Three million initial unemployment claims expected tomorrow - Printable Version
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RE: Three million initial unemployment claims expected tomorrow - Farm93 - 05-07-2020
(05-07-2020, 06:04 PM)BostonCard Wrote: And yet the Dow rose 211 points today; it is up over 5000 points from its nadir. The NASDAQ, at 8979, is somehow up for the year (it closed 2019 at 8972).
Goes to show that the stock market is not the economy and the economy is not the stock market (h/t to Kai Ryssdal).
BC
The trillions the Fed and Congress created are key to the market rise. Not only is there a lot of new money floating around, but the ease also demonstrates more will likely be created if needed. That money might not get to those most in need, but it should give the economy a boost.
The unemployment claims and unemployment rate are likely to miss the impact to those in the gig economy. AirBNB hosts and Uber/Lyft drivers are not really unemployed, but their income has to be very close to $0 each week.
RE: Three million initial unemployment claims expected tomorrow - Mick - 05-07-2020
(05-07-2020, 08:27 PM)Farm93 Wrote: The trillions the Fed and Congress created are key to the market rise. Not only is there a lot of new money floating around, but the ease also demonstrates more will likely be created if needed. That money might not get to those most in need, but it should give the economy a boost.
The unemployment claims and unemployment rate are likely to miss the impact to those in the gig economy. AirBNB hosts and Uber/Lyft drivers are not really unemployed, but their income has to be very close to $0 each week.
I still think there will be deflation rather than inflation. Consumers have no money, and will have no jobs, not really. I strongly suspect that once businesses figure out how profitably they can run after driving costs out, they'll continue to do so. We will have furloughed 20% of our staff (24% of my team, including five more tomorrow), and these are people that I desperately need. The remainder of my team is desperate, they want to keep their jobs. Most of us work after hours, and now Saturdays and Sundays to handle the flood of sales/BD/marketing demand.
The short-sightedness of this policy won't be felt for a while, which will ease its permanence. I realize that I only have insights into my own firm, but I can't help but feel that the pandemic will cement these job losses, now at 34 million+ and climbing. This past week's RIFs were higher than the estimates, and the prior week's RIFs had to be adjusted upward. And speaking of marketing, at this point it doesn't matter whether America goes back to work or not -- the long term damage has been done. All the activities that we might have engaged in, we will no longer have in 2020 and i wouldn't be surprised if that extends to 2021. The media and medical communities will have achieved their goals, the infection curve will be flat and America's economy will be flatter. Well -- not flatter, the economy is in nosedive right now, and will continue to do so for quite a while.
Fastest Economic Deterioration Ever Recorded:
https://news.bitcoin.com/us-manufacturing-crisis/
Bigger Than Expected Nosedive In U.S. Home Sales
https://www.rttnews.com/list/us-economic-news.aspx
CBO Thinks American Economy Will Shrink 40% this Quarter (annualized, four times the size of the worst quarterly contraction on record!)
https://local12.com/news/coronavirus/us-economy-shrank-at-48-rate-last-quarter-as-virus-struck
U.K. Economy Worst Since 1706
https://www.cnn.com/2020/05/07/economy/uk-economy-bank-of-england/index.html
RE: Three million initial unemployment claims expected tomorrow - OutsiderFan - 05-08-2020
(05-07-2020, 06:59 PM)BostonCard Wrote:(05-07-2020, 06:46 PM)OutsiderFan Wrote: Those driving up equity values are like fleas who don't yet realize the market dog is dead.
This is a fact. Main Street businesses have no money to spend. There is this - insane - notion that we'll all be back to normal soon, so all these companies will be riding high again. What these folks don't realize is pre-pandemic economic activity is not returning for a long time.
I've used very simple data to come to this conclusion:
- Open Table reservations were down 50% the week before any government shutdowns in March
- Surveys have shown 70% of people don't want to attend live sports events until there is a vaccine
- Other surveys have shown heavy support for stay at home orders
This is short piece is instructive:
https://www.cnbc.com/2020/05/06/market-is-too-optimistic-about-a-post-coronavirus-world-stephen-roach.html
The issue is that with the exception of fast food joints, most restaurants are not public companies in the stock markets. Ditto major sports teams. Obviously, reductions in the above will affect suppliers and upmarket producers, but the companies that are going to be most affected by COVID-19, apart from the travel industry, are by and large not publicly traded.
BC
The downstream impacts still matter. Think about housing and ability to collect rent. Commercial real estate that has been way over built is getting crushed. Main Street businesses aren't spending money on advertising. This is where the online ad companies make most of their money. I still don't think most people understand how bad the situation is. Mick seems to have some insight, however!
Let's not pretend the economy was healthy before this pandemic. It wasn't. It was built on debt and a supply-oriented mentality that relies on demand always materializing. When nobody has any savings and lives hand to mouth (not just many individuals, but many small businesses as well), any disruption is catastrophic. Many business owners already have their individual finances completely dedicated to them. You can say banks can lend them money because interest rates are so low, but who wants to take on additional risk in such uncertain times, or if banks will lend anyway?
It's not healthy have an entire economy crash if it can't handle being put on pause for two months. If you can't survive for two months without income, you couldn't afford to be operating as you did. Those who can't are mostly pushed over the ledge, no longer able to sustain themselves or ramp up again. Most people have no idea how difficult it is to start a business and keep it going without significant investment that is very difficult to obtain.
RE: Three million initial unemployment claims expected tomorrow - Mick - 05-08-2020
(05-08-2020, 04:51 AM)OutsiderFan Wrote:(05-07-2020, 06:59 PM)BostonCard Wrote:It's not healthy have an entire economy crash if it can't handle being put on pause for two months. If you can't survive for two months without income, you couldn't afford to be operating as you did. Those who can't are mostly pushed over the ledge, no longer able to sustain themselves or ramp up again. Most people have no idea how difficult it is to start a business and keep it going without significant investment that is very difficult to obtain.(05-07-2020, 06:46 PM)OutsiderFan Wrote: Those driving up equity values are like fleas who don't yet realize the market dog is dead.
This is a fact. Main Street businesses have no money to spend. There is this - insane - notion that we'll all be back to normal soon, so all these companies will be riding high again. What these folks don't realize is pre-pandemic economic activity is not returning for a long time.
I've used very simple data to come to this conclusion:
- Open Table reservations were down 50% the week before any government shutdowns in March
- Surveys have shown 70% of people don't want to attend live sports events until there is a vaccine
- Other surveys have shown heavy support for stay at home orders
This is short piece is instructive:
https://www.cnbc.com/2020/05/06/market-is-too-optimistic-about-a-post-coronavirus-world-stephen-roach.html
The issue is that with the exception of fast food joints, most restaurants are not public companies in the stock markets. Ditto major sports teams. Obviously, reductions in the above will affect suppliers and upmarket producers, but the companies that are going to be most affected by COVID-19, apart from the travel industry, are by and large not publicly traded.
BC
BC's right, re: public companies. Separately, and with respect to the economic crash, we have to realize the difference between a slowdown and a dead stop. We haven't had an economic dead stop (or close to it) before, America has never had to do so. Think of it this way. If an aircraft carrier is moving at 24 knots, and has to slow to 19 knots, it takes x energy to return to 24 knots. It takes a vast multiple of x to return to 24 knots from a dead stop, and I think most Americans don't understand that's the nature of returning the economy to normal. And in this massive return, we have to remember that a rich doctor, retired in Marin can afford to take two months off, but a house painter can't. The 34 million+ who are trying to survive after losing their employment won't all return at once. A larger-than-expected number won't return at all, particularly as businesses discover that they can live without those individuals. Let's face it, a fair percentage of that 34 million people will include employees that businesses would have fired if they could. Couple that phenomenon with the fact that we don't need all that much real estate and knowledge workers can and should work from home, and the fact that other businesses can be automated; well...we will have a much larger permanent underclass of unemployed people.
RE: Three million initial unemployment claims expected tomorrow - BostonCard - 05-08-2020
(05-08-2020, 04:51 AM)OutsiderFan Wrote: The downstream impacts still matter. Think about housing and ability to collect rent. Commercial real estate that has been way over built is getting crushed. Main Street businesses aren't spending money on advertising. This is where the online ad companies make most of their money. I still don't think most people understand how bad the situation is. Mick seems to have some insight, however!
Let's not pretend the economy was healthy before this pandemic. It wasn't. It was built on debt and a supply-oriented mentality that relies on demand always materializing. When nobody has any savings and lives hand to mouth (not just many individuals, but many small businesses as well), any disruption is catastrophic. Many business owners already have their individual finances completely dedicated to them. You can say banks can lend them money because interest rates are so low, but who wants to take on additional risk in such uncertain times, or if banks will lend anyway?
It's not healthy have an entire economy crash if it can't handle being put on pause for two months. If you can't survive for two months without income, you couldn't afford to be operating as you did. Those who can't are mostly pushed over the ledge, no longer able to sustain themselves or ramp up again. Most people have no idea how difficult it is to start a business and keep it going without significant investment that is very difficult to obtain.
I don't disagree with anything you stated; I was just noting that the Wall Street (and specifically the stock market) has not been affected as much as Main Street, and that in part this was because the most vulnerable firms, the ones that are going to be completely wiped out by this tidal wave, are not listed firms on Wall Street. There are, of course major exceptions, including the entire travel sector, large parts of the retail sector, and probably carmakers. But while we will likely see a small business apocalypse, Fortune 500 companies will be hurt, but most will still be around on the other side.
BC