The Dow industrials rose more than 1,300 points, putting it 20% above its recent low and back into bull-market territory, despite unemployment claims soaring in a fresh sign of the economic disruption caused by the coronavirus pandemic.
RT @skwp: Complete and utter horse manure. The entire world economy is shut down or shutting down. Unemployment about to go through the roof. They’re printing money as if that fixes anything. Don’t believe the hype. Buy #Bitcoin https://t.co/ySv2htCW1V
Lot‘s of ppl in #crypto getting very excited about how „legacy markets“ seem to just be waiting for the next #altseason like in $crypto. So let me just explain: there is a long standing, idiotic „definition“ of a bear or bull market in stocks: https://t.co/u2d4UxedpH
This is a dead cat bounce at best, we haven’t even come remotely close to the worst of things. There will “absolutely” be another huge drop in the market in the near future when corona becomes much worse in our county. Don’t buy in long term thinking you’re getting a steal, if you don’t sell soon you’ll be left holding for quite something time. Market trend won’t last, but enjoy it while you can
People aren't afraid of this anymore, we have all been inundated with it every day since it started, it's just becoming normal now in our minds. People are starting to realize the world won't end, and the panic sellers are getting back in again. That and the fed's money machine got the print switch taped down, and it's spewing its tendies directly into the market every time there is any type of bad news. This is classic bandwagoning, make the market go up, people FOMO, and wallah.
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Buddy take something into consideration. 90% of stocks are owned by people who are in a biological weapons bunker called their house. You know the rich people who own everything, they have more than enough money to buy an hold (for generations until the end of time).
You think these people give a shit that the populations thinning. People are very easy to make.
The math was wrong. The epidemiologist behind the coronavirus model, which everyone is citing, revised his initial estimate. He now says that it's not as bad, projecting 20K deaths - possibly lower still - in the UK, down from 500K, a 96% decrease in projected deaths. 20K may still be a lot, but in the context of every day illnesses it's quite small.
Can anyone explain this? Is it hopeful optimism? Because a lot of info isn’t really justifying this. I guess maybe they liked public officials outing themselves as sociopaths, but that’s all I can think of.
I've finally realized that we don't have anywhere close to a free market in terms of the debt and equity markets. As long as the Fed is willing to step in, you have to assume there is a giant safety net underneath certain asset classes and prices regardless of the underlying fundamentals.
On the demand side, gratuitous govt spending boosts demand in the short term. On the supply side, it's a game of chicken between boomers and working age adults. The market trending upward indicates an expectation that going back to work is more likely than welding workers in houses to save grandpa.
Which is better? *Shrugs*
Can someone explain this to a layman? I know that unemployment was expected and baked in to the market, and that the stimulus bill is giving hope to investors, but the rise over these past two days still seems incredibly unwarranted. Am I missing something?
In my opinion, it's a result of a reduction in uncertainty. Additionally, the fiscal bill is nearly guaranteed to pass on Friday, which might have precipitated a short squeeze near the end of the day. Overall though, it's important to remember that assigning narratives to price movements is a futile human behavior. It's mostly a random walk. It's also worth noting that the market overall is down over the past month, massively.
Anecdotally, I've been 23/7 trading the market since it went into "parabolic dotcom mode" a few months ago, and was incredibly bearish on the jobs numbers yesterday. I live in a state that has a shutdown mandate, and some of the estimates of 1 million filing for unemployment were just ludicrously low. I may have even made some ranting posts on other sites about how out of touch with working America Wall Street is, and how damage being done via cut hours, people working side gigs, etc is vastly understated.
None the less, I opened a short VIX position and grabbed some short dated calls on corona exposed stocks, fully expecting nasty job numbers (which we got). Going long into today was sort of a base level contrarian move, which is a position traders spend more time in than out of.
So I'm not sure you're missing anything, and I'm not sure I'm adding much, but generally, being contrarian can get you ahead of the curve and in times of spiked volatility that can generate outsized returns. In high volatility times like this, market behavior like "profit taking" or "entering beaten down bargain positions" can register on the tape for a long time. When there is 10x the amount of unrealized gains on open short positions, any sort of momentum/fear-of-missing-out in regards to them taking profit/closing positions can take a while to play out, to the extent where its tradable on a human scale and is not just a blip that trades with an HFT bot or feeds a darkpool.
Liquidity on the market is often very low currently. If you look on the lvl 2, especially in the options market, the bots are running high spreads and sometimes just "nope" out of an equity entirely for a period of time if bids/asks are thin or vol spikes. Usually, spreads are impressively tight and market makers are happy to delta hedge any position you want and gamma scalp for a few slivers of a percent. Not now - they won't play unless it's clearly in their favor, due to people (and presumably high frequency bots) coming in and slamming stocks up and down on a regular basis. This can be a result of big institutional positions unrolling, margin calls on big accounts, or ultra smart quant strategies raiding an unsuspecting bid/ask in a microsecond (presumably the smart smart money is making insane profit currently). As a result, everyone is defensive. There is money to be made simple waiting for people to aggressively enter positions and/or dump positions out of panic or necessity, so why close the spreads.
Finally, in regards to the "rise of the past two days"... are you referring to an index? Within the index, there are companies +30% due to benefiting from the Fed expanding its collateral scope, and other companies bleeding a few percent every day due to corona exposure. The value of an index price doesn't have much value right now outside of the (admittedly massive) ETF market. Well, the index price does have some value, but it needs to be evaluated alongside capital flows, forex rates, bonds, and macro factors, since so much money is flowing through world markets currently. Within the index is where the actual story is taking place. At the end of this story, there will likely be a new regime that values equities on different criteria than before. Maybe some forgotten value stocks will be "hot", maybe some tech momentum stocks that were big will bleed half of their market cap and lose investor interest within the next year. Gotta drill down a bit more instead of simply looking at SP500 percentage up or down.
Lots to think about, and this is a strange time to trade! It's a very "human" market compared to the low-vol, optimized, momentum environment we just exited.
08 had similar huge upswings and downswings as the market tries to sort this out. There was an unbelievable sell off. Some think it may have been too much and were seeing a rally. It’s been expected that these numbers would be horrible. It could go as high as 40 million by the end of April. Decisions are being made with that in mind. In times of great uncertainty you tend to see large fluctuations.
Kinda scary. I mean this is the perfect set up for a corporate take over. All the plebs sold off their stock so the rich own even more of the market, people are under house arrest unless essential. Public gatherings are illegal and unemplyment is so sky high workers dare not act out.
Equity markets are realistic about the future. Most countries have two high level options:
1) Keep everything shutdown until mask production becomes adequate for businesses to reopen or a vaccine is developed. This keeps sickly boomers from dying in droves. Also it craters the economy and working age people die in droves from not being able to afford food/shelter/etc because you cant live on good intentions. And no, arbitrarily large amounts of inflation driven govt checks aren't food/shelter/etc.
2) Businesses reopen and return to producing goods and services. Boomers die in droves from WuFlu. However, since very few of them were working, their deaths dont impact the production of goods and services that much and returns aggregate demand to normal levels (their heirs just buy avocado toast instead of dentures).
Now it may be grim, but which option do you think Western nations are going to *de facto* pick? Starving their workers or their retirees dying of plague? If you think it Door #1, then equity markets should still be in free fall. If you think it's Door #2, then markets should be stabilizing or rebounding.
Some non-Western countries (e.g. South Korea) are picking Door #1. Some Western nations (like Italy) went hard into Door #2 and are frantically trying to backpedal.
It really is like reddit has a master plan of just making me fall in topics were people keep repeating "gee, government is printing money, here comes inflation". When that is absolutely not a given. I Think Reddit is playing a prank on me.
Seriously, the explanation being simple is not a proof that the theory is true.
> Also it craters the economy and working age people die in droves from not being able to afford food/shelter/etc because you cant live on good intentions. And no, arbitrarily large amounts of inflation driven govt checks aren't food/shelter/etc.
Yeah, you don't know what you're talking about.
What if states like IL, CA, and NY are forced (or at least feel forced) to select door #1 because of their population densities, and most of the rest of the country selects door #2? The reason I ask is because while Trump claims he shut down the country, but he didn’t. Governors did. While Trump may make a speech and declare us open for business, there’s no guarantee those three states I mentioned follow suit on his timeline. What then?
You're correct, shutdowns were absolutely driven by state governors not the US's president. This is important because those three de facto Wuflu leper colonies are hostile to Trump to say the least. Ergo if Trump suggests Door #2...there's almost no chance those three states will follow suit. It'd be political suicide for their governors to be seen as "siding" with him. Honestly I suspect that if he pushed for Door #1 instead, they'd fall over themselves to reopen businesses ASAP. US politics are that polarized.
The macro impact of this is that NYC, California, and Washington's governors are likely to want stay shut down for an extended period with massive impacts to their economies...but the rest of the US will try to reopen. Which is going to influence a lot of workers from those leper colonies to leave to states that are open. Which will either lead to shifting economic production away from those three states in the long term or turn the other 47 states into Italy 2.0.
It's a really weird situation to watch, and likely one with multi-decade consequences.
This is indicative of *inflation* not economic development. Congress helicoptering trillions of debt-based cash into a dual sided supply and demand shock will push equities up because more cash chasing fewer goods will lead people to buy equities as their dollars lose value.
Functionality it's no different than if Weimar Germany doubled its currency in circulation and acted all surprised that the nominal value of domestic equities doubled. It isnt growth, it's why X = 100 and 2X = 200 are the same number.
> Is the dow a good indicator of economic stability and development ?
A big dropoff is expected, it could be when certain statistics come out, or it could be tomorrow (a lot less likely), but it's gonna happen.
Look at the 2008 chart, it's full of bounces:
Lots of people tend to value the S&P 500 more as an indicator [due to the differences in how the two are weighted](https://www.investopedia.com/ask/answers/difference-between-dow-jones-industrial-average-and-sp-500/), but that’s not to say the Dow is a bad gauge.