Oso planning to go pro
Goldman just cut US GDP forecast to -5% EOY. Was at 0% going into Q1. We're about to enter a world of suck. https://twitter.com/biancoresearch/status/1239301815847567360
Fed just cut interest rate by a full point....https://www.nytimes.com/2020/03/15/business/economy/federal-reserve-coronavirus.htmlProbably a boost in the short-term, but the long-term outcome is still FAR more dependent on whether we can flatten the covid-19 curve.
Futures just opened at -800.
To me, as an investor this seems like pure panic. I get the idea, but confidence is shaken.
Speaking of confidence. The people standing behind the president as he spoke, did not look confident. They looked sick, one even shaking his head. If your read body language, it was not a good read.
Until he learns to just shut up, things will continue to go down the tubes. Lies and bitterness do not stem a crisis on Wall Street.
Instead, two decades of rock-bottom interest rates have hurt the nation of savers, who have responded by tightening their belts. Low-cost loans have propped up unprofitable companies while big business has piled into investing overseas as the market shrinks at home.Those two decades of failure to reflate the economy have created a whole generation of consumers with little understanding or expectation of rising prices, complicating Kuroda’s efforts even further. Banks and debt markets have been caught in the crossfire, with negative rates crushing the profit margin on lending and the BOJ’s massive asset buying under quantitative easing sucking the life out of bond trading.While it’s hard to call the world’s greatest monetary experiment a success, it’s also clear things would have been far worse without it. The BOJ has got the better of deflation, even if the consumer price index dips into the red briefly in 2019 because of low oil prices and one-off changes in phone and education costs. And instead of economic malaise, Japan has enjoyed a modest expansion in recent years, with unemployment near the lowest since 1992 and wage growth, though tepid, still the best in many years.
I mean, you had stocks trading at historically high multiples that were then hit by a black swan event. Fed rate cuts are a blunt tool that is going to have a limited impact IMO. I think it would be much more useful to provide stimulus rebates, i.e., checks directly to individuals as was done in 2008. Businesses don't have any reason to use cheap funds to expand in the midst of this situation, but individuals that are out of work will certainly spend it.
Two black swan events, actually. Had the coronavirus not been a thing, the Saudi-Russia oil battle would be dominating financial headlines.Otherwise, agree totally with what you say.Over the years, increased unemployment benefits have been a great financial stimulus because these folks immediately put the money back into the economy. Unemployment is low now, but the point is the same -- give people in need money to spend right now. Don't give it to corporations who will pocket it, invest it, use it for long-term acquisitions, use it for buybacks, etc.
The market turn down was not a “black swan event.” Market Long-term indicators were very overbought and they warn us weeks before the correction.