Just how far can Covid 19 drive down the markets?
Discussion
soofsayer said:
loafer123 said:
Given it was up by only 0.1%, the figures weren't that bad.
Eh?Work related benefits claims up 126%
YoY weekly hours down 9%
Payrolls down 2.1%
Vacancies down 134,000
Cant see what you are referring to?
The ONS specifically said that using Work Related Benefits as a measure was misleading because the government relaxed the hurdle for claiming as part of the package of support during lockdown.
I don't suppose the weekly hours being down is any great surprise to anyone, given lockdown.
As for Payroll, I am hearing from multiple sources that alot of people who were considering retirement have decided this is the trigger to get them to actually do it...they don't need this s
t anymore!My point is not that these figures are wonderful, just that they are not a good guide at this stage as to the likely outcome, and if anything are better than forecast.
I have to say I find the whole situation utterly bewildering. I get that stock markets don't need to reflect 100% the current economic situation however this is so far seperated that i can't wrap my head round it. I would understand if the stock market was hovering around 2018 prices or even 2019 prices but most things now at all time highs when most things are turning down makes zero sense.
The stock market are busineses that conduct their business in the economy so it doesn't matter how much it tries to detatch itself from it, it will spring back in correlation at some point.
Don't even get me started on the news! 20% jump in sales from what? the all time lows of being shut!? - give me a break
As for this ridiculous level of stimulus, I honestly have no idea what that looks like in the future. We have to pay for it obviously!
The stock market are busineses that conduct their business in the economy so it doesn't matter how much it tries to detatch itself from it, it will spring back in correlation at some point.
Don't even get me started on the news! 20% jump in sales from what? the all time lows of being shut!? - give me a break
As for this ridiculous level of stimulus, I honestly have no idea what that looks like in the future. We have to pay for it obviously!
loafer123 said:
red_slr said:
Looks like the first start of the recession starting to filter through with large increase of people out of work.
FTSE responds by going up 2.5%.
I am giving up LOL.
Main reasons are;FTSE responds by going up 2.5%.
I am giving up LOL.
The unemployment rate was virtually unchanged, indicating the furlough scheme is doing it's job.
Payroll numbers are down by 600,000 in May, however a substantial proportion will be taken up by people retiring (lots of "sod this, I've had enough") and overseas workers in hospitality returning to their home countries.
EU and UK playing nicely at yesterday's discussion, indicating Brexit compromise is possible.
More shoppers returning in the UK on day 1 that was seen in Europe when they reopened.
Also, as DrJ says, US is talking about a huge stimulus package and rumours are the UK will do the same.
As I said elsewhere, the government will spend their way out of this one.
What happens the next time in 5 years times something else happens, then what, spend again?
Chamon_Lee said:
loafer123 said:
red_slr said:
Looks like the first start of the recession starting to filter through with large increase of people out of work.
FTSE responds by going up 2.5%.
I am giving up LOL.
Main reasons are;FTSE responds by going up 2.5%.
I am giving up LOL.
The unemployment rate was virtually unchanged, indicating the furlough scheme is doing it's job.
Payroll numbers are down by 600,000 in May, however a substantial proportion will be taken up by people retiring (lots of "sod this, I've had enough") and overseas workers in hospitality returning to their home countries.
EU and UK playing nicely at yesterday's discussion, indicating Brexit compromise is possible.
More shoppers returning in the UK on day 1 that was seen in Europe when they reopened.
Also, as DrJ says, US is talking about a huge stimulus package and rumours are the UK will do the same.
As I said elsewhere, the government will spend their way out of this one.
What happens the next time in 5 years times something else happens, then what, spend again?
If everyone is printing, it matters alot less.
Combine that with very low interest rates meaning debt is virtually free and it is easier to sleep at night.
Personally, I take great comfort from the fact that most of the money we print is being bought by the BoE, meaning we have both asset and liability on our own wider UKPLC balance sheet.
What these low interest rates do mean is that there is little point holding bonds, and the cash has to find a home. That is why stocks & property will do well, mopping up excess capital.
As for the point of printing, when people are afraid, the velocity of money around the system declines, so you need to put more in to compensate. That is what happened in the GFC, and that is back again now.
All governments in the next stage will try and do that by way of investment into infrastructure as they will at least have something to show for it afterwards.
loafer123 said:
Chamon_Lee said:
loafer123 said:
red_slr said:
Looks like the first start of the recession starting to filter through with large increase of people out of work.
FTSE responds by going up 2.5%.
I am giving up LOL.
Main reasons are;FTSE responds by going up 2.5%.
I am giving up LOL.
The unemployment rate was virtually unchanged, indicating the furlough scheme is doing it's job.
Payroll numbers are down by 600,000 in May, however a substantial proportion will be taken up by people retiring (lots of "sod this, I've had enough") and overseas workers in hospitality returning to their home countries.
EU and UK playing nicely at yesterday's discussion, indicating Brexit compromise is possible.
More shoppers returning in the UK on day 1 that was seen in Europe when they reopened.
Also, as DrJ says, US is talking about a huge stimulus package and rumours are the UK will do the same.
As I said elsewhere, the government will spend their way out of this one.
What happens the next time in 5 years times something else happens, then what, spend again?
If everyone is printing, it matters alot less.
Combine that with very low interest rates meaning debt is virtually free and it is easier to sleep at night.
Personally, I take great comfort from the fact that most of the money we print is being bought by the BoE, meaning we have both asset and liability on our own wider UKPLC balance sheet.
What these low interest rates do mean is that there is little point holding bonds, and the cash has to find a home. That is why stocks & property will do well, mopping up excess capital.
As for the point of printing, when people are afraid, the velocity of money around the system declines, so you need to put more in to compensate. That is what happened in the GFC, and that is back again now.
All governments in the next stage will try and do that by way of investment into infrastructure as they will at least have something to show for it afterwards.
. What you are saying does make sense. loafer123 said:
The unemployment rate was up by 0.1%.
The ONS specifically said that using Work Related Benefits as a measure was misleading because the government relaxed the hurdle for claiming as part of the package of support during lockdown.
I don't suppose the weekly hours being down is any great surprise to anyone, given lockdown.
As for Payroll, I am hearing from multiple sources that alot of people who were considering retirement have decided this is the trigger to get them to actually do it...they don't need this st anymore!
My point is not that these figures are wonderful, just that they are not a good guide at this stage as to the likely outcome, and if anything are better than forecast.
Gotcha, my bad.The ONS specifically said that using Work Related Benefits as a measure was misleading because the government relaxed the hurdle for claiming as part of the package of support during lockdown.
I don't suppose the weekly hours being down is any great surprise to anyone, given lockdown.
As for Payroll, I am hearing from multiple sources that alot of people who were considering retirement have decided this is the trigger to get them to actually do it...they don't need this s
t anymore!My point is not that these figures are wonderful, just that they are not a good guide at this stage as to the likely outcome, and if anything are better than forecast.
Aiminghigh123 said:
Interesting comments about China.
Ground troops wise why are they building fast rail? Yes rail can be bombed but you can also transport a huge amount of troops at a time by rail anywhere in the country if needed and further.
If you look at the population you soon see why they need high speed rail - there is just too many people to be served by flights.Ground troops wise why are they building fast rail? Yes rail can be bombed but you can also transport a huge amount of troops at a time by rail anywhere in the country if needed and further.
I was there last year, and on one of these trains at 300kmph we spent 10min continuously passing just new high rise apartments being built. The speed of development and resources needed for it is crazy. They're certainly going to overtake the west economically, as they are still an expansion phase with all the energy and hope that comes with it. The west is stagnating as it's too expensive to create real growth, so we play around with the edges while people become even less happy and more depressed.
NRS said:
If you look at the population you soon see why they need high speed rail - there is just too many people to be served by flights.
I was there last year, and on one of these trains at 300kmph we spent 10min continuously passing just new high rise apartments being built. The speed of development and resources needed for it is crazy. They're certainly going to overtake the west economically, as they are still an expansion phase with all the energy and hope that comes with it. The west is stagnating as it's too expensive to create real growth, so we play around with the edges while people become even less happy and more depressed.
It’s remarkable what’s happening in China isn’t it? We really don’t have a clue in the West, they are buying up companies on the quiet globally. From what I’ve seen they run them relatively well, certainly better than venture capitalists and vultures. I was there last year, and on one of these trains at 300kmph we spent 10min continuously passing just new high rise apartments being built. The speed of development and resources needed for it is crazy. They're certainly going to overtake the west economically, as they are still an expansion phase with all the energy and hope that comes with it. The west is stagnating as it's too expensive to create real growth, so we play around with the edges while people become even less happy and more depressed.
Time will tell but the world is definitely changing (as it always does!)
loafer123 said:
If you are the only Central Bank printing money, it's dangerous. Your currency weakens, inflation beckons, credibility declines.
If everyone is printing, it matters alot less.
Combine that with very low interest rates meaning debt is virtually free and it is easier to sleep at night.
Personally, I take great comfort from the fact that most of the money we print is being bought by the BoE, meaning we have both asset and liability on our own wider UKPLC balance sheet.
What these low interest rates do mean is that there is little point holding bonds, and the cash has to find a home. That is why stocks & property will do well, mopping up excess capital.
As for the point of printing, when people are afraid, the velocity of money around the system declines, so you need to put more in to compensate. That is what happened in the GFC, and that is back again now.
All governments in the next stage will try and do that by way of investment into infrastructure as they will at least have something to show for it afterwards.
if every Central Bank is printing vastly, it's still a sure-fire way to big inflation and maybe even hyper-inflation. Historically, it's always been deflation first before the big inflation. If everyone is printing, it matters alot less.
Combine that with very low interest rates meaning debt is virtually free and it is easier to sleep at night.
Personally, I take great comfort from the fact that most of the money we print is being bought by the BoE, meaning we have both asset and liability on our own wider UKPLC balance sheet.
What these low interest rates do mean is that there is little point holding bonds, and the cash has to find a home. That is why stocks & property will do well, mopping up excess capital.
As for the point of printing, when people are afraid, the velocity of money around the system declines, so you need to put more in to compensate. That is what happened in the GFC, and that is back again now.
All governments in the next stage will try and do that by way of investment into infrastructure as they will at least have something to show for it afterwards.
Interest rates can only remain low for so long and there will come a time when interest rates will be at the level they were in the 1980s... that is when the people who are not careful will get burned badly.
https://www.usdebtclock.org/
A44RON said:
loafer123 said:
If you are the only Central Bank printing money, it's dangerous. Your currency weakens, inflation beckons, credibility declines.
If everyone is printing, it matters alot less.
Combine that with very low interest rates meaning debt is virtually free and it is easier to sleep at night.
Personally, I take great comfort from the fact that most of the money we print is being bought by the BoE, meaning we have both asset and liability on our own wider UKPLC balance sheet.
What these low interest rates do mean is that there is little point holding bonds, and the cash has to find a home. That is why stocks & property will do well, mopping up excess capital.
As for the point of printing, when people are afraid, the velocity of money around the system declines, so you need to put more in to compensate. That is what happened in the GFC, and that is back again now.
All governments in the next stage will try and do that by way of investment into infrastructure as they will at least have something to show for it afterwards.
if every Central Bank is printing vastly, it's still a sure-fire way to big inflation and maybe even hyper-inflation. Historically, it's always been deflation first before the big inflation. If everyone is printing, it matters alot less.
Combine that with very low interest rates meaning debt is virtually free and it is easier to sleep at night.
Personally, I take great comfort from the fact that most of the money we print is being bought by the BoE, meaning we have both asset and liability on our own wider UKPLC balance sheet.
What these low interest rates do mean is that there is little point holding bonds, and the cash has to find a home. That is why stocks & property will do well, mopping up excess capital.
As for the point of printing, when people are afraid, the velocity of money around the system declines, so you need to put more in to compensate. That is what happened in the GFC, and that is back again now.
All governments in the next stage will try and do that by way of investment into infrastructure as they will at least have something to show for it afterwards.
Interest rates can only remain low for so long and there will come a time when interest rates will be at the level they were in the 1980s... that is when the people who are not careful will get burned badly.
https://www.usdebtclock.org/
A44RON said:
Japan have been in an economic coma for years.
You have clearly never been there.It remains the third largest economy in the world despite long term low interest rates at the same time as high government debt.
There is a strong argument for the principle that ageing populations result in falling velocity of money and the need for a larger monetary base to compensate.
NRS said:
DonkeyApple said:
The other way to look at is that we have outsourced all our cheap labour work to China because our society now frowns upon workers heads falling off or workers starving in the gutter. However, all it would need to cripple China almost overnight would be for us living in the West to stop buying st we don’t need. China exists because it is convenient to the West to outsource vast amounts to where land and labour are cheap and no one cares about kittens. That’s the uncomfortable truth. And the more tat we buy with money we haven’t got the richer and more powerful we make China. One day we will have bought all we can buy and then the East won’t have a need for the West. 
We can’t really blame the Chinese for doing what we’ve paid them to do. Like we can’t be surprised they fired up their tat factories ASAP from Covid when there were hundreds of millions of Weatern consumers sitting online demanding to buy tat.
Certainly large parts of China that is still the case. However, in part they are now as advanced if not further ahead than the west for some things. The outsourcing etc has enabled them to massively grow the economy, which then combined with a lack of adherence to copyright etc has meant they can catch up fast. I'd suspect they'll continue ahead for a while just because it is in the mindset (a lot of the west now is focused on so many small problems we're not really going anywhere) but eventually they will stall and a lot of the cheap production of stuff move elsewhere (some of it already is). The difference with China is they have a big enough country to be able to copy the US and become such a huge growth machine, whereas many small countries will never be able to do that as there's not enough people/land etc to diversify in just one land. t we don’t need. China exists because it is convenient to the West to outsource vast amounts to where land and labour are cheap and no one cares about kittens. That’s the uncomfortable truth. And the more tat we buy with money we haven’t got the richer and more powerful we make China. One day we will have bought all we can buy and then the East won’t have a need for the West. We can’t really blame the Chinese for doing what we’ve paid them to do. Like we can’t be surprised they fired up their tat factories ASAP from Covid when there were hundreds of millions of Weatern consumers sitting online demanding to buy tat.
Arguably a problem America has is that it’s gunboat foreign policy is being seen more and more for the imperialism and yoke that it is. The veneer of liberty via burgers, pop music, pornography, wealth and military protection of the 20th century as the US sought to take global economic control away from a crippled Europe has been somewhat washed away in the 21st century by the expanded and much more vividly due to modern media, application of violence and oppression of populations to force them into trade while China has adopted a policy of letting those populations be free to exploit, slaughter and enrich themselves without overt interference. In many ways it is China that has brought peace and prosperity to Africa and South America through its raping of resources while the US has been projecting fear and violence and just being more brash, overt and clumsy in how it goes about taking global resources for itself.
Chamon_Lee said:
I have to say I find the whole situation utterly bewildering. I get that stock markets don't need to reflect 100% the current economic situation however this is so far seperated that i can't wrap my head round it. I would understand if the stock market was hovering around 2018 prices or even 2019 prices but most things now at all time highs when most things are turning down makes zero sense.
The stock market are busineses that conduct their business in the economy so it doesn't matter how much it tries to detatch itself from it, it will spring back in correlation at some point.
Don't even get me started on the news! 20% jump in sales from what? the all time lows of being shut!? - give me a break
As for this ridiculous level of stimulus, I honestly have no idea what that looks like in the future. We have to pay for it obviously!
One way to look at it is that the stock market never reflects today. It is rather, a statistical guess about tomorrow. Today’s events only change the market if they change the consensus opinion of what figures are going to be tomorrow. The stock market are busineses that conduct their business in the economy so it doesn't matter how much it tries to detatch itself from it, it will spring back in correlation at some point.
Don't even get me started on the news! 20% jump in sales from what? the all time lows of being shut!? - give me a break
As for this ridiculous level of stimulus, I honestly have no idea what that looks like in the future. We have to pay for it obviously!
So you can have some dreadful looking economic numbers day and the market can rise because the consensus that derives the value of the market generally expected those numbers to be worse.
Putting it another way, 1 million people spontaneously combusted today. If the market hadn’t been expecting this then it would react quite violently to the downside. If the market had expected 1 million people to just randomly combust today then the market would move up gently. If only 500k people burst into flames the market would rally strongly on the fantastic news that half a million people had died in a horrific manner. Everyone would be celebrating and high giving over the corpses. If 2m people went up then the market would sell off and it would be sad faces all round.
The key is that the content of the news is actually totally irrelevant. Every baby on the planet could be put into a food blender today with a kitten and the market does not care at all about that. It is irrelevant. What it cares about is whether it knew this event was going to happen and whether it got the size of the event correct.
So we can rationalise what seems to be the lunacy of a rising market while the world around us right now looks cr4p by looking at the things we know:
We now know this disease doesn’t specifically target shoppers or shop workers. It predominantly targets people who no longer shop. For the markets this is fantastic news. People dying doesn’t matter it’s who and how many. The market originally rebased on the risk that shoppers might be killed. Losing 6 months of shopping from a credit card transport life unit is bad but losing up to 50 years of that unit transporting a credit card from consumer venue to consumer venue would have been really bad. So, the right type of human dying is fantastic news. Wayhay!!
The collapse of oil. That makes everything cheaper for everyone. Less money spent getting goods into the shelves means more profit per unit. Less money spent by credit card transporters getting to those shelves means more units sold. Big win.
Only the poorest and youngest workers are being really badly impacted economically. This is great news. Their wealth is underpinned by the State anyway and that’s looking rock solid for keeping the cash flowing.
Civil unrest. We knew there would be unrest. It was only the spark that wasn’t known. And ultimately, smashing stuff up somit needs to be repaired and replaced is good for the economy!!!
Stimulus. We knew it was going to happen and so long as all Western economies were hit economically in a similar manner than all would be free to debase to almost limitless levels.
Our problem is that as individuals we care about things. The markets don’t have empathy. They care about different things. They don’t care that someone has punched a cat in the face 5 times. They care that they predicted the number of punches accurately.
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