U.S. Stocks Rise After S&P 500’s Record Close
wsj.com
wsj.com
I don't think that's ever been any clearer than it is now.
The damage from this is just getting started, we're already in recession, and the stock market is setting all-time highs. It's a bit bizarre.
Most people on unemployment are laid off. They are not applying for new jobs because they assume that they will have a job to go back to shortly.
These people are also dealing with the clusterfuck surrounding schooling & childcare. From what I've seen, it's close to impossible to get your younger child back into childcare. The older ones taking remote classes in school require a good deal of adult attention.
I don't think a lot of people would change jobs even for a big raise because things are so hectic right now. Even people here on HN are struggling to balance their lives, and these are people who earn good wages and have a lot of flexibility with their schedule.
The stock market is setting new highs in anticipation of a renaissance in worker efficiency and business margins.
If living poverty makes people more industrious, then people who grew up in poverty should have better outcomes than people who never have.
And that's pretty well proven to by false. In fact, there's a name for all of the negative effects of living in poverty that perpetuate a life in poverty: the cycle of poverty.
We're not even in the first inning of this crisis - We're still in batting practice. The ripples and waves of this crisis will probably (just my arm chair opinion) last for years, if not the next decade.
But, hey, who knows! Maybe it'll all be over and done with next spring post vaccine. We'll be back to 4% unemployment and it'll be like it never happened from an economic perspective. Seems unlikely to me, but I'm not an economist.
I don't bet on this happening, but it is certainly a possible outcome.
A lot of the issues we are facing are the result of supply shortages due to people not being able to operate in close proximity to one another. If not for Covid, then it's likely that the economy would have continued to grow.
If you think about it, the US economy continued to grow over the past decade even while the collapse of the retail, energy, and agricultural sectors during that time frame. Once people are able to return to being in large groups, it's not unreasonable to expect growth to continue.
"We" as in "tech workers making several times the min wage" ? Or "we" as "people who already lived in precarious conditions before covid" ?
Not to rain on your parade but _a lot_ of people are _very badly_ affected by the situation, especially in the US.
eg. https://www.marketwatch.com/story/apple-pulls-in-pricing-joi...
If you're wondering who's buying 30year corporate bonds that have yields lower than pretty much any current inflation predictions, the US Federal Reserve has a new directive under the CARES act to buy into corporate bonds. https://www.marketplace.org/2020/06/16/the-fed-starts-buying...
If you are in a position to sell corporate bonds right now you can set the rates to well below inflation predictions and they will still sell thanks to government intervention. The real kicker is that the more this is done the more inflation will kick in making it an even better deal.
For the common person the only way to get advantage from this ridiculous situation is to own shares in these corporations that are issuing low rate bonds and buying back shares.
This just isn't true, Apple has sold debt for as long as their Non US cash position has been material, so they could access their non US cash without having to repatriate(pay US taxes on it) their cash.
A simple look on a Bloomberg terminal shows they have outstanding debt from 2014
I think the point still stands as a whole though. When you see things such as "Of the $10 billion on offer, the $1 billion five-year tranche was issued at a coupon of 0.45%, the lowest coupon seen on a U.S. corporate bond at that maturity, according to Refinitiv data, which goes back to 1980." It's worth highlighting the rarity of these circumstances. https://www.reuters.com/article/us-alphabet-bonds/google-own...
The corporate bond yield has since recovered as the stock market doing better and money moved out of bond into stock.
Seriously thought, this is a landmine. If the company faces cashflow issues and they can't pay their bond payments, then the company can be sent into a negative feedback loop where their stock price continues to fall, making it harder to borrow, which eventually leads to bankruptcy.
This is the situation that happens a lot with companies who are otherwise profitable. They just have too much debt as the result of a leveraged buyback. So they are operating on the edge, and one bad quarter throws them into a tailspin.
COVID leaves physical capital almost entirely untouched. It is most harmful to people and in particular the poor who often work "essential" (but undercompensated) jobs, those without healthcare, and small business owners. National restaurant chains can ride it out while sole owner ones with less cushion fold. Small stores die while everyone flocks to Amazon.
The pandemic is essentially a net transfer of power to the rich. The stock market is an index of the rich—the wealthiest 10% own 85% of all stock. Of course it's going up.
If we don't figure out how to more equally distribute the rewards of capitalism, we may find there are very few people left to buy the goods founders want to sell, unless we all want to do high-end art marketplace startups.
We could have a financier as a main course as well as a dessert.
But trillions are being redistributed and that is why the stock market is up. Creating money out of nothing is a wealth tax.
We actually have figured it out. It's called "taxes". Taxes are how you do it. There, mystery solved.
The problem is that the rich have reached a level of power —through Citizens United, Fox News, disenfranchisement, and just straight up getting richer—that they can prevent taxes that harm them but would benefit the majority of Americans.
The stock market is a scam. A the biggest pyramid scheme the world has ever seen. CEOs who understand how the system works and willingly participate in it are criminals.
At least “you are taking the same risk as the market” (roughly speaking).
If it is true though, then I don't see how it can last with so many of these new investor now being unemployed and losing the $600 a week.
The problem with using the market as a savings account is the times large numbers of people need to dip into savings tend to coincide with the times the market is dipping.
If you don't use the stock market as your savings account, that's reasonable for your risk tolerance but the truth is that people have cottoned on to the true risk and they've adjusted their behaviour to match their tolerance.
Having to do it when it's depleted by market crash sucks.
or get some bond ETF that has less volatility. the dividends will still exceed anything you get from a savings account.
or even just leave the cash in the vanguard money market fund. that won't even lose value, and actually pays interest.
so... s/the affluent/the educated/ perhaps
https://www.investopedia.com/terms/p/permanent-portfolio.asp
Companies that are more profitable have higher value stock - increasing the demand for it, no?
Case in point: https://news.ycombinator.com/item?id=23529088
This is stupid. nothing's real anymore.
Hypothetical example:
Today, SPY is 339 and DXY is 92.82.
One year from today, SPY is 500 and DXY is 45. Is this valuation higher or lower than today's?
If that is the case, then you also have to wonder what this will do to the long term market. If everyone is only buying and holding (except when they retire), then the market can’t really go down. Or can it?
Possibly consumer, buy-and-hold investors are out-influencing Wall Street traders? I find that hard to believe, but it does seem like a long-term possibility.
If a recession is bad enough that people have to liquidate investments to pay the bills, investment mentality is irrelevant. As it happens, in this particular recession, office workers who may have money in the market are generally not doing too bad because they can continue to work remote.
> (except when they retire)
In theory, if the amount of dollars being liquidated through retirees is greater than the amount of dollars being invested by workers (when the entire boomer generation has retired), this could imply that markets go down.
Outside of BTC, gold, and housing in some places, there really aren't any other choices. Government bonds are 0% or negative.