2020 market expectations and positioning

[DukeCS33]

Indeed, but that was during past conditions were much better. Now the financial conditions have deteriorated very badly. They could announce QE, large scale assets purchases and even buy stocks, what will stop them? BoJ and SNB already buy stocks. So it is futile to expect a 40% or more crash.

Is it rationale to expect the Fed to buy stocks to support the market when company earnings deteriorate due to covid 19 induced slowdown? How would Fed justify that? Japan's QE experiment did not get them anywhere.

 

[commie_rick]

Yes ignore this troll.

He had been repeating the same message since 2018.

Just do us a favor. Use the desktop browser and click report button.

he might be the oracle of Yishun.

 

[coolhead]

Indeed, but that was during past conditions were much better. Now the financial conditions have deteriorated very badly. They could announce QE, large scale assets purchases and even buy stocks, what will stop them? BoJ and SNB already buy stocks. So it is futile to expect a 40% or more crash.

I'm not sure if the fed is allowed to buy stocks directly from market. In this regard, it's the same for ECB. i agree with you though that the condition in mid feb were much better but deteriorating. I'm curious if the fed will continue to tighten balance sheet and confuse the markets further.

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[revhappy]

Is it rationale to expect the Fed to buy stocks to support the market when company earnings deteriorate due to covid 19 induced slowdown? How would Fed justify that? Japan's QE experiment did not get them anywhere.

In the US, the stock market is much bigger part of the economy than anywhere else in the world. If stock markets collapse, companies collapse and lead to large scale job losses, people's 401k make them look so poor. So that is enough rationale for the Fed to buy up stocks to prevent that scenario.

I believe we shouldnt discuss what the Fed should or should not do. That is not in our control. But we should discuss what the Fed is likely to do.

 

[Eraval]

Not bad leh, fighting well, dip so small machiam like nothing

 

[_dXter]

I like this. Apart from GFC 2008, short this week, wait next week for lows, or wait till next month for clarity.

 

[BBCWatcher]

We’re seeing some pretty low yields out there now. The 10 year U.S. Treasury yield dipped down to 0.9043% intraday and closed below 1%. That seems to be a new record low for the 10 year. The U.S. Treasury Inflation Protected Securities (TIPS) yields are negative all the way out to and including the longest maturity, the 30 year. TIPS are real return bonds, so the U.S. Treasury can now borrow out to 30 years at negative real interest rates. Wow.

Among other things this’d be a terrific time for the U.S. Treasury to issue its longer maturity bond. Maybe a 60 year and/or 100 year?

For those of you hoarding too much cash for some strange reason, this month (March, 2020) looks to me like “last call” for decent rate bank fixed deposits and Singapore Savings Bonds. Singapore tends to import U.S. interest rate cuts to some extent into the Singapore dollar. And of course these rate cuts make CPF’s floor rates all the more attractive.

 

[BBCWatcher]

In the US, the stock market is much bigger part of the economy than anywhere else in the world.

True, but that doesn’t make it big. Way less than half of Americans have any meaningful wealth invested in the stock market.

If stock markets collapse, companies collapse and lead to large scale job losses, people's 401k make them look so poor. So that is enough rationale for the Fed to buy up stocks to prevent that scenario.

Not really. We’ve seen lots of stock market corrections that have had absolutely no material impact on the real economy. Those are terrific events for cash rich companies — and there are lots of them now, and more cash rich than ever because their bond portfolio just spiked — to go buy their own shares and make acquisitions. Private equity loves these events, too.

No, you still need events in the real economy to have real impact. And the 401(k) and IRA plans are stabilizing factors, actually.

A contagious virus is actually good short term news for workers, would you believe. Employers in a tight labor market are suddenly reminded that they need (healthy) employees, and the virus both boosts labor demand (especially in healthcare) and reduces labor supply in the short term. Most employers are reluctant to lay off workers amidst a public health crisis in a tight labor economy because that’s just bad for business. So I don’t think we’ll see consumer demand fall much in the aggregate. Indeed, it might go up.

 

[revhappy]

For those of you hoarding too much cash for some strange reason, this month (March, 2020) looks to me like “last call” for decent rate bank fixed deposits and Singapore Savings Bonds. Singapore tends to import U.S. interest rate cuts to some extent into the Singapore dollar. And of course these rate cuts make CPF’s floor rates all the more attractive.

MBH & ABF haven't really gone up today, inspite of the US rate cut. Why?

 

[moolala]

In the US, the stock market is much bigger part of the economy than anywhere else in the world. If stock markets collapse, companies collapse and lead to large scale job losses, people's 401k make them look so poor. So that is enough rationale for the Fed to buy up stocks to prevent that scenario.

I believe we shouldnt discuss what the Fed should or should not do. That is not in our control. But we should discuss what the Fed is likely to do.

has the US fed actually bought stocks in the past? This is my first time hearing this

What stocks do they buy and how can we position ourselves for it?
Or do they buy index ETF?

 

[Dividends Warrior]

With rates near zero again, the hunt for yield is ever more intense. The TINA effect shall continue this year IMO.
Fly, my lovely REITs!

 

[DukeCS33]

In the US, the stock market is much bigger part of the economy than anywhere else in the world. If stock markets collapse, companies collapse and lead to large scale job losses, people's 401k make them look so poor. So that is enough rationale for the Fed to buy up stocks to prevent that scenario.

I believe we shouldnt discuss what the Fed should or should not do. That is not in our control. But we should discuss what the Fed is likely to do.

I do not think the Fed has a mandate to buy stocks.

And maybe you are confusing the cause and effect. Companies collapse lead to stock market collapsing. If stocks do well, it is a reflection that companies are healthy. Big moral hazard if the Fed starts bailing out those who loses in investments.

 

[kage]

The Fed will throw rate cuts, QE and everything else they have, at the markets. So I dont see much downside here. Look at China, inspite of the large scale total shutdown, how liquidity has managed to keep their markets orderly. I expect the same thing to happen to S&P also.

Looking back Dec 2018 low of 2400 on S&P was such a great buy opportunity. I doubt if you will get even 2750 in this round. If 10 year yields go negative, people who rebalance their portfolio will not get out of stocks.

They not only throw large amount to stabilize their market, they can stop financial institution to sell down also.

On the other hand, US market institution have a bigger freedom to make their own call

 

[coolhead]

In the US, the stock market is much bigger part of the economy than anywhere else in the world. If stock markets collapse, companies collapse and lead to large scale job losses, people's 401k make them look so poor. So that is enough rationale for the Fed to buy up stocks to prevent that scenario.

I believe we shouldnt discuss what the Fed should or should not do. That is not in our control. But we should discuss what the Fed is likely to do.

don't mind me asking, how does the US stock market contribute to the US economy? I don't deny that comparatively, the US stock market is significant to the US economy. however does it contribute to the US economy?

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[revhappy]

don't mind me asking, how does the US stock market contribute to the US economy? I don't deny that comparatively, the US stock market is significant to the US economy. however does it contribute to the US economy?

Posted from PCWX using Redmi K20 Pro

We will have to study past periods when US markets suddenly tumbled, what was the effect on consumer spending. I saw in interview, analyst saying when US markets tumble, it hurts consumer confidence as people look at their 401k and feel poor. In Dec 2018, when markets tumbled, retail sales fell.

 

[coolhead]

We will have to study past periods when US markets suddenly tumbled, what was the effect on consumer spending. I saw in interview, analyst saying when US markets tumble, it hurts consumer confidence as people look at their 401k and feel poor. In Dec 2018, when markets tumbled, retail sales fell.

your case is a valid but weak one. in that case, the bear stock market in 2018 dec would have resulted in a drop in retail sales and consumer confidence as are other sudden tumbles. However, 2018 dec is only 1 incident and cannot be used to build up my case. If there is a real stock market tumble because of a deeper problem in the economy, then the stock market becomes a leading indicator of the actual US economy by about 6 months. While the wealth effect of the stock market is definite, the effect is small. A larger wealth impact will be the effect caused by the black swan, increase in unemployment rate that causes retail spending to fall to a greater extent. this will then affect the US economy to a greater extent.

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[InterestingStuff]

for those who remember 2008
in the beginning of the year there was already subprime problem, then suddenly go crazy later in the year, if the market crash, i am sure there will be another news event

 

[revhappy]

your case is a valid but weak one. in that case, the bear stock market in 2018 dec would have resulted in a drop in retail sales and consumer confidence as are other sudden tumbles. However, 2018 dec is only 1 incident and cannot be used to build up my case. If there is a real stock market tumble because of a deeper problem in the economy, then the stock market becomes a leading indicator of the actual US economy by about 6 months. While the wealth effect of the stock market is definite, the effect is small. A larger wealth impact will be the effect caused by the black swan, increase in unemployment rate that causes retail spending to fall to a greater extent. this will then affect the US economy to a greater extent.

Posted from PCWX using Redmi K20 Pro

Imagine you are a company. In times of stress, what you need is capital. You need cheap funding sources and you need your stock valuation to not plummet as valuation plummets your ability to raise cash goes down. If companies are able to sustain their valuation and get cheap capital, they will not have to fire people to cut costs. This is all largely sentiment driven and it could get into a vicious cycle. Look at the Chinese economy now compared to the past 2016 crisis. Since they have provided so much liquidity and calmed the markets, everything seems normal and rest of the world is also okay.

In 2016, China couldnt calm its market initially, they devalued Yuan and caused the markets to go into a tailspin and affected a lot of other markets also, like South east asia. But this time, they acted early and with full force and see the result. Until last week before cases reached Italy and Korea, we had all thought, this was all contained, inspite of the massive economic hit China took.

 

[Trader11]

With rates near zero again, the hunt for yield is ever more intense. The TINA effect shall continue this year IMO.
Fly, my lovely REITs!

LOL you use vickers????

 

[Opps-gal]

for those who remember 2008
in the beginning of the year there was already subprime problem, then suddenly go crazy later in the year, if the market crash, i am sure there will be another news event

Cannot remember anything.

But will this virus leads to a global recession down the month?