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The Economy and The Markets (where are we, where are we heading, and what does it mean for the QC...)


A2.

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My comparison: My personal investment assets in the great recession bottomed at a 40% decline from top just before the rupture in 2008 to the trough.

Today, 18 March 2020 I am down 33.5% from late February 2020. Different assets, differing mix and usual caveats. But a mix of equities, preferred, some institutional managed, small percentage of bonds both time points.

 

Edited by tarhoosier
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What will be interesting, and different this time than twelve years ago is how the personal bailout is addressed. There can be forebearance by landlords and small lenders. Then the Collateralized obligations may (will) have to forgive or forebear, and major lenders will have to continue without repayments. International bank institutions will expand their ability to stretch to the max, maybe further (how?).

How the support for the entire credit stack takes place is far out of my understanding. Steve Mnuchin, please call Hank Paulsen, right now.

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:shok: Holy moly:

 

The biggest mall owner in the U.S., Simon Property Group, announced it will be closing all of its malls and outlet centers in the country, effective at 7 p.m. until March 29. “The health and safety of our shoppers, retailers and employees is of paramount importance,” CEO David Simon said in a statement. Simon is the first U.S. mall owner to take such a broad-sweeping effort, as retailers altogether have temporarily closed thousands of locations in recent days.

Edited by gman430
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Wiping out debt makes zero sense and would fudge things up worse than they already are.  A pause in debt payments makes more sense, but that would still be quite crapty.  To me, it feels like those that can still make payments should, but perhaps the negative credit repercussions that come with nonpayment can be disregarded for the next couple of months.

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22 minutes ago, cltheel.sdl said:

Wiping out debt makes zero sense and would fudge things up worse than they already are.  A pause in debt payments makes more sense, but that would still be quite crapty.  To me, it feels like those that can still make payments should, but perhaps the negative credit repercussions that come with nonpayment can be disregarded for the next couple of months.

Just because you pause debt payments, doesn't mean interest doesn't stop accruing 

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4 hours ago, urbanlover568 said:

ECB just put out a 750 billion Euro stimulus plan.

Sadly all this stimulus isn’t helping the market . Futures near limit down after being up 600. I actually thought we’d bounce, but the gravity of this liquidation is simply too much. :tw_bawling:
My best bet is Martial law to soon be implemented & forced quarantine. This will drive the markets down even further.

A little further down the line: War.

All wars are based in economics, and now would be that time when we need to listen for the drum beats of war.

As I mentioned  months back, this will be a shock & awe type of market drop (sub 10k DOW highly likely over the next few months). The results, of which,  are more than mere red numbers rolling along the bottom of our screens. There’s an economic reset coming. Brace for impact.


We live in truly scary times. Stay safe out there folks!

 

A2
 

Edited by A2.
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Just to speak a little on the "average" casual investor, I was speaking with a coworker of mine on Monday (via IM since we are all WFH) who thought 401(K)s are just fancy savings accounts and that they were guaranteed to keep at least what they put in.

Let's just say a lot of late millennials (currently in their mid-late 20's) have no idea what is about to hit all of us.

When this started diving in earnest I moved my investments to the safest possible places, and otherwise will only be paying down debt in the mean time. I'll hop back in after a few months but I'm struggling to think of any time in history with simultaneous Demand and Supply shocks like this. My background is Economics, not Finance, but it doesn't take John Maynard Keynes to think that the GS analysis earlier in this thread is blowing smoke.

Edit: I wish I had my first Macro teacher providing his insight on all of this. That guy was a genius and would have amazing insight  right about now

Edited by DH17
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I still don’t understand why they don’t just quarantine people over 65 and those with underlying health conditions. Wouldn’t that be easier than trying to quarantine the entire country while killing off the economy and everybody’s 401K? 

Edited by gman430
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1 hour ago, gman430 said:

I still don’t understand why they don’t just quarantine people over 65 and those with underlying health conditions. Wouldn’t that be easier than trying to quarantine the entire country while killing off the economy and everybody’s 401K? 


Don’t you think they’ve discussed/thought about that? 

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On 3/18/2020 at 12:57 AM, A2. said:

I could go on and on. But the BOTTOM LINE is that the BANKS DO HAVE SYSTEMIC RISKS WHEN THEY HAVE TRILLIONS IN DERIVATIVES ON THEIR BOOKS. Period.

Even besides the derivatives, just the loans themselves (and I don't have any insight here, but my sense is that business debt is going to be a big deal this time around vs the consumer real estate issue of last time) could do in the banks. I know GS always looks out for itself but I'm floored they could say with a straight face that there's no systemic risk.

A2, I'm inclined to believe that after the crushing bout of deflation there's going to be a crushing bout of inflation given how much debt we're piling on to an already ridiculous amount of public debt. Agree/disagree? If agree, then when and how would be the best ways to play precious metals?

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1 hour ago, Vitamin_N said:

Even besides the derivatives, just the loans themselves (and I don't have any insight here, but my sense is that business debt is going to be a big deal this time around vs the consumer real estate issue of last time) could do in the banks. I know GS always looks out for itself but I'm floored they could say with a straight face that there's no systemic risk.

A2, I'm inclined to believe that after the crushing bout of deflation there's going to be a crushing bout of inflation given how much debt we're piling on to an already ridiculous amount of public debt. Agree/disagree? If agree, then when and how would be the best ways to play precious metals?

Your a pretty observant person. Yes deflation now, followed by a massive amount of inflation due to central banks the world over dumping all kinds of their “funny money” to try and stop it. 
 What I have done personally is I hold both instruments to handle both. Cash and Precious metals. Personally I know they manipulate the PM market,  but in the end gold and silver will ALWAYS be considered money and their manipulation is only temporary. You can’t print it and it’s scarcity and utility is known throughout the world. 
To reiterate, I would hold both. Cash and PM. 

And I actually would hold PM in both deflation and inflation regardless. It’s financial insurance. 
Holding some  cash is great for what we’re dealing with now.
 

A2

Edited by A2.
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10 minutes ago, Madison Parkitect said:

There are going to be some people who make a killing off this pandemic, for instance: Blue Apron stock has gone from $2.28 a share to around $23 a share since Monday, and Microsoft teams has reported a user increase of 12 million people since last week.

Indeed. Some of my shorts are up 300%! While their is capital destruction in crashes, most Money isn’t  lost its transferred. 
 

A2
 

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