Coronavirus in Massachusetts (Russell: directions, agreement, positions)

[htfdcolt]

Originally Posted by Shrewsburried

Thanks for the reminder, dad.

To some degree, equity markets are supposed to price in current and future economic data. Currently, the equity markets are particularly detached from economic realities.

The Russell index and HYG index maintain a loose correlation, so when the Fed injects itself into bond markets it causes a very direct ‘pop’ on the Russell and, to a lesser degree the larger cap indexes. Add ridiculous pumps on severely overstated Gilead “trials” and now, even Wall St. pundits, are asking traders to slow their roll.

You may accuse me too of stating the obvious, but here goes.

Unemployment numbers, particularly when they can be associated with specific companies doing mass announced layoffs, show the market that those companies are taking prudent measures to keep their margins and profitability in line with reduced demand. I know this sounds heartless, but to do otherwise would be irresponsible and poor financial management. Therefore the market rewards this prudence by valuing their stocks favorably for the future.

This is precisely why we need government intervention in catastrophes of this nature. Because companies are incentivized to act in the interests of their stockholders.

[sawyer2]

Originally Posted by Steephill2

If it’s not why is so much effort put into propping it up and not more effort or $$ to help the actual economy? How in the world did they not have enough money for the small business loans and had to add more money to it? the Federal reserve’s dual mandate is maximizing employment and stable prices. Not doing very well with #1 and unsure what the plans are to limit the job losses out there. Over 30 m now.

Need $ to fund the upcoming war with China

[Steephill2]

Originally Posted by sawyer2

Need $ to fund the upcoming war with China

If that’s what you think, gonna have to borrow more from China. What a bizarre world we live in.

[id77]

Originally Posted by Shrewsburried

Thanks for the reminder, dad.

To some degree, equity markets are supposed to price in current and future economic data. Currently, the equity markets are particularly detached from economic realities.

The Russell index and HYG index maintain a loose correlation, so when the Fed injects itself into bond markets it causes a very direct ‘pop’ on the Russell and, to a lesser degree the larger cap indexes. Add ridiculous pumps on severely overstated Gilead “trials” and now, even Wall St. pundits, are asking traders to slow their roll.

I feel like we're all perhaps overanalyzing this a bit much. At the very basic core of things, is the stock market not exactly that: a market for stocks? People buy stocks. People sell stocks.

The current numbers suggest that, despite what you or the pundits believe investors should think or should fear or should do, many still feel comfortable enough in the way things are and the way things are going to buy those shares off someone selling them.

Just because people are being laid off en masse and trials for a drug with no control testing is being very overhyped prematurely (which I agree it is) does not mean the people who have the cash in hand to buy stock aren't supposed to be bearish.

Example: Disney may have laid off 100k people, but they kept their dividend in the process, which means DIS holders are getting paid. The ships might not be sailing now, but they eventually will again, and people buying DIS believe that after all this is done and over with, the typical idiot consumerist American will go right back to be typical idiot consumerist American who goes to Disneyworld, rides on Disney cruise ships, and buys overpriced Disney crap for their screaming spawn. They see the opportunity at the end of the rainbow here, not the current disaster.

[bohemka]

Originally Posted by id77

I feel like we're all perhaps overanalyzing this a bit much. At the very basic core of things, is the stock market not exactly that: a market for stocks? People buy stocks. People sell stocks.

The current numbers suggest that, despite what you or the pundits believe investors should think or should fear or should do, many still feel comfortable enough in the way things are and the way things are going to buy those shares off someone selling them.

Just because people are being laid off en masse and trials for a drug with no control testing is being very overhyped prematurely (which I agree it is) does not mean the people who have the cash in hand to buy stock aren't supposed to be bearish.

Example: Disney may have laid off 100k people, but they kept their dividend in the process, which means DIS holders are getting paid. The ships might not be sailing now, but they eventually will again, and people buying DIS believe that after all this is done and over with, the typical idiot consumerist American will go right back to be typical idiot consumerist American who goes to Disneyworld, rides on Disney cruise ships, and buys overpriced Disney crap for their screaming spawn. They see the opportunity at the end of the rainbow here, not the current disaster.

I agree with all those points, but with a second (maybe third, fourth?) wave ahead, thirty million unemployment filings over the past six weeks, and a significant number of people who are struggling financially and may never regain their jobs, the purchasing power of "typical idiot consumerist American" is greatly reduced if not altered forever.

[western mass and love it]

All this talk of future waves is fear mongering. There is no current data showing any future waves. Just pure speculation and fear mongering to keep things as they are now. Why anyone would want things as they are now though is beyond me.

[id77]

Originally Posted by bohemka

I agree with all those points, but with a second (maybe third, fourth?) wave ahead, thirty million unemployment filings over the past six weeks, and a significant number of people who are struggling financially and may never regain their jobs, the purchasing power of "typical idiot consumerist American" is greatly reduced if not altered forever.

Disney in particular has been parting fools from their money since the Great Depression. I suspect if the landscape changes yet again, they'll figure out new ways to squeeze blood from the poor's stones.

Other companies will follow suit.

The key takeaway is that everything, including the pandemic (despite what many want to believe today about its effects), eventually will pass and things will move ever upward and onward. Some won't recover, but new people to the labor market will emerge and take their place. Thus it has always been.

The 60-something investor may do well to sit this one out, but the 30- and 40-something has gobs of time to ride out any recession or depression.

[mp775]

Originally Posted by justyouraveragetenant

Youtube...could be seen as a monopoly.

Originally Posted by justyouraveragetenant

Bitchute is a site like youtube but it does not censor videos. Videos that have been banned from youtube are often found on Bitchute.

Nope, not a monopoly.

[Shrewsburried]

Originally Posted by id77

I feel like we're all perhaps overanalyzing this a bit much. At the very basic core of things, is the stock market not exactly that: a market for stocks? People buy stocks. People sell stocks.

The current numbers suggest that, despite what you or the pundits believe investors should think or should fear or should do, many still feel comfortable enough in the way things are and the way things are going to buy those shares off someone selling them.

Full disclosure: my opinions aren't that of a passive 401k/IRA investor, so I when I'm discussing equities it's within the context of someone who actively trades on a much shorter timeline (particularly if it's options). I've been day trading the volatility since January and what I've been seeing over the past 4-6 weeks is a low volume melt up - emphasis on LOW volume. Big hedges have been overwhelming on the sell side over the past two weeks and huge amounts of capital are sitting out of this rally, including the beloved Berk (Buffet, Munger & Co).

My opinion, similar to that of Gunlach or even Dimon, is that equities have overshot future uncertainty ... not just Covid-19, but also the pending U.S election, consumer debt load, etc. Those buying BA or DAL likely have little to fear depending on when they bought in, but many tech stocks or even retail remain near ATHs ... those could see a painful drop if they return to more sober PE ratios.

Fed won this round, but we'll see whether massive amounts of stimulus can sustain equities through depressed demand. I believe that like 2009, this current stimulus boost also falls under "this too will pass"; i.e., we will retest lows by Q4.

[id77]

Originally Posted by Shrewsburried

Full disclosure: my opinions aren't that of a passive 401k/IRA investor, so I when I'm discussing equities it's within the context of someone who actively trades on a much shorter timeline (particularly if it's options). I've been day trading the volatility since January and what I've been seeing over the past 4-6 weeks is a low volume melt up - emphasis on LOW volume. Big hedges have been overwhelming on the sell side over the past two weeks and huge amounts of capital are sitting out of this rally, including the beloved Berk (Buffet, Munger & Co).

My opinion, similar to that of Gunlach or even Dimon, is that equities have overshot future uncertainty ... not just Covid-19, but also the pending U.S election, consumer debt load, etc. Those buying BA or DAL likely have little to fear depending on when they bought in, but many tech stocks or even retail remain near ATHs ... those could see a painful drop if they return to more sober PE ratios.

Fed won this round, but we'll see whether massive amounts of stimulus can sustain equities through depressed demand. I believe that like 2009, this current stimulus boost also falls under "this too will pass"; i.e., we will retest lows by Q4.

As someone whose positions are heavy in tech stocks, I'll offer my two cents on that sector.

A fall from tech's pedestal back to earth isn't going to happen. Not only despite the pandemic, but in some ways because of it. The cloud, telecommunications, e-services (in turn feeding back to the cloud), and the like are all largely impervious to quarantines and shutdowns. The working from home and business continuity that is happening today is because of tech's infrastructure. Many of these companies also work largely outside of consumer circles. For instance, anyone who thinks of AMZN as a retail giant only is completely missing the enterprise powerhouse they are in AWS. The average unemployed Joe probably has little to no knowledge what AWS really even is, despite the fact that they use and interact with it multiple times every single day. We've already seen from GOOG and MSFT earnings the explosive growth in the cloud. Other tech companies like chipmakers and software produce for or leverage the cloud and continue to operate because of it.

I can see some small cap and niche players in tech coming back to earth, but the big boys in the S&P will not lose 40 or even 30% from their current state this year, or next. If MSFT fell to $140, I'd be all over more of it so fast...but so would a lot of others. Even in the late March lows, it didn't stay below $150 for long. AMZN's more or less been immune, and GOOG's brief stint below $1100 has all but vanished.

I agree that those who bought in on a BA or DAL (or, in my case, both) are doing it for the long-term return. I'm quite comfortable both will make some form of comeback, and certainly to levels higher than they're trading today.