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Old 04-30-2020, 03:47 PM
 
Location: Olympus Mons, Mars
6,510 posts, read 9,283,856 times
Reputation: 7035

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I was listening to the latest iteration of the Afford Anything podcast (Paula Pant) and she was discussing a report by Morningstar that basically offered one theory as to why the stock market is essentially at 2019 levels.

The report supposedly says that the areas of the economy affected are rather narrow and only form 15% of GDP but employ about 30% of the workforce. So, even though the absolute numbers of unemployed are high those are workers who make relatively less impact on the GDP. Further the stimulus (SBA PPP, enhanced unemployment etc.) is going to recapture the missing demand from this group.

The bulk of the workforce are still employed and have either seamlessly switched to remote work OR they are deemed essential workers who are working on site full time, says the report which is why the impact on the economy should be minimal.

I found the referenced report here:

https://www.morningstar.com/articles...2008-recession

Not quite sure, but I am skeptical of this analysis. Thoughts?
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Old 04-30-2020, 03:55 PM
 
80,234 posts, read 78,594,179 times
Reputation: 56753
We all see the same gloomy outlook ...odds are that is not how things will play out since it is the obvious ....those who think this depression they envision is inevitable will likely be left behind financially for their failure to realize things never play out the way we think they will .....

Predicting is a losing game
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Old 04-30-2020, 04:20 PM
 
2,072 posts, read 527,843 times
Reputation: 3270
Quote:
Originally Posted by k374 View Post
Not quite sure, but I am skeptical of this analysis. Thoughts?
That I really want some of whatever they're smoking.

Or was this from Lucifer Morningstar?

I don't fall with the total-doom-und-destruktion crowd and think we are more resilient than most people believe, but to blithely say "the bulk of the workforce remains employed" is pretty rose-tinted.
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Old 04-30-2020, 04:26 PM
 
Location: Oregon, formerly Texas
6,392 posts, read 4,332,765 times
Reputation: 11104
My sense is that everyone is really, really, really hoping that things are not that bad. To a delusional extent, even though a drive downtown indicates it's worse than anything in my lifetime. Although there's that, there is also confusion.

The speed with which this thing has hit us is kind of hard to comprehend - going from arguably the best economy in history to a depressionary within 2 months seems impossible. We're still kind of deer-in-the-headlights.

I work for a school, and we have no F***ing clue what's going to happen this fall. Will we have students? Will they all take a gap year? Will we have an enrollment surge due to unemployment (which would happen in a normal recession)? If we have students, will we have to place them 6 feet apart? Will the state cut our budget by 30%? Will we get bailout money? From the business owners I know, they are similalry in the dark about how things will proceed.

No one freaking knows.

Mathjak has a point that your best bet is to continue with your personal plan. Since my plan is based on being employed, I've decided to stop contributing and sold all my positions that were positive & moved them into savings and CDs because I'm worried I will need cash in the next 6-12 months. At 2018-19 levels I still made a respectable profit.

I'm holding onto gold and my select few favorite companies that I'm pretty sure will be winners coming out of this.

I've been obsessed with reading about the Spanish Flu lately. There are a lot of similarities in the way covid is proceeding and especially a lot of parallels in the way people are reacting. Denial, then fear, then anger. Cities back then did the same thing - they locked down, then the business community got upset about the lockdowns, cities opened back up, more infections happened. A lot of people didn't want to believe the disease was real. A lot of rhetoric bounced around about how it was just "the grippe." Same thing people are saying now - "not that bad."

Even though that's the closest historical analogue we have, the fact that it happened at the end of WWI means that economic comparisons from 1918 to 2020 have limited utility, since the world economic paradigm of <1914 had already been destroyed by WWI & they were entering unprecedented territory. We need more historical research, however, on how much the 1920-21 recession was due to the flu. Not enough has been done on that.

But based on that reading, my takeaway is - "2 to 3 years." That is how long it will take this to resolve. We are about 3 months into the first year.

Here is the DJIA from 1918-22: https://en.wikipedia.org/wiki/Depres..._1918-1922.jpg Oddly enough that big spike occurred immediately after the 2nd wave hit, the worst of it by far - which was late September to November 1918. Overall trajectory was up, like the market always is.

But if you think you need your cash, don't risk it.


Last edited by redguard57; 04-30-2020 at 04:39 PM..
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Old 04-30-2020, 04:26 PM
 
17,804 posts, read 21,969,349 times
Reputation: 36085
Quote:
Originally Posted by k374 View Post
I was listening to the latest iteration of the Afford Anything podcast (Paula Pant) and she was discussing a report by Morningstar that basically offered one theory as to why the stock market is essentially at 2019 levels.

The report supposedly says that the areas of the economy affected are rather narrow and only form 15% of GDP but employ about 30% of the workforce. So, even though the absolute numbers of unemployed are high those are workers who make relatively less impact on the GDP. Further the stimulus (SBA PPP, enhanced unemployment etc.) is going to recapture the missing demand from this group.

The bulk of the workforce are still employed and have either seamlessly switched to remote work OR they are deemed essential workers who are working on site full time, says the report which is why the impact on the economy should be minimal.

I found the referenced report here:

https://www.morningstar.com/articles...2008-recession

Not quite sure, but I am skeptical of this analysis. Thoughts?

LOL..thanks for the laugh.

30 million people are now out of work, and that will increase.

Unemployment benefits. I live in CA there is growing frustration with people not being able to apply on the website, forget calling. Those who have gotten to apply are still waiting now going on 4 weeks and haven't gotten their first check.

So they're not getting any assistance.

And it isn't just in CA, just got a text from a friend who told me her head is about to explode as she can't get through to apply., BTW she is a nurse. Nurses are getting laid off, contrary to the lies told on the TV news most hospitals are quiet.

All jobs are essential to those who had them.

Wake up and smell the coffee, the US economy was running on empty, with massive debt. We have been kicking the can down the road.

This virus which does exist, but has been made out to be much worse than it is. It is the excuse that will be given for the economic collapse. Both parties are to blame, but they will use the virus as the excuse.

Think about it, you don't close down like this over something that 98% of the people who get it make a full recovery, and that for the most part the ones that don't are due to age, obesity, and preexisting conditions. It doesn't make sense, but it does if you want to blame it for an economy that has been like a house of cards for many years.

I don't know the person is you're taking about, maybe she smokes a bowl before going on air.
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Old 04-30-2020, 04:40 PM
 
17,804 posts, read 21,969,349 times
Reputation: 36085
Quote:
Originally Posted by redguard57 View Post
My sense is that everyone is really, really, really hoping that things are not that bad. To a delusional extent, even though a drive downtown indicates it's worse than anything in my lifetime. Although there's that, there is also confusion.

The speed with which this thing has hit us is kind of hard to comprehend - going from arguably the best economy in history to a depressionary within 2 months seems impossible. We're still kind of deer-in-the-headlights.

I work for a school, and we have no F***ing clue what's going to happen this fall. Will we have students? Will they all take a gap year? Will we have an enrollment surge due to unemployment (which would happen in a normal recession)? If we have students, will we have to place them 6 feet apart? Will the state cut our budget by 30%? Will we get bailout money? From the business owners I know, they are similalry in the dark about how things will proceed.

No one freaking knows.

Mathjak has a point that your best bet is to continue with your personal plan. Since my plan is based on being employed, I've decided to stop contributing and sold all my positions that were positive & moved them into savings and CDs because I'm worried I will need cash in the next 6-12 months. At 2018-19 levels I still made a respectable profit.

I'm holding onto gold and my select few favorite companies.

I've been obsessed with reading about the Spanish Flu lately. There are a lot of similarities in the way covid is proceeding and especially a lot of parallels in the way people are reacting. Denial, then fear, then anger. Cities did the same thing - they locked down, then the business community got upset about the lockdowns, cities opened back up, more infections happened.

Even thought that's the closest historical analogue we have, the fact that it happened at the end of WWI means that economic comparisons from 1918 to 2020 have limited utility, since the world economic paradigm of <1914 had already been destroyed by WWI. We need more historical research, however, on how much the 1920-21 recession was due to the flu. Not enough has been done on that.

But based on that reading, my takeaway is - "2 to 3 years." That is how long it will take this to resolve. We are about 3 months into the first year.
Many are in denial, and let's be honest most Americans are clueless and very self involved. They don't pay attention, don't question anything, and as we see don't put anything aside in regards to savings. And it's not because they're all living paycheck to paycheck...they live beyond their means.

Everyone for the most part has been inside, believing the "we're all in this together" nonsense. Once the dust settles and they start to see the reality and it impacts them directly the rude awakening will hit them right in the face.

Your mention of your drive downtown was an excellent comment. Restaurants and small businesses for the most part are done.

I live in LA, store windows in the San Fernando Valley on Ventura Blvd which has some high end stores put plywood over their windows weeks ago.....I wonder why, nervous about the civil unrest due to people losing their jobs, not being able to get through to unemployment, apply and 4 weeks later no check.

The boarding of windows is happening in other major cities, again I wonder why. They're worried about civil unrest.

It took the US 12 years to make a full recovery from the GD, it wasn't until 1941 when the US entered WW2.

Anyone who thinks you just bounce back from this is clueless as to how economics work, and should try educating themselves, they certainly have the time now to do so.
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Old 04-30-2020, 05:40 PM
 
2,072 posts, read 527,843 times
Reputation: 3270
Quote:
Originally Posted by seain dublin View Post
Restaurants and small businesses for the most part are done.
Just to pick one of your points...

Do you really think there will be fewer restaurants and 'small businesses' around in, say, July 2021?

This vague claim that any business that fails this summer leaves some permanent void in a local economy and employment is... mystifying.
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Old 04-30-2020, 06:01 PM
 
80,234 posts, read 78,594,179 times
Reputation: 56753
ExactLy .... no one sees money loving a vacuum where a competitor or business left a void in what it does...truly short sighted.

We just had a huge pizza uno close up ...... now it looks like a bigger chain is moving in ....we lost a few businesses in the mall by our house ...ihop is combining all the storefronts in to a big location.

Downturns are the best times to start or open locations ...you can get all kinds of rent concessions ,deals and terms
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Old 04-30-2020, 08:03 PM
 
Location: DFW
6,832 posts, read 12,419,274 times
Reputation: 5244
I think a recession is inevitable.. whether it'll be more like 2001 (mild), 1990 (moderate), or 2008 (severe) remains to be seen. But many seem to be leaning more towards the 2008 camp.
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Old 04-30-2020, 08:10 PM
 
Location: Heart of flyover America
648 posts, read 258,106 times
Reputation: 1229
More hopium. People don't understand that before the global contagion, we had the most massive and hideous credit bubble in economic history. The bubble has been ripped open by the contagion. The resulting economic crisis will the most devastating the world has ever seen. The longer the central banks and governments try to postpone the collapse, the more calamitous it will be when it finally does happen.
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