March 2, 2020

"U.S. stocks surge, global markets stabilize on heels of worst week since Great Recession."

WaPo reports (2 minutes ago).
Simeon Hyman, global investment strategist at ProShares said the volatility was due to uncertainty. “Investors don’t know what the ultimate impact of the coronavirus will be," Hyman said. "But if history is a guide, this will eventually pass and markets will recover.”
The Dow Jones is up 770.70 as I write this. That's 3.03%.

120 comments:

Achilles said...

Given.

The algorithms are doing the investing now.

They feed on the 401k investors who just invest and sit.

Every week those people had 401k contributions just plunked in automatically. The algo's just skim a percentage on the up and on the down.

daskol said...

Even crypto currencies, which were somewhat counter to traditional capital markets, started moving in tandem with them these last 10 days. We've discounted 2020 earnings growth more or less entirely and indiscriminately in the last 7 trading days.

Achilles said...

The DoW Jones is a set of 30 handpicked companies.

Companies are added and removed as needed.

The DoW Jones index is pure garbage as a metric. It is pure propaganda in the purest sense.

It doesn't even reflect most 401k's.

daskol said...

Crude is up, gold is up, NASDAQ is up, S&P is up, Russ2k is up (although not as much as larger company indices). VIX is way down. That's capital markets stretching their legs.

daskol said...

Signal, if weak given only one day, that the discounting of 2020 economic performance may have overdone it, at least if you're generally bullish. Signal that people are fucking nuts if you're bearish.

GatorNavy said...

Krugman hit the hardest by this news

Char Char Binks said...

Igna, Chuckles, hardest hit.

BADuBois said...

MSM, Democrats, hardest hit indeed.

daskol said...

farmer, too. he was just thinking this whole virus thing was a worse deal than we'd been led to believe.

Achilles said...

daskol said...

Crude is up, gold is up, NASDAQ is up, S&P is up, Russ2k is up (although not as much as larger company indices). VIX is way down. That's capital markets stretching their legs.

The real mover here is the Dollar.

In crisis the demand for the dollar goes up.

If the fed wasn't trying to tank the economy it would loosen up supplies.

But the fed is trying to tank the economy. So the dollar is getting much stronger now.

daskol said...

overnight, futures swung over 1000 points, so until the trading day is done, who knows how it will go. but you could see the bottom Friday, at least of this round of panic.

daskol said...

The Fed has supposedly committed to reducing interest rates, so seems as though they're doing their part. And the futures swung positive on that news when GS reported it.

Michael K said...

Think of all those factories being built or reopened in the US. China is shut down and may be for 6 months or more.

daskol said...

dollar has been stable to slightly lower vs. the Euro, strangely enough, over the last week.

Freder Frederson said...

Think of all those factories being built or reopened in the US. China is shut down and may be for 6 months or more.

Please provide examples, otherwise it is just wishful thinking.

gilbar said...

Achilles said...
The DoW Jones is a set of 30 handpicked companies.
Companies are added and removed as needed.
The DoW Jones index is pure garbage as a metric. It is pure propaganda in the purest sense.
It doesn't even reflect most 401k's.


Yep! That's why people look at, and invest IN the S&P500
You didn't mention IT; because, YOU'RE PURE PROPAGANDA?
I'm not saying, i'm just Asking

purplepenquin said...
This comment has been removed by the author.
Big Mike said...

Too many supply chains reach through China, but the factories are resuming production so the latest panic is ebbing. [Shrug]

J. Farmer said...

farmer, too. he was just thinking this whole virus thing was a worse deal than we'd been led to believe.

First, I never said anything about believing anything was "a worse deal than we'd been led to believe." Second, what I did say was that I am tending to believe more than not that this will present big problems in the next couple of months. It's still too early to have very confident opinions one way or the other. Third, you think this headline is an effective counterargument to that position?

Bay Area Guy said...

Good!

I hope it's because the hysteria bubble over Corona ChiCom Virus has been burst.

But, I don't know. If I did know, I'd be much more savvy about the stock market (and hopefully much richer).

Also, I don't know if the Coronavirus "pandemic" is serious or not. I tend to think not, but it is an inexpert opinion. However, my basis for said inexpert opinion, is quite simple and sound -- statistics from the CDC on the flu.

For the two-year period in the US, 2017-2018:

(1) 45 Million cases,
(2) 810,000 hospitalizations
(3) 61,000 deaths

Does the Covid-19 virus cause a worse form of the Flu than what we already had in 2017-2018?

I ask this, because the US seems to have a pretty heavy baseline of flu sickness and death -- before the Corona Wuhan virus hits us. Of course, it could already be here doing nothing, since we don't generally test for it. I would like to see responsible public health officials start discussing the significance of this baseline.

daskol said...

I think most of the information we get is very unreliable, but that markets have been reliable indicators of the fact that the news was worse than we were being told: markets would tank, and then you'd hear that there are twice as many cases as previously reported somewhere, or 5 new countries with virus cases, etc. I don't think investors or "smart money" have anything other than access to higher quality info a little before everyone else gets it, but in times like these of genuine uncertainty, nobody knows shit. It's just fun to tease Eeyores.

Fernandistein said...
This comment has been removed by the author.
Fernandistein said...

"But if history is a guide, this will eventually pass and markets will recover."

That's like the expert astronomer who predicts that the sun will rise tomorrow, because that's what it always does...er, I meant "because history is a guide". That sounds much spiffier.

Browndog said...

There is more doom and gloom in the media today than at any point since the outbreak, yet the markets are up.

De-coupling from China was always going to be painful, if not impossible. Now is the time to make that move.

The globalists are still crying and begging for Beijing to do something about the supply chain. Their biggest fear is a U.S. economy independent of China.

traditionalguy said...

And as we wait the London bankers who own a bank called the FED talk lowering the rate of interest they charge the USA...and they talk...and they talk...while they run the old North Carolina 4-corners strategy meant to run out the clock.

Drago said...

Freder: "Please provide examples, otherwise it is just wishful thinking."

LOL

Back to "Magic Wand" thinking, eh Freder?

In wake of the intensifying trade battle between the U.S. and China, more and more companies announced plans to shift manufacturing from China.

Even Chinese companies are diversifying their supply chains to outside China:

"Not only are foreign companies rethinking its production location, a handful of Chinese companies are also leaving China. Chinese multinational electronics company TCL is moving its TV production to Vietnam, while Chinese tire maker Sailun Tire is transitioning its manufacturing line to Thailand, Nikkei reported."

This has literally been going on for over 2 years now but Freder never noticed.

Too many Russia Collusion Fever Dreams......which are fortunately not early symptoms of coronavirus.

wild chicken said...

"The Fed has supposedly committed to reducing interest rates, "


And if that doesn't save the banks, they can fire up QE again.

EZ money. Win-win!

Drago said...

Browndog: "There is more doom and gloom in the media today than at any point since the outbreak, yet the markets are up."

I recommend substituting "because" for "yet".

Francisco D said...

In the long run, the Coronavirus will be a boon for American manufacturing, as long as execs and unions don't screw up the opportunity they are getting.

We bet too much on China and are now paying a price for depending on a totalitarian government. I don't know if Trump had this in mind when he started pressuring the Chinese, but he was certainly the right guy at the right time for America.

You don't have to like Trump to acknowledge that his economic instincts have been better than any other candidate in the past 10 years.

daskol said...

It must be painful for people of intellectual honesty to confront the prescience of Trump's prescient warnings about our economic dependence on China, and before that, Japan. He's been beating that drum since the 80s.

Limited blogger said...

So my strategy of doing nothing was correct?

Achilles said...

Freder Frederson said...

Please provide examples, otherwise it is just wishful thinking.

Freder, like Obama and most democrats, think magic wands power the economy.

Trump is smarter than Freder.

Trump is smarter than Obama.

Republican voters know more about how the economy actually works than democrat voters.

purplepenquin said...

The DoW Jones index is pure garbage as a metric. It is pure propaganda in the purest sense

Sounds like something a dumb lefty would say. Always beating up on capitalism and attacking Wall Street.

iowan2 said...

I wasn't worried last week when the market tanked, and I'm not reassured today at 11:30 that all is magically better.

This little snapshot says little. too many variables. no one thing, or 6 things or 20 things are going to be predictive. Make predictions for June 1. Thant's not so simple.

In the "tell me something I don't know" category, we have leftists Mayors and Governors repeating President Trumps statements, telling their voters that all is well, do the simple right things and (your state here) is going to be just fine. This is a cold, monitor yourself and family. Think smart, an you will recover, like always. Unless you are already compromised, this is not something to panic about.

Again. Politicians doing for their own voters, exactly what President Trump has done.

Drago said...

Limited blogger: "So my strategy of doing nothing was correct?"

Well, shorting the market last week might have been clever and then buying back in at the trough would have been even better.

You could have taken the profits and booked a trip to China to see the sights!

traditionalguy said...

The narrative that the FED saves us is BS. It only crashes the US economy periodically so the weak guys are wipe outand the insider guys run off with all their stuff. It's a long time operation.

Now the FED discount rate interest rate is being pegged 3.5% higher than the rest of the european central banks. That is armed robbery. It has nothing to do with stimulus tools. It has to do with swaps where the euro bank looters borrow at their banks for -1% and invest the loan proceeds in USA T-Bills paying them +2.5% in Dollars. It is a license to steal. And killing that game that the rogue America First Orange Man who wants to end is their sole raison d'etre.

Achilles said...

daskol said...

It must be painful for people of intellectual honesty to confront the prescience of Trump's prescient warnings about our economic dependence on China, and before that, Japan. He's been beating that drum since the 80s.


Heresy!

Heathen!

Lowering regulations and capital costs and making the US more competitive will provide jobs and raise wages?

Bullshit.

There is a magic wand in Trump's pocket.

Gusty Winds said...

Bill "I'm praying for a recession" Mahar must be pissed. Looks like he'll have to go pay for an orgy to make himself feel better.

BleachBit-and-Hammers said...

TP stocks are up.

StephenFearby said...

Friday is usually the day that traders cover their shorts.

That's because they don't want to be shamed by our blog mistress for wearing them.

But also because of the risk of not being able to cover their short positions when the markets are closed for the weekends.

BleachBit-and-Hammers said...

Get rich quick shark-tank gadget-wealth happens because of cheap Chinese labor.
It won't happen overnight, and it may never happen, but Americans need to shed their addiction to cheap Chinese goods and get off their asses make stuff here. and spend more money on these made in the USA products. Our deep state overlords and bureaucratic Clintonian corruptors need to get out of the way. Piss off, Bloomie.

daskol said...

$17T (as in trillion) of negative interest rate debt was purchased in Europe last year. I get that the bond prices have increased as yields got crushed, so that people who bought them can now sell them for more money. I GUESS. But someone's going to be left holding the bag, with bonds redeemable for less than par at some point. I don't get it.

Scott M said...

Has anyone checked on Mr. "Dow 25000!" Krugman?

Achilles said...

The fed keeps bailing out Europe.

They should all decortate lamp posts.

J. Farmer said...

@daskol:

It must be painful for people of intellectual honesty to confront the prescience of Trump's prescient warnings about our economic dependence on China, and before that, Japan. He's been beating that drum since the 80s.

Very true. The Buchananite wing of the Republican Party has been talking about these issues since at least the early 1990s. Unfortunately, we ended up with George W. Bush. And then McCain. And then Romney. We finally got someone slightly to the right of these three guys, and the Establishment is in meltdown mode.

Bay Area Guy said...

@Browndog:

De-coupling from China was always going to be painful, if not impossible. Now is the time to make that move.

The globalists are still crying and begging for Beijing to do something about the supply chain. Their biggest fear is a U.S. economy independent of China.


I buy this, completely.

Here's my "soft" 2-step conspiracy theory:

Trump is trying to hammer China. He's likely read "The Coming China Wars" by Peter W. Navarro. One of his chief policy aims is to restore the manufacturing base here (in the US), and tariff the crap out of Chinese goods.

Add to the mix, the Hong Kong uprising.

What better way to fight and win a trade war/ideology war, than by proclaiming to the world that your rival (China) is also infected with a new deadly virus that will kill us all? (I exaggerate somewhat). It allows Trump to cancel immigration from China (and now Iran). It adds a bit of urgency to closing our borders to the potentially infected, untested hordes.

That's the first step, which gins the media up into a hysterical state.

The second-step is for the Dems to attack Trump for not doing enough to stop this catastrophe from hitting the US. If people actually start dying in the US, we will see much more of this, even though Trump tapped this down with his speech last week.

Anyway, that's my soft theory, and I'm sticking to it!


bagoh20 said...

It's partly my fault. I invested a shitload of money in the market this morning. I've been waiting for this buying opportunity. I just wish Noble Prize winning economist Paul Krugman was telling me it was gonna crash further, then I could feel 100% confident in my investment. He did highlight the beginning of the panic with obvious glee last week, so I have that.

Freder Frederson said...

This has literally been going on for over 2 years now but Freder never noticed.

I don't know how you think this counters my argument. Michael K. contended, without providing any examples, that manufacturing was returning to the U.S. I am fully aware that a lot of Chinese production is shifting to other countries like Thailand, Cambodia and Vietnam. Last time I checked they are not part of the U.S.A.

J. Farmer said...

@BleachBit-and-Hammers:

Get rich quick shark-tank gadget-wealth happens because of cheap Chinese labor.
It won't happen overnight, and it may never happen, but Americans need to shed their addiction to cheap Chinese goods and get off their asses make stuff here. and spend more money on these made in the USA products.


Agree, but the problem is that a large part of the right is enamored with Randian free market ideology, and this position is anathema to them.

daskol said...

Fair point about the Buchaninites: aside from a once true left-winger like Bernie before he sought national office, they were among the few voices for heterodox economics of restricted immigration and managed global trade in support of strategic industries vs. doctrinaire open boarders "free trade" favored by the neoliberal consensus that predominates across our political spectrum. The economic nationalist platform is not really right or left, just like the globalization platform was both right and left.

purplepenquin said...

They should all decortate lamp posts

Not sure I understand this reference. Could you please clarify & explain exactly what you mean by it?

mockturtle said...

Stephen Fearby quips: Friday is usually the day that traders cover their shorts.

That's because they don't want to be shamed by our blog mistress for wearing them.


Good one! ;-)

Short-selling has been a big issue in this market, though, especially in China.

narciso said...

Hang appropriate officials

zipity said...


And Liberals/Democrats and the Lame Stream Media© (but I repeat myself) are crestfallen that the markets aren't continuing to fall.

Michael K said...

The Buchananite wing of the Republican Party has been talking about these issues since at least the early 1990s. Unfortunately, we ended up with George W. Bush.

That is what Perot was talking about although it was more about Mexico. Same principle.

Freder, as usual is confused.

Brent Moore said...

DJIA - the best of the best
High capitalization
High liquidity
High corpotate bond rating

Thus, these are the stocks that interest international investors.

S&P500 and Nasdaq have different audiences.

bagoh20 said...

"The DoW Jones index is pure garbage as a metric"

All the indexes track pretty closely. If there was a really bad one, it would have to track far differently than the rest.

Drago said...

Freder: "I don't know how you think this counters my argument. Michael K. contended, without providing any examples, that manufacturing was returning to the U.S. I am fully aware that a lot of Chinese production is shifting to other countries like Thailand, Cambodia and Vietnam. Last time I checked they are not part of the U.S.A."

https://www.usatoday.com/story/money/business/2018/06/28/manufacturers-bringing-most-jobs-back-to-america/36438051/

Go ahead and stay stupid. I don't think it will be too difficult for you.

Meanwhile, please continue telling workers those jobs they have are not real and their wage increases are not real.

It's a surefire "winner" for 2020 for the dems!!

cubanbob said...

Drago the Chinese are investing in other South East Asia countries for several reasons. Reason one is that the labor in those countries is now substantially cheaper than in China. Reason two is that the Chinese New Year is becoming longer and longer every year which in of itself is worsening supply chains. Those countries have a very short Lunar New Year. Reason three is that all else being the same, that investment enhances Chinese influence in those countries. The Chinese do assembly in those countries, the components still come from China.

Too many people have the mistaken believe that supply chains can be easily altered which is entirely untrue. A manufacturing plant is still ultimately an assembly plant. It is the tip of the iceberg. Everything below requires huge capital investments and that doesn't and can't happen overnight.

Then there is the problem of insufficient expertise. Go to any university in the West that has Chinese students and the first thing you will notice is the Chinese are for the most part majoring in STEM fields. Unlike America students. If you needed to recruit two hundred chemical engineers in a hurry you would have a much better chance finding them in China than here. Trump is right by starting the process but until student loans are geared to mainly financing engineering we will not be able to repatriate a lot of the industrial capacity we need.

Roughcoat said...

Some of the commenters here write like Cliff Clavin talks. I'm not naming names, Farmer.

Drago said...

Bay Area Guy: "Trump is trying to hammer China. He's likely read "The Coming China Wars" by Peter W. Navarro."

Trump has been laser focused on China since the 1980's. Here's an article from 2011 (before Trump became a republican and, thus, Literally Hitler) that describes all the backgrounders on China that Trump had been consuming for years:

https://latimesblogs.latimes.com/washington/2011/05/donald-trump-i-understand-the-chinese-mind.html

"Asked to name any of his favorite tomes on China, Trump reportedly listed the following 20 books right off the top of his head.

1. "The Party" by Richard McGregor
2. "On China" by Henry Kissinger
3. "Mao: The Untold Story" by Jung Chang
4. "Tide Players" by Jianying Zha
5. "One Billion Customers" by James McGregor
6. "The Coming China Wars" by Peter W. Navarro
7. "The Beijing Consensus" by Stefan Halper
8. "China CEO" by Juan Antonio Fernandez and Laurie Underwood
9. "Poorly Made in China" by Paul Midler
10. "CHINA: Portrait of a People" by Tom Carter
11. "The Man Who Loved China" by Simon Winchester
12. "China Shakes the World" by James Kynge
13. "Mr. China" by Tim Clissold
14. "Country Driving" by Peter Hessler
15. "The Dragon's Gift" by Deborah Brautigam
16. "Factory Girls" by Leslie T. Chang
17. "The Heavenly Man" by Brother Yun
18. "1421" by Gavin Menzies
19. "Seven Years in Tibet" by Heinrich Harrer
20. "Battle Hymn of the Tiger Mother" by Amy Chua"

The only "problem" of course, is that as soon as Trump announced he was a republican all the usual suspects immediately charged him with being a "republican who does not read".

So what are the results thus far re: Trump China strategy?

https://www.wsj.com/articles/china-surrenders-to-reality-in-the-trade-dispute-11579133428

https://www.cnbc.com/2020/01/15/tariffs-worked-says-jim-cramer-praising-trump-on-china-trade-deal.html

Naturally, there's lots of lefties/LLR-lefties who can see what is happening with China and will simply deny the progress.

As with the Brits vis a vis the EU, the US holds all the major cards in dealing with China. All it took was a US President willing to play those cards on behalf of the US and not the EU/China global elites.

Drago said...

cubanbob: "Too many people have the mistaken believe that supply chains can be easily altered which is entirely untrue."

No one of any note believes that.

No one of any note even claims that.

As you point out, there is no one reason for supply chains becoming more diversified. However, there is no question that the US was the piggy bank for China's rise over the last 30+ years and without that China would never have garnered the economic gains it realized at the hands of those in the West who handed it to them.

It was a choice. And our "elites" were bought off to make the wrong (from a US perspective) choice.

cubanbob said...

daskol what you and J Farmer don't get that economic nationalism is like medicine: there is a difference between a therapeutic dose and a poison. Too much of it and you wind up like Argentina. Encouraging manufacturing is one thing, protecting manufacturers from foreign competition ultimately weakens the domestic suppliers. They get lazy and don't innovate. Trump is correct in his measured way on resolving the issue. making capital investments at home easier is a major start. Stopping the subsidy of education in fields that don't related to industrial development is another key component. It's a long term process.

BleachBit-and-Hammers said...

Farmer - I'm a free market capitalist. I recognize fully that "free market" is just a term people bat around. "Free market" is an imperfect deal, because humans are imperfect.
Statists like to say it's greed, and in part greed can ruin all sorts of things. Including the free market. Bu greed on the statist side, is a zillion times worse. Look at Castro and his billionaire family and the compete poverty of Cuba.
Yeah - I'll take that imperfect free market again - over that shit.


I'll take free market, unfettered by a state run bureaucrats from on high all day every day - despite it's imperfections.

BleachBit-and-Hammers said...

poorly wirtten cuz I'm in ah uryy

BleachBit-and-Hammers said...

free market capitalism is not a system of government - it is a system of commerce.

Achilles said...

Freder Frederson said...

This has literally been going on for over 2 years now but Freder never noticed.

I don't know how you think this counters my argument. Michael K. contended, without providing any examples, that manufacturing was returning to the U.S. I am fully aware that a lot of Chinese production is shifting to other countries like Thailand, Cambodia and Vietnam. Last time I checked they are not part of the U.S.A.

This is Obama's Magic Wand Economic theory in practice.

Heavily subscribed to by democrat voters.

cubanbob said...

Drago:
"As you point out, there is no one reason for supply chains becoming more diversified. However, there is no question that the US was the piggy bank for China's rise over the last 30+ years and without that China would never have garnered the economic gains it realized at the hands of those in the West who handed it to them.

It was a choice. And our "elites" were bought off to make the wrong (from a US perspective) choice."

It started with the Marshall Plan. Germany is still a major exporter and so is Japan. I'm not saying it was a bad policy but we failed in making sure we stayed competitive in manufacturing. China is doing to us what we did to the British and like we helped finance China so did the British finance us. The point being is having a world reserve currency is both a blessing and a curse. Countries that don't have such a privilege are much more focused on exports not only for jobs but in order to pay for necessary imports as no country can be entirely self-sufficient.

Bay Area Guy said...

Hi Drago,

Thanks, I saw that article, and found it interesting. Like many folks, I haven't paid much attention to China since, I dunno, Tiananmen Square incident in '89?

My foggy recollection is that Pat Buchanan was always barking about what China (and US Politicians of both parties) were doing to the US manufacturing base here, but was largely ignored as a crank.

Anyway, Trump and Steve Bannon have opened my eyes on this China issue.

traditionalguy said...

Reality addicts have noticed by now that DJT accumulated information at warp speed and uses it later when needed so fast he is accused of not doing a study first. This pattern happened to George Patton over and over. Both men were always right about the decisions they made, which in essence was their only crimes which was outshining the dumb ones around them who did need to stop and think until it was too late to win.

rhhardin said...

The psychology is wanting to buy but at the bottom, and where is the bottom. The panic goes both ways equally well. Actual economic reality doesn't figure in either way. At most it affects this year's earnings, and the stock price depends on earnings over many many years in the future, not this year particularly, except in the case of a single company where bad earnings indicates the company position is failing (so it affects the long future as well).

rehajm said...

Roughcoat said...
Some of the commenters here write like Cliff Clavin talks. I'm not naming names, Farmer.


Aw...that's it! I thought I knew him from somewhere...

Drago said...

cubanbob: "China is doing to us what we did to the British and like we helped finance China so did the British finance us."

Not even close.

We "voluntarily" agreed to insane rules governing intellectual property with the Chinese which amounts to a wholesale transfer of tech to them beginning in the 90's with Clinton and Loral and the trade agreements. Then, with WTO and admitting China as a "developing" nation we allowed them unbelievable trade advantages.

NAFTA specifically allowed a backdoor loophole to allow both China and the EU to funnel goods into the US and bypass the minimal tariff barriers we had in place. We openly allowed the EU and China and India and all the others to charge us to the hilt on tariffs while we allowed their products into the US with very little in the way of tariffs.

For instance, the EU paid only a 2.5% tariff on autos imported into the US. US companies were hit with a 10% tariff for every US build vehicle shipped into the EU. Why do you think even Harley-Davidson has to build a manufacturing facility in the lunatic-bureaucratic nightmare EU? Because the EU tariffs effectively shut them out.

China was charging 100% tariffs on US autos!

On top of it all we allow the Chinese to "invest" hundreds of millions into our Universities where they've established essentially centers of theft with regards to ongoing research along with allowing the Chinese to get away with hacking the living snot out of every Fed and State govt database.

Nope.

Our "elites" and the UniParty screwed the US over. For decades. For cash. While the US was being bled dry.

rehajm said...

"But if history is a guide, this will eventually pass and markets will recover."

That's like the expert astronomer who predicts that the sun will rise tomorrow, because that's what it always does...er, I meant "because history is a guide".


In events where it doesn't recover money isn't going to be high on your list of problems.

Achilles said...

BleachBit-and-Hammers said...

I'll take free market, unfettered by a state run bureaucrats from on high all day every day - despite it's imperfections.

That would be nice.

But that is not how the world works.

chuck said...

That is what Perot was talking about although it was more about Mexico.

Yes. I was sympathetic to his argument at that time. Although I didn't vote for Perot, I thought it was a concern that American workers were being cut out of the loop.

Quaestor said...

This has literally been going on for over 2 years now but Freder never noticed.

Rotwang's Cabana Boy and his ilk found a cure for reality long ago.

Left Bank of the Charles said...

It's the Biden bounce.

Rabel said...
This comment has been removed by the author.
J. Farmer said...

@BleachBit-and-Hammers:

Farmer - I'm a free market capitalist.

So am I. But societies will always be statist. And states will always tend towards oligarchies. The crisis the US is suffering is much more a cultural one than an economic or political one. Though the former obviously feeds into the latter.

Michael K said...

I was astonished to learn that the last deep fermentation penicillin plant closed about four years ago. The US invented the deep fermentation process during WWII. Since Penicillin is a feedstock for other antibiotics, this is a big deal. It appears that China organized a cartel that sold antibiotics and APIs below costs to drive out US manufacturers.

Freder may think all manufacturing is going to third world countries but high value processes are returning to the US and have been for about two years now. The Obama/Clinton/China cartel was ousted about then.

cubanbob said...

Drago you are missing my point. We are in the position we are in because of the blessing and curse of us having the world reserve currency. If our currency was the Australian or Canadian dollar our elites wouldn't have the luxury to afford the cupidity you refer to. Still lets not lose sight of the fact that China has four times our population and its economy is barely two thirds of ours. With the right policies and the right mindset we can regain a considerable amount of our higher value capital intensive industrial capability while our economy grows and the rest of the world including China can grow. Trump is starting us on the right path. Let's hope the swamp doesn't stop the process.

cubanbob said...

Drago you are missing my point. We are in the position we are in because of the blessing and curse of us having the world reserve currency. If our currency was the Australian or Canadian dollar our elites wouldn't have the luxury to afford the cupidity you refer to. Still lets not lose sight of the fact that China has four times our population and its economy is barely two thirds of ours. With the right policies and the right mindset we can regain a considerable amount of our higher value capital intensive industrial capability while our economy grows and the rest of the world including China can grow. Trump is starting us on the right path. Let's hope the swamp doesn't stop the process.

exhelodrvr1 said...

Democrats and LLRs hardest hit.

daskol said...

A dose of economic nationalism is called for, in this case pursuing a policy that privileges Americans who are already here and working, as reflected in controlling immigration and therefore wages, negotiating trade deals in which American manufacturers are given a shot and calling out and responding to bad actors and their attempts to hurt American interests (and fatten wallets of self-interested American leaders). Aside from a few voices in the wilderness that we've noted, there has been no spokesman for this type of approach in either major US political party. That more than any other factor may lay behind the destruction of those parties. For the Dems, it was mass immigration for a more docile electorate, while chamber of commerce GOP types wanted an expanded labor market to goose corporate profits. Trade deals and other foreign negotiations suffer from a severe agency problem, and the interests of the country were subjugated to the cupidity of our representatives. For intellectual types, a patina of neoclassical economics and Ricardian trade theory made it seem the inescapable direction of progress. Transnational, from internationalist socialist types to new global world order types are hostile to the retrograde nation-state. This was a true hegemony, and it is now shattered. Also the market's up. A good day.

Bill, Republic of Texas said...

They should all decortate lamp posts

Not sure I understand this reference. Could you please clarify & explain exactly what you mean by it?


That reminds me of my old grammar book. There was a picture of an old drunk hobo passed out against a lamp post.

The caption was the pole was lighter and the drunk was lit.

I don't know why I remember that after all these years. It still makes me chuckle.

Michael K said...

They should all decortate lamp posts

"À la lanterne!" French Rev.

daskol said...

To the moon, Ralph Kramden

Drago said...

cubanbob: "Still lets not lose sight of the fact that China has four times our population and its economy is barely two thirds of ours."

2 facts of which I never lose sight, particularly in terms of long-term geo-military confrontation...(Hellooo India...)

I agree with the rest of what you wrote.

Bay Area Guy said...
This comment has been removed by the author.
Bay Area Guy said...

Dow up 1,293 -- largest gain ever.

Can we officially declare the "Corona ChiCom virus Freak-out" to be over?

(Sorry, too soon).

Kai Akker said...

I just wish Noble Prize winning economist Paul Krugman was telling me it was gonna crash further, then I could feel 100% confident in my investment

That's a good line, Bagoh20. I'd like to agree, but how about this?

https://www.advisorperspectives.com/dshort/updates/2020/03/02/regression-to-trend-another-look-at-long-term-market-performance

Rusty said...

"Freder may think all manufacturing is going to third world countries but high value processes are returning to the US and have been for about two years now."

Before that. For the last ten years that I know of. I know some grinding businesses that do grinding exclusively for Japanese companies. like Honda, Nissan, Mazak. All the precision grinding for Honda motorcycles is done by a company in Addison Illinois. Why? Too expensive to get it done in japan and China is iffy on precision results.

Michael K said...

Too expensive to get it done in japan and China is iffy on precision results.

After Japan went to school with Deming, it was, and remains, the home of precision. Who buys Chinese cars ?

tim in vermont said...

"Freder may think all manufacturing is going to third world countries”

The standard Democrat line is that US workers are clueless dolts beyond redemption, and the sooner they are out of work and on the dole, the better.

tim in vermont said...

"About the only certainty in the stock market is that, over the long haul, over performance turns into underperformance and vice versa.” From the regrssion to trend link

The problem with this kind of thinking is that things really do change over time that fundamentally affect the market. One of them is cheap US natural gas, which the Democrats want to put an end to. US productivity is rising as well.

So bet against the markets at your own risk, as always.

Achilles said...

Left Bank of the Charles said...

It's the Biden bounce.

+1

You can claim "Dead Biden" bounce if you want. If you don't I will. There are several adjectives that could work.

Biden is going to exit the campaign by doing something addled and loveable though. He isn't really suicidal either.

tim in vermont said...

"It's the Biden bounce.”

I will go so far as to admit that part of it is a “Thank God they have a plan to stop Bernie!” bounce.

daskol said...

Dead Biden Bounce is a decent band name.

daskol said...

Biden is not a plan to stop Bernie, though. All those quitters are just clearing the way for Bernie.

tim in vermont said...

I am not sure that this coronavirus is anything like over. I think we will know in a couple more weeks what the arc will look like.

Ken B said...

No Great Depression yet. Inga hardest hit.

h said...

I have a stock portfolio and I'm happy that the DJIA is up 4% today. I hope it will recover further. But we should not let attention to the stock market blind us to the impacts of the corona virus on the real economy. It does look to me like trade with China is already interfered with, and there appears to be a ripple effect through container shipping and reliance on just-in-time inventory-- since containers need to be available when and where they are needed, and slight interferences in a few ports can have a big impact on this. Also, since manufacturing depends on these shipments of just-in-time parts, on an assembly line missing just one part will cause the assembly line to shut down. I saw somewhere that the parts being delivered in late February were probably loaded before the outbreak, so we are just beginning to see the real economy impacts. The stock market drops because investors anticipate these real economy impacts. Irrational non-exuberance may cause the stock market to drop "too far" and to correct. And that's probably what we are seeing today. But the political implications of coronavirus are likely to depend more on the real economy, and not so much on the stock market.

Ken B said...

Farmer:” Third, you think this headline is an effective counterargument to that position?”
I don’t think he was making an argument. He was suggesting you felt cock blocked.

tim in vermont said...

The New York Times has always been a conduit for and a member of the infragovernment run out of Langley. It’s just too obvious to ignore now.

tim in vermont said...

“...Also, since manufacturing depends on these shipments of just-in-time parts, on an assembly line missing just one part will cause the assembly line to shut down.”

It all reminds me of poorly designed software without redundancy, or buffering (I forget what we used to call code that re-assembled data after it got mixed up and thrown out of order), that could never past the first test that took it out of regimented and expected inputs rolled out into the real world.

Of course leaving out those parts of the system that made code more robust made the code more efficient, as long as the inputs arrived where and when expected.

tim in vermont said...

It’s like a communications protocol problem.

BleachBit-and-Hammers said...

J Farmer- America is not an oligarch - unless you feel the deep state is an oligarch- then I guess we are.

daskol said...

Down 500 tomorrow, at least that’s what I bet.

BleachBit-and-Hammers said...

Achilles - well do explain how the world works.

bagoh20 said...

"Fox Business reported that the Dow "rose over 1,294 points or 5 percent in what is the biggest point gain ever. Ditto for the S&P 500 and Nasdaq from a point gain of 136 and 384 points respectively."

It runs against the odds and history, but I'm expecting further gains tomorrow, or at least little retreat.

tim in vermont said...

"Down 500 tomorrow, at least that’s what I bet.”

So do I get my new boat or not?

But yeah. With six dead now associated with a single nursing home in King County, I am thinking that the adventure is just beginning.

AllenS said...

The stock market rallied for one reason, and only one reason, and that is because Donald John Trump is still the POTUS.

Michael said...

Daskol

Dow futures currently at +179.5. Might want to look at the chart instead of guessing.

daskol said...

Last night they were down as much as 700 before going up. It’s going to be a wild ride because a lot of money is invested in this being a persistent down market, as per the regression analysis posted above. It’ll be a bulls-bear tug of war, with bears having a short term advantage at pushing things down because scary headlines are still coming. That’s how it feels.

daskol said...

With trading volatility like this, bet against Vegas and Macau as they’ve got nothing on the markets for the next few weeks.

Kai Akker said...

because a lot of money is invested in this being a persistent down market,

Not so. In percentage terms, the least ever. The stock market reached extremes of bullishness along with that extreme of valuation -- highest valuation ever in our financial history -- shown on the charts in the link I posted earlier.

To my eye, that chart is screaming.

Achilles said...

BleachBit-and-Hammers said...

Achilles - well do explain how the world works.

Well first the preprocessor clears out the directives and includes.

Then the compiler and the assembler takes the code and other libraries and creates a bunch of object code files.

Then the linker takes those object files and builds a locatable file.

Then the locator matches up the symbols and the hardware and loads the software into proper memory locations.

GRW3 said...

Stock market changes need to be judged on percentages, not points.

Robert Cook said...

"J Farmer- America is not an oligarch - unless you feel the deep state is an oligarch- then I guess we are."

No, America is not an "oligarch." It is an oligarchy.

Indisputably.