to a zero target on the fed funds rate.

"Long-term interest rates hitting the hard 0% floor means that virtually all asset classes go down because the positive effects of interest rates falling won't exist (at least not much). Hitting this 0% floor also means that virtually all the reserve country central banks' interest rate stimulation tools (including cutting rates and yield curve guidance) won't work," Dalio wrote. "The printing of money and buying of debt assets that central banks are now allowed to buy almost certainly won't work much (because bonds can't be pushed much higher and they are also less likely to be sold to buy other assets of entities that are in financial trouble)." ...
https://www.cnbc.com/2020/03/16/bridgewaters-dalio-says-fed-has-done-all-it-can-targeted-fiscal-stimulus-needed.html

But even Dalio didn’t know how to invest around COVID-19.  His largest hedge fund lost 20%:
‘We didn’t know how to navigate the virus and chose not to because we didn’t think we had an edge in trading it. So, we stayed in our positions and in retrospect we should have cut all risk.’
[Bridgewater's Dalio,] Head of world’s largest hedge fund says his firm ‘didn’t know how to navigate coronavirus’ stock selloff and should have ‘cut all risk’ but failed to react
Published: March 15, 2020 at 5:00 p.m. ET
http://www.marketwatch.com/story/head-of-worlds-largest-hedge-fund-says-his-firm-didnt-know-how-to-navigate-coronavirus-stock-selloff-and-should-have-cut-all-risk-but-failed-to-react-2020-03-15
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