The Amazing Resilience of the Stock Market, Part D'Oh

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contrarianna
The Amazing Resilience of the Stock Market, Part D'Oh

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contrarianna

I looked in vain to post in North Report's original "The Amazing Resilience of the US Stock Market" but perhaps out of rare embarrassment it was comically changed to: "The SARS-CoV-2 Economy (physical distancing & good hygiene)

https://rabble.ca/babble/international-news-and-politics/amazing-resilie...

and then the thread was mod-closed for the redundancy in the new title, thereby "physically distancing" (perhaps in the name of "good hygiene") NR's comic gems still viewable in the early pages.

To be fair, no one can say that the stock market isn't "resilient". If the entire house of marked playing cards does not collapse it will eventually come back. Crises capitalism and stock market crashes have always functioned as mechanisms that pump wealth from ordinary working taxpayers (or now many nonworking taxpayers) into the hands of the moneyed elite. This is the same as it ever was:

Why economic inequality leads to collapse
The lesson of the Great Crash was that unequal enrichment provokes asset bubbles, excessive demand for debt and, finally, economic failure. Now we are painfully learning that again

https://www.theguardian.com/business/2012/feb/05/inequality-leads-to-eco...
 
Research: How the Financial Crisis Drastically Increased Wealth Inequality in the U.S.
by Moritz Kuhn , Moritz Schularick and Ulrike Steins
September 13, 2018

https://hbr.org/2018/09/research-how-the-financial-crisis-drastically-in...

Wealth Redistribution in Bubbles and Crashes*
http://www.pbcsf.tsinghua.edu.cn/research/anli/paper/Wealth%20Redistribu...

Wealth Disparities before and after the Great Recession

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4200506/ 

For today's coronavirus, a little help from those insiders in high places never hurt, though they might suffer hurtful remarks from a toothless SEC:

The Securities and Exchange Commission issued a sharp warning against trading on nonpublic information related to the coronavirus.

The caution came days after news of recent stock sales by the CEO of the owner of the New York Stock Exchange, Jeff Sprecher, and his wife, Sen. Kelly Loeffler, R-Ga., sparked widespread criticism and calls for investigations.

In addition to Loeffler’s move, recently disclosed stock sales by three other senators, Richard Burr (R-NC), James Inhoffe (R-OK) and Diane Feinstein (D-CA) have come under scrutiny because they occurred after the coronavirus briefing. 

Those trades came in the weeks before stock market indexes dramatically fell in value due to the coronavirus pandemic, and on the heels of a private, all-senators briefing on the virus outbreak from Trump administration officials that Loeffler attended on Jan. 24....

https://www.cnbc.com/2020/03/23/coronavirus-sec-warns-on-insider-trading...

Good Luck Sending Any Senators to Jail for Insider Trading on Coronavirus
Members of Congress are exceptionally hard to bust for insider trading, despite evidence they’re somehow mysteriously able to outperform even many expert hedge fund managers with brilliantly-timed stock trades.

https://www.vice.com/en_ca/article/dygj8m/good-luck-sending-any-senators...

But that is just the tip of the turd-berg of Wall Street and disaster capitalism of Coronavirus

Coronavirus Is the Perfect Disaster for ‘Disaster Capitalism’
Naomi Klein explains how governments and the global elite will exploit a pandemic.

By Marie Solis
Mar 13 2020, 7:16am
....
These are the perfect conditions for governments and the global elite to implement political agendas that would otherwise be met with great opposition if we weren’t all so disoriented. This chain of events isn’t unique to the crisis sparked by the coronavirus; it’s the blueprint politicians and governments have been following for decades known as the “shock doctrine,” a term coined by activist and author Naomi Klein in a 2007 book of the same name.

History is a chronicle of “shocks”—the shocks of wars, natural disasters, and economic crises—and their aftermath. This aftermath is characterized by “disaster capitalism,” calculated, free-market “solutions” to crises that exploit and exacerbate existing inequalities.

Klein says we’re already seeing disaster capitalism play out on the national stage: In response to the coronavirus, Trump has proposed a $700 billion stimulus package that would include cuts to payroll taxes (which would devastate Social Security) and provide assistance to industries that will lose business as a result of the pandemic.

“They’re not doing this because they think it’s the most effective way to alleviate suffering during a pandemic—they have these ideas lying around that they now see an opportunity to implement,” Klein said.

VICE spoke to Klein about how the “shock” of coronavirus is giving way to the chain of events she outlined more than a decade ago in The Shock Doctrine....

https://www.vice.com/en_ca/article/5dmqyk/naomi-klein-interview-on-coron...

Sean in Ottawa

Interesting how this title was first based on mystification (my interpretation) at a market that continued without regard for what it was doing for people. Now it is more sarcasm as the market is no longer resilient. It has gone up in fantasy based on false assumptions sold by capitalists to each other to the effect that they can ignore this crisis.

Both cases the market is not resilient, It is living in a false sense of security that they can continue without regard for people.

 

kropotkin1951

The US securities market has been a ponsie scheme for decades. Without the infusion of money from new suckers it would have collapsed. Too bad the new suckers are the general public who get to pay payroll taxes and get to watch the financial gurus get financially eased into nirvana.

NorthReport
NDPP

"We tracked the last time the Government bailed out the economy. Here's what to know about the $1 Trillion Coronavirus Plan."

https://twitter.com/AcrossMediums/status/1244303381444702208

 

Democrats Unite With Trump To Enact Massive Corporate Bailout

https://www.wsws.org/en/articles/2020/03/28/bill-m28.html

"In a celebration of bipartisan unity, the Democratic - controlled House of Representatives on Friday approved by voice-vote an unprecedented $2.2 trillion bill to bail out the nation's corporations and banks, while providing limited and temporary aid to workers hit by the economic impact of the coronavirus pandemic..."

NorthReport

Sure looks like smart money is investing now, eh!

Stocks Surge to 3-Week High on Easing Virus Toll: Markets Wrap

https://www.bloomberg.com/news/articles/2020-04-05/currencies-start-mixed-as-virus-death-toll-dips-markets-wrap?srnd=premium-canada

kropotkin1951

NorthReport wrote:

Sure looks like smart money is investing now, eh!

Stocks Surge to 3-Week High on Easing Virus Toll: Markets Wrap

https://www.bloomberg.com/news/articles/2020-04-05/currencies-start-mixed-as-virus-death-toll-dips-markets-wrap?srnd=premium-canada

More reports from our American masters. Pay attention everyone to the propaganda pieces NR posts daily. He has his pulse on the best of them.

Of course for people paying attention they might notice that this bounce is in fact the oligarchy using taxpayers latest quantitative easing to buy an even greater percentage of the outstanding stocks than they already own. Right wing assholes cheeer it on thinking it proves how great the evil empire is.

NorthReport

Our pension plans depend on the stock market!

kropotkin1951

NorthReport wrote:

Our pension plans depend on the stock market!

That is very true. They don't have to be.

Sean in Ottawa

kropotkin1951 wrote:

NorthReport wrote:

Sure looks like smart money is investing now, eh!

Stocks Surge to 3-Week High on Easing Virus Toll: Markets Wrap

https://www.bloomberg.com/news/articles/2020-04-05/currencies-start-mixed-as-virus-death-toll-dips-markets-wrap?srnd=premium-canada

More reports from our American masters. Pay attention everyone to the propaganda pieces NR posts daily. He has his pulse on the best of them.

Of course for people paying attention they might notice that this bounce is in fact the oligarchy using taxpayers latest quantitative easing to buy an even greater percentage of the outstanding stocks than they already own. Right wing assholes cheeer it on thinking it proves how great the evil empire is.

I think there are two things going on here. The first is the opportunity for the rich to buy up more of the economy at a discount - that Kropotkin is speaking of here. This is not a reflection that the economy is not in trouble. It is confidence that the Trump administration will buy them out with the public's money as is always done. This is not a symptom of health -- it is one of sickness.

The second thing going on is that the stock market, like the people of the US, is increasingly disconnected from any agreed reality. In the past generally there was a single universe of truth when it came to events. Sure variations, analysis and interpretations abounded with different predictions. However, there has been a ever declining set of agreed facts. Now, you have the most right wing actually being told and believing more and more substantially different information, not only about what will happen but what has already happened and what is going on now. Many with money are convinced that this is almost over or that they can convince government soon to sacrifice people for the economy. This trend is not new but it is increasing and has grown with the popularity of self-curated reality through internet choices even since 2008. With the US having more than one very different reality, you can expect the market to drive in two different directions depending on who is buying and selling on a given day. Then you have another different version of the truth as seen by the majority who are not in this market in any major way: the non capital class. As reality comes home to people, together with new cult fantasies from the cult leader, you can expect major girations to continue.

I suspect that eventually there will be some undeniable realities that may sink through the denial class that has controled the markets for generations.

I predict another significant adjustment to the global economy. Many habits have been broken. Many of these may not return and they will threaten the market as it has been known:

1) Home working. This will escalate as those this is working for (employers and employees) will continue. Employers will find they do not need as much expensive space and will recognize how much unpaid benefits they get from this as people use their own space, own computers etc. This has some positive implications for the environment as commuting is reduced. It may have an impact on consumption. People out of the house daily are tempted to buy more and even think they need more.

2) Consumption may decrease in areas where people noticed that they saved lots of money and did not notice it much. This would not be expected to create significant benefits as this consumption may migrate to other things. Example: people who were over spending on fast food meals may have discovered how much of their money was going to this, may find that their wallet is reduced and they can continue to do without. Instead they may save this for other things, including better restaurants they may enjoy more but less frequently.

3) People may not all return to some of the risky behaviours during a pandemic as habits may develop and lingering fears may create new habits. Unfortunately this could inlcude a greater desire for automation and further job loss.

4) Savings may increase for some of the more prudent who realized that they needed more than they had. I suspect the majority will return to old habits but even a small percentage of people making a change to save more could have implications for the consumption economy.

5) Dislocation and job loss is unlikely to recover in the hopeful V recession many think is possible. This economy we have been in has been out of step socially and technologically. It is hard to imagine that the most out-of-touch elements will return without thought. For this reason even if the medical emergency goes away completely (not a sure bet) the effects are likely to include permanent, and longterm as well as temporary economy changes.

6) The private economy will be in shambles for a while. I suspect that there will be some push that in recovery the economy is built a little greener. We can expect that many capitalists will push back hard and there will be some incoherence in this depending on the responses of government as it is apporached by well-heeled lobbyists. Of course the energy sector will be very unstable as some push for greener investments and other try to revive unsustainable practices that in many cases make no sense even in the short term. This will create volatility. 

7) Trade practices are being exposed for what  they were. There will likely be many reactions to this 

These are just some of the possibilities. I think the political/economic generational battle will intensify as well. It is difficult to imagine anything but a period of radical changes and swings and political upheaval.

NorthReport

Trump is determined to get the economy going again, as his re-election probably depends on it.

Dow surges 700 points as Wall Street rally gains steam

https://www.cnbc.com/2020/04/07/stock-market-futures-open-to-close-news.html

NorthReport

Stocks rise as Federal Reserve provides $2.3 trillion to support economy, capping best week since 1974

https://www.usatoday.com/story/money/2020/04/09/dow-markets-jobless-claims-surge/5120559002/

epaulo13 epaulo13's picture

'What a Rigged Economy Looks Like,' Says Sanders, as Stock Market Enjoys Best Month in 33 Years Despite 20%+ Unemployment

While a record 20.5 million Americans lost their jobs and one-third of people were unable to pay their rent or mortgage by the end of last month, the stock market in April enjoyed its strongest month since 1987—again supporting the common critique that Wall Street wealth is not the same as economic health.....

NorthReport

Actually some of the stock market increases are in growth companies with a future such as the Tech sector like Apple, Google, Microsoft and companies that focus on climate change like Facedrive out of Toronto, which is in direct competition with Uber, and NextEra Energy which competes with the oil and gas sector.

NorthReport

How Warren Buffett’s son spent the $90,000 of Berkshire stock he got at 19—worth $200 million now: ‘I don’t regret it’

https://www.cnbc.com/2020/05/07/warren-buffett-son-doesnt-regret-spending-berkshire-stock-he-got-at-19-worth-200-million-now.html

NorthReport

It is unfortunate that one state would allow themselves to be played off against other states by the likes of Musk 

https://www.bbc.com/news/world-us-canada-52601750

NorthReport

Shopify has just overcome RBC to become Canada's most valuable company. Does anyone here use it? Will it eventually overtake Amazon? 

https://www.msn.com/en-us/money/savingandinvesting/why-shopify-tsxshop-stock-is-the-next-amazon-nasdaqamzn/ar-BB127JkL

Michael Moriarity Michael Moriarity's picture

It is my understanding that Shopify does not run a store themselves. They are more like Microsoft, in that they provide a sales software platform that is used by thousands of online stores.

NorthReport

Hyperdrive

An $85 Billion Airline Rescue May Only Prolong the Pain

The coronavirus pandemic may limit global air traffic to 50-60% of normal levels by year-end

https://www.bloomberg.com/news/articles/2020-05-02/coronavirus-airline-bailouts-a-guide-to-85-billion-in-state-aid?srnd=premium-canada

NorthReport
NDPP

Wolff Responds: Today's Booming Stock Market

https://youtu.be/65W9E5lhI0I

"The connection between the stock market and the real world we live in...these are two different worlds. The vast majority of Americans have no interest in the stock market."

NorthReport

That would be a big mistake.

For example where do people think their pension plans assets are invested? 

However, having said that, most stock market investments should be in the indexes like the S and P 500 Index as most investors, whether private for themselves, or on behalf of others, don't have the skills to invest in the winning stocks. 

NDPP

NorthReport wrote:

For example where do people think their pension plans assets are invested? 

 

NDPP wrote:

"It is no exaggeration to state that the CPP is 'banking on death.' The Coalition to Oppose the Arms Trade lists CPP investments in 73 corporations supporting Israel's military/police/surveillance/prison industrial complex. The CPP is also a big investor in nuclear weapons and in Canada's fossil fuel and mining sectors which are wreaking havoc in indigenous communities world-wide."

The Canadian Pension Plan: The Deadly Hand of the Market

https://socialistproject.ca/2018/05/canadian-pension-plan-deadly-hand-of...

NDPP

Mortgage Deliquencies Surge by 1.6M in April, the Biggest Monthly Jump Ever

https://twitter.com/profwolff/status/1264597778841440256

"Capitalism's Crash: US homeowners fail to pay April mortgages at highest rate in history. Govt's $1200 check too little too late. As stock market rises, misery and homeless do too."

NorthReport
NorthReport

Buy on mystery, sell on history!

Dow soars 700 points on big hopes for a vaccine and the economy's reopening

https://www.cnn.com/2020/05/26/investing/dow-stock-market-today/index.html

NDPP

Holding the Bailout Bag

https://michael-hudson.com/2020/06/holding-the-bailout-bag/

The Federal Reserve is directly buying stocks, bonds, junk bonds, mortgages, junk mortgages, all to prop up the value of assets owned by the top 5%. Economist Michael Hudson joins Paul Jay.

Meet the real 'looters' of America. 'Amazing resilience' my ass...

epaulo13 epaulo13's picture

NDPP wrote:

Holding the Bailout Bag

https://michael-hudson.com/2020/06/holding-the-bailout-bag/

The Federal Reserve is directly buying stocks, bonds, junk bonds, mortgages, junk mortgages, all to prop up the value of assets owned by the top 5%. Economist Michael Hudson joins Paul Jay.

Meet the real 'looters' of America. 'Amazing resilience' my ass...

..facing reality

NorthReport

Trump with his anti-science diatribes can look in the mirror to see who is responsible for what happened today Second Covid-19 wave. Duh!

https://www.washingtonpost.com/business/2020/06/11/markets-today-fed-cor...

NorthReport
NorthReport
NorthReport

Covid-19 is another miracle says the real estate industry who have never ever said that a housing situation was bad for investors.  

How COVID-19 has changed Canada's economy for the worse — but also for the better

Real estate, retailers and the job market have been hit hard, but there are some reasons for hope

The pandemic has certainly wreaked havoc on one of the traditional pillars of Canada's economy — the housing market.

Physical distancing requirements at the onset of the pandemic in March walloped the real estate industry because realtors couldn't host open houses, and buyers were concerned about the future. This year was the worst April for home sales in almost 40 years, and May was only slightly better.  

Realtors are quick to say the slowdown is just a blip, and that demand remains strong. But policy-makers are clearly a little bit concerned. The Bank of Canada is expecting COVID-19 will cause mortgage deliquencies to more than double the peak they hit during the financial crisis of 2009, and Canada's national housing agency is expecting prices could drop by almost 20 per cent before rebounding starting in 2022, or later.

Lower prices are bad news for sellers, but a slowdown does represent an opportunity for buyers looking to jump to a market that had gotten away from them.

https://www.cbc.ca/news/business/covid-economy-changes-1.5618734

kropotkin1951

Real estate is location, location, location. The last three houses that sold on my cul de sac end of a street were on the market for less than two days. The last one sold in under twenty four hours and that was only three weeks ago. We've had people give us their numbers just in case we change our minds and decide to sell soon. Apparently living within a 100 meters of a community forest is considered a desirable location when society gets locked down during a pandemic.

If you on the other hand bought a condo on spec in Vancouver hoping to pay the mortgage by renting on Air BnB then you are likely in big trouble.

NorthReport

What year was it when the real estate industry decided to start comparing apples with oranges instead of apples with apples? Real estate statistics used to compare the price of a house sold in 2010, to the price the same house sold for in 2020. Now they compare the price of the house sold in 2010, to the price of the house sold in 2020, with the cost of living or inflation added on.

And what about condo fees, which are usually quite massive. It would be interesting to see a comparison between the selling price of a 2010 house ,with the selling price of the same house 10 years later less the 10 years of deductions for the property taxes and condo fees.     

NorthReport

House prices in Canada’s largest cities expected to drop amid ‘severe declines’ in sales, construction: CMHC

https://globalnews.ca/news/7097849/cmhc-canadian-house-prices-construction-sales/

kropotkin1951

Right now a condo is a big risk in BC. The insurance rates for strata condos are increasing across the board and the strata fees and municipal taxes are substantial and rising. However if the speculators who have been riding the rising tide start to see the neap approaching they might start renting at better rates and that would be a great thing.

 

NorthReport

And our governments need to get back into co-op housing.

kropotkin1951

NorthReport wrote:

And our governments need to get back into co-op housing.

Indeed coops are part of the picture but they also need subsidy pools to make them affordable housing and not just subsidized middle class housing.

NDPP

The Decline of the US Dollar Could Happen at 'Warp Speed' in the Era of Coronavirus, Warns Prominent Economist Stephen Roach

https://www.marketwatch.com/story/the-decline-of-the-us-dollar-could-hap...

"Stephen Roach, a Yale University senior fellow and former Morgan Stanley Asia chairman, tells MarketWatch that his forecast for a sharp deterioration of the US dollar could be a very near-term phenomenon, not an event that looms off in the distance. 'I do think it's something that happens sooner rather than later,' the economist told MarketWatch during a Monday afternoon interview.

His comments come as the financial expert has been warning for weeks of an epic downturn of the buck that could signal the end of the greenback as a reserve currency - an event that would ripple through global financial markets.  'The dollar is going to fall very, very sharply..."

NDPP

The Keiser Report: More Money Printing = More Unrest (and vid)

https://www.rt.com/shows/keiser-report/492577-fed-creates-inequality-mas...

"Max and Stacy discuss the latest data from the US Federal Reserve, which proves that the Fed itself creates some of the inequality causing unrest across the land as more and more money-printing begets more and more unrest. In the second half, Max talks to investor Michael Pento about the state of the Fed's balance sheet and whether or not he agrees with Yale economist Stephen Roach, who forecasts a dollar collapse..."