The DOW is down about 6.5% and the S&P 500 over 6%.
Q: Why?
A: Fake news and oil.
Good News on Fake News
Thank you Mike Pence and the Task Team, especially communications czar Pence for stopping the spread of fake news. Uh.. wait a minute on that.
And look at all their other accomplishments, like. Hmmm. I will have a list this afternoon because there are too many accomplishments to list at the moment.
Meanwhile, please note our best in the world job of testing. Only those we have tested have the coronavirus because we are smart enough to only test those we are pretty sure have it.
Meanwhile
“Nothing is shut down, life & the economy go on.” https://t.co/pMVtjkDtBL
— Carl Quintanilla (@carlquintanilla) March 9, 2020
How the Tune Changes
https://twitter.com/_Kenziepuff/status/1237036789178695681
Mike “Mish” Shedlock
Why wouldn’t Trump impose tariffs on imported oil to protect domestic producers and stabilize the credit market?
Maybe because the US imports hardly any petroleum product anymore? And most of the net import comes from Canada (big problem?) https://www.eia.gov/tools/faqs/faq.php?id=727&t=6
Someone should tell the guy that the US is now a net exporter of oil. Super low oil prices are NOT good. Oh, and there’s the problem of the $200 billion in oil company debt out there that’s probably going to go under pretty quickly.
If Putin and MBS decide to compete for the title of “who can hand Americans the most valuable stuff for free”, that’s a good thing for Americans.
Americans get to have their valuable stuff in the ground, and eat the Saudi/Russian stuff too. It’s a win in aggregate. Lower prices always are. On anything from cellphones to oil to stocks and bonds.
Mish – interested to hear your opinion o n how this will impact housing prices, and on what timeline? I’ve probably heard coworkers mention “refinance” 20 times… and i can’t help but think, this is probably the perfect time to find a buyer and start renting.
Trump is correct. The risk of contracting Coronavirus is low….today. You probably won’t get it today. You probably won’t get it this week. You probably won’t get it this month. In fact, you probably have only a 0.1% chance of getting it in March.
However….your odds of getting it in April are significantly higher, and the odds that you will have it by the end of May are very high. The growth rate it is showing in warm climates leads to the conclusion that it will not take the summer off. Exponential growth leads to the conclusion that by April, and certainly by May, there will be enough cases that it will be hard NOT to get it.
As we can see, the market isn’t just looking at today. It is looking out a month or two. As we saw as recently as Feb. 20th, the market doesn’t look too far in the future, but when it became apparent that it wasn’t going to be contained, the market started down. The fact that we, here, saw it earlier gave us time to get out of the market, and to go short, if we chose to.
Trump doesn’t do himself any favors, though. Every time he talks and blames it on fake news, he reinforces the notion that his government doesn’t view this as a serious problem, and that scares the hell out of the market.
The mafia must really be mad these days at their fearless leader.
I will go out on a limb and say we get a recession in 2020.
Somehow I have a suspicion you will blame Donald for coronavirus AND the oil price war.
You get what you get and you dont throw a fit. Trump’s luck is about to run out. I voted for him in 2016 and truly hoped he would be the change agent that was needed. The experiment is over.
The circuit breakers keep triggering but when they open again they retrigger. This could go on for days depending on how many sell orders are backlogged.
Those demanding that mommy Fed make it stop may be in for a surprise. Powell argued openly in Fed meeting minutes during Bernanke’s Zirp infinitum rampage that there would be hell to pay” It’ll never be enough for Wall St.” There’s a whole generation of strutting, swaggering Wall. St. sell side folks now putting on dry pants and screeching indignantly for the Fed to save them…again.
I think Powell will keep cash in the ATMs and let it burn down to reasonable.
The problem is this will take the real economy with it. There are more people working in real jobs who trade on the side. They will get whacked with a layoff notice and market tanking. Double whammy. A larger percentage of Americans rely on the stock market for month to month income now than 10 years ago.
For every American living off of welfare checks in the form of Fed asset pumping, there are ten who cannot afford a place to live, as a result of the same asset pumping theft/redistribution rackets.
The “real” economy benefits from accurate pricing, and cheap capital for productive people. Not pumped up schemes to enrich idle dunces.
The real economy is whatever happens no matter what it depends on. Anything else is an illusion.
Liquidity in Biblical proportions. Wheelbarrows of credit cards.
A lot of the smart money probably is out of equities now, and hoping for an extended crash so they can buy back in at half-price. But currently employed politicians will try to convince voters that this really isn’t happening, and will sacrifice anyone they can to get prices back up. I expect Trump to declare some crazy emergency measure if equities stay down or downer.
This is nothing. Just wait until hedge fund investors begin to panic and want their money back. Today’s drop in the stock market will be peanuts compared to the decline that is coming. And you heard it from me first.
Coming to a fund near you —- “gated” …
I was in a hedge fund once. In 2007 I told them I want out, send me my money. They said “maybe”, but I got my money out just in time, before they refused any more withdrawals.
There are two ways to handle this thing. Either, be very very aggressive NOW and stop it, or let it run its course. Intermediate measures only prolong the agony and economic damage.
I haven’t voted for a democrat in 30 years, but Biden and a Republican Congress looks pretty attractive.
You can’t just let it run it’s course. Our medical system is not equipped to handle these many sick people at once. You have to keep up measures to reduce spread as much as possible.
Seriously? A senile corrupt idiot for president at a crucial time? What the hell are you thinking?
So after he finishes bashing fake news, he has to do something. Tax cut, stimulus- maybe we can get some roads repaired out of this deal, subsidies to the oil companies – (most likely). And the winner is….
Time for the FED to start directly buying equities (S&P 500 only. Keep it within the USA of course. What a joke that will be in a globalized economy!) and negating the debt of zombie corporations. Question is? Who gets bailed out? Not me but Jamie Diamond? You bet ya!
Per their charter Federal Reserve not allowed to buy equities. Congress would have to amend Federal Reserve Act. Buying equities would open a HUGE can of worms.
True, but they can give money to a hedge fund who buy for them. I think Citadel has done this before.
At peak US stock market $35 trillion. Giving a few hedge funds some dough won’t cut it. Last week Boston Fed prez Rosengren publicly asked for ability to buy equities, but with caveat. Wanted full indemnity for Federal Reserve taking any loss. ie: FULL backstop from Treasury. How will j6p feel handing over hundreds of $billions (trillions?) to the rich to keep them rich?
Moneterism will be continued by whatever means available. The response to this collapse will indeed be Biblical in proportion. Then Moneterism will indeed die and a 1929 to 1954 event will occur. Fundamentals will eventually win out.
Wait until there are enough test kits to test everyone who is symptomatic, and the number confirmed is going to skyrocket.
I think they have enough test kits now, it’s the actual testing that would be the bottleneck now.
Well you could be right. But I contacted this state’s department of health last night and asked who was being tested. I received this answer:
“Currently, the only people who meet the case definition to be tested are recent travelers (in the last two weeks) to countries with a level 2 or higher travel alert (China, Italy, Iran, South Korea, and Japan) who are experiencing coronavirus symptoms (fever, cough, shortness of breath) and their close contacts and DPH is testing people who are meeting the criteria.”
Doesn’t sound like there are enough kits to me.
I read there are over a million kits now and a lot more coming. The probably don’t have the personnel to test everyone and would like to focus on those more likely infected.
Trump’s making a mistake. If the death rate is bad, the dems will have plenty of ammo. Better to shut up and if things work out, he can crow all he wants afterwards.
This explains a great deal: link to verywellmind.com
So what explains this psychological effect? Are some people simply too dense, to be blunt, to know how dim-witted they are? Dunning and Kruger suggest that this phenomenon stems from what they refer to as a “dual burden.” People are not only incompetent; their incompetence robs them of the mental ability to realize just how inept they are.
Incompetent people tend to:
Overestimate their own skill levels
Fail to recognize the genuine skill and expertise of other people
Fail to recognize their own mistakes and lack of skill
Dunning has pointed out that the very knowledge and skills necessary to be good at a task are the exact same qualities that a person needs to recognize that they are not good at that task. So if a person lacks those abilities, they remain not only bad at that task but ignorant to their own inability.
On another note: Are anyone who expect to have to pay rather than receive a return, going to file and pay taxes by tax date, if they are holed up at home and trying to conserve as much cash as possible for a protracted emergency? Or will they “deal with that later?”
I was thinking the same thing. Trump could win votes (and be practical) by pushing off the tax deadline a month or two.
Largest stock drop EVER! It’s unbelievable… everyone is talking about it!
EVER!? Was it 1987 when the DOW dropped 20% ?
Zardoz does not know market history very well, does he?
I was in a dealing room on 19/10/87 trading bonds. A triple A five year new issue we were involved with was down 10% (price that is) when I walked into the office. Everything was all over the place all day.
FAAAAAAKE NOOOSE!
FOMC meets next week. Will they wait that long before pulling trigger on something major?
Whenever and whatever, will it be enough? (ie: Mr market react favorably)
hint: NO
Not going to be easy to print their way out of this one….
Big bank stocks crashing hard. Citi down 15% today.
ECB !
Can you imagine Italian Bank NPL trend?
Not just the Italian element now.
What chance considerable bank nationalisations?
How will the electorate like that?
What value the Euro?
Stress!
No way, you are wrong because these banks have been Stress Tested!!!!!!!!!!!!!!!!!!!!