It’s getting increasingly difficult to say we’re not entering a recession. Pretty much every leading indicator is flashing red now. I’m expecting Q1 earnings reports and forecasts in a month to be the nail in the coffin.
This has got to be the best telegraphed recession of all times. I cannot believe that anyone having skin in the economic game didn't know that it is likely coming. Come on, don't be ridiculous.
Things are definitely looking bad, but given how optimistic the market has seemed over the past months even with lots of bad news coming out, I wouldn't be surprised if there's a pretty sharp recovery once Covid-19 is contained.
How is it wasting their time. Would you be just as offended if he said "I wish you well" instead? You're just being intolerant toward others beliefs and you think you are any less bigoted because your beliefs are better. He didn't force anything on anyone. You might be ignorant about this but people who believe in prayer don't think of it as hoping or good wishes, they (we) genuinely believe it has actual immediate effect. Your lack of belief does not justify your intolerance, he did not force others to participate. You are free to do more interesting things while he spends what...30 secs doing something you don't believe in? Such a high price for tolerance?
And fyi, i am the last person that would support pence politically.
Something people are misreading is that currently, the thing that is increasing exponentially is testing capacity.
The thing you don't need testing capacity to detect is the serious and critical cases. So, look at the "Total Number of Severe or Critical Cases" over time. [1]
Note that for cases which will be "severe" that the median time to onset of severe symptoms is 1 week (WHO report). Median time for any symptoms is 5-6 days. So essentially, if it is going to get bad, it gets bad quickly.
What this indicates to me is that now that there is finally some actual testing capacity being deployed, we will see a lot of "new" cases, but they are old infections. Growth of the case count is not indicative of the actual current "growth factor", or R0 in the community.
It appears that it may be coming under control in South Korea actually. We need a few more days to be sure. It also appears to be under control in China as well, with less than 100 new cases reported there yesterday.
Containment in an absolute sense is not possible, but the data does not support a conclusion that pervasive infection (e.g. 10% of world population, as what happens every year with the flu) is inevitable.
Arguably the only two data points we have at this point seem to point to containment actually being possible.
Only once the daily testing rate has stabilized can you directly observe the new case growth rate without a bias.
My theory on the severe case load in China is that the total infection rate is under-reported by at least an order of magnitude. We’ll only ever know if we have reliable serological testing (for antibodies) which is not yet being done.
Doesn't matter if it is contained. If people accept it as normal (i.e.: full global spread) that's enough. There are bigger pandemics people have adopted to (AIDS,flu,etc...) a vaccine would help too.
The market fears are not a result of being afraid people will die. It's mostly around consumer spending,containment/quarantine efforts and supply chain stability.
This by itself is a very recoverable crisis, you don't need bailouts and mergers like in 2008. Nothing has collapsed (yet), which means everyone is trying to "buy low" as soon as any sign of long term recovery is seen. The only big fear is how politicians might throw gas into the fire for certain political ends.
> If people accept it as normal (i.e.: full global spread) that's enough
I agree, but what if they don't?
It's quite easy to just stop doing stuff, order everything on Amazon, and binge on TV and video games.
It's arguably even rational to do it. Socializing is somewhat of a risk right now, and I'm pretty comfortable at home.
The CDC said today that Americans should avoid taking long flights.
The administration is downplaying the risk to Americans.
> which means everyone is trying to "buy low" as soon as any sign of long term recovery is seen
The market was given a chance to do that last week when the fed cut rates. The fact that futures are limit down tonight suggests that this selling may go deep.
I would love to "buy low", but the bottom may not happen until prices are back to 2008 levels.
Also 10Y is now down below 0.35. I'm not sure where the cracks in the system are, but this is a global stress test of the economy.
Your fears are justified but what I am saying is containment won't be very effective. The worst case is if it lingers on barely spreading like it is now. Once you see 100k+ infections per state and every major city with similar numbers things will hopefully normalize.if this timing is close to when Russia and KSA straighten out their dispute I would say that is a good time to start buying slowly.
It really depends on the unknown factors. Things will normalize because people gotta eat, the big unknown here is when. Will everyone start missing mortgage payments and credit card bills because quarantines (unlikely)? Will supply chain issues cause big losses (very likely)? But you can make up for losses,like you said even with quarantine people still order online. We're seeing losses but no cascadig long term collapse like detroit,aig,lehman brothers in '08. But the worsr case can still play out and collapses can start cascading if the corona fears and oil dispute last more than a few weeks
Not sure why this is being downvoted. This is generally correct:
> The market fears are not a result of being afraid people will die. It's mostly around consumer spending,containment/quarantine efforts and supply chain stability.
It's a nasty virus, but this isn't the Spanish Flu devastating the post-WW1 landscape. It is absolutely going to screw up productions schedules and messing with the supply chain. Turns out if millions of people have to miss work the economy suffers, go figure.
Probably because of the last bit about politics, that was just me expressing a paranoia but to many their politics is like a religion to them and they assume I meant their side in my comment (I just meant politicians in general,plenty act in bad faith)
Also a recession is a cleansing thing (Austrian school). A lot of unproductive people will be fired and a lot of stupid projects will be shut down, creating space for new ventures. You should take risks exactly during the time of a recession, not during the time of market & general confidence all time highs. Same with young age - take risks when you're young and your downside is small.
But it ain't going to be easy.
(contingent on the recession actually materializing).
Ahh, the times of bimetallism. Bimetallism was the Bitcoin of the times, railroads were the "tech" of the times. Robert Shiller has a very entertaining comparative research between Bitcoin and bimetallism in his book Narrative Economics: https://youtu.be/QV0JrMV5nnc
If you are skilled at what you do, you'll survive unscathed, in the long term. Those statistics about people earning less in aggregate (that graduated during the last recession) are true, but you don't have to be the average employee. If you work for it, these forces working against you can be overcome.
My condolence. I graduated in May 2001 post bubble. A lot of my friends had their offers withdrawn by the time they graduated.
I started a small dev firm in lower mid town manhattan instead. Then 9/11 hit that year.
I know kids that graduated just a year prior actually ended up doing quite well overall. But class of 01 and couple years following, I think jobs were harder to find.
Best of luck. I think timing may still be on your side, but I feel sorry for kids graduating next year.
1) Government makes more treasuries, sells them to the fed, and spends the money on infrastructure. That increases government debt, but improves our deflation situation and shrinks the loan bubble a bit. Preventing a deleveraging.
2) Government literally prints money, and gives it to people. That will rapidly increase inflation, which will increase corporate profits, shrinking the loan bubble a bit, preventing a deleveraging.
3) Don't do 1 or 2 because it basically redistributes wealth. Wait for rich people to spend their massive wealth on CPI-style goods and services, causing poor people to eventually have and spend more money. This takes aeons.
As far as I can tell, the powers that be have decided that #3 is the solution, and absolutely refuse to have a stable monetary system that involves giving anything to poor people.
I think #2 is the right outcome. Perhaps not give the money to people outright, but use it to manage the situation (e.g. cover lost wages for people staying at home from work, help airlines and similar businesses stay afloat, etc.).
In the economically prosperous portions of our nation, inflation is doing just fine. Housing prices have performed phenomenally in the past decade. The overall CPI understates inflation because there's a great number of areas that aren't economically relevant in the U.S. and consequently haven't experienced the accompanying inflation.
Every year the flu kills 640,000 people world wide. Right now we are at 3648 from coronavirus. Also there is a lot of evidence to suggest that the actual number of infections is much larger than the reported numbers. This means that the actual death rate is much lower than what is reported.
All of this smells like a massive over-reaction to the coronavirus.
There has been a correction to world markets going on for a while with the US being a possible exception. What actually shakes out it tough to say. Sadly, the markets are controlled just as much by sentiment as by actual hard data so...
Actually, if you had an equal chance of getting either, then you'd have a much much higher chance of dying from flu, according to current statistics. People really underestimate how bad the flu is.
The lack of a reputable statistic is concerning. I found the number 480,000 deaths (only U.S., not a global figure) circulating on sites including Daily Mail, Business Insider, /r/China_Flu, and abc14news.com, a domain registered in late 2018 and may or may not have any relation to ABC News the company.
This isn't only because of COVID-19. The OPEC+ union between Russia and Saudi Arabia broke down yesterday. The Saudi's are now flooding the market with crude and are likely going to increase production to record levels. Crude is down 30% as of 3/9 1AM EST. This uncertainty (plus people moving out of energy bonds into treasuries) is also driving the flight to safety.
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[ 3.1 ms ] story [ 62.5 ms ] threadThat said, it seems like this recession could have a significantly different flavor to it than the others in recent memory.
As they say: All happy families are alike; each unhappy family is unhappy in its own way.
(Credited to Tolstoy where I looked it up just now.)
(TIL there's something named the Anna Karenina principle after this very line [0]; it's used in statistics and ecology).
[0] https://en.wikipedia.org/wiki/Anna_Karenina_principle
> Doesn't seem like something that should catch anyone by surprise.
it's fine as a personal effort, it's an issue when it turns into a forced group activity.
And fyi, i am the last person that would support pence politically.
The thing you don't need testing capacity to detect is the serious and critical cases. So, look at the "Total Number of Severe or Critical Cases" over time. [1]
Note that for cases which will be "severe" that the median time to onset of severe symptoms is 1 week (WHO report). Median time for any symptoms is 5-6 days. So essentially, if it is going to get bad, it gets bad quickly.
What this indicates to me is that now that there is finally some actual testing capacity being deployed, we will see a lot of "new" cases, but they are old infections. Growth of the case count is not indicative of the actual current "growth factor", or R0 in the community.
[1] - https://www.worldometers.info/coronavirus/coronavirus-cases/...
I still think we can all acknowledge at this time that this is an endemic virus. Containment is no longer possible.
Containment in an absolute sense is not possible, but the data does not support a conclusion that pervasive infection (e.g. 10% of world population, as what happens every year with the flu) is inevitable.
Arguably the only two data points we have at this point seem to point to containment actually being possible.
Only once the daily testing rate has stabilized can you directly observe the new case growth rate without a bias.
My theory on the severe case load in China is that the total infection rate is under-reported by at least an order of magnitude. We’ll only ever know if we have reliable serological testing (for antibodies) which is not yet being done.
The market fears are not a result of being afraid people will die. It's mostly around consumer spending,containment/quarantine efforts and supply chain stability.
This by itself is a very recoverable crisis, you don't need bailouts and mergers like in 2008. Nothing has collapsed (yet), which means everyone is trying to "buy low" as soon as any sign of long term recovery is seen. The only big fear is how politicians might throw gas into the fire for certain political ends.
I agree, but what if they don't?
It's quite easy to just stop doing stuff, order everything on Amazon, and binge on TV and video games.
It's arguably even rational to do it. Socializing is somewhat of a risk right now, and I'm pretty comfortable at home.
The CDC said today that Americans should avoid taking long flights. The administration is downplaying the risk to Americans.
> which means everyone is trying to "buy low" as soon as any sign of long term recovery is seen
The market was given a chance to do that last week when the fed cut rates. The fact that futures are limit down tonight suggests that this selling may go deep.
I would love to "buy low", but the bottom may not happen until prices are back to 2008 levels.
Also 10Y is now down below 0.35. I'm not sure where the cracks in the system are, but this is a global stress test of the economy.
It really depends on the unknown factors. Things will normalize because people gotta eat, the big unknown here is when. Will everyone start missing mortgage payments and credit card bills because quarantines (unlikely)? Will supply chain issues cause big losses (very likely)? But you can make up for losses,like you said even with quarantine people still order online. We're seeing losses but no cascadig long term collapse like detroit,aig,lehman brothers in '08. But the worsr case can still play out and collapses can start cascading if the corona fears and oil dispute last more than a few weeks
> The market fears are not a result of being afraid people will die. It's mostly around consumer spending,containment/quarantine efforts and supply chain stability.
It's a nasty virus, but this isn't the Spanish Flu devastating the post-WW1 landscape. It is absolutely going to screw up productions schedules and messing with the supply chain. Turns out if millions of people have to miss work the economy suffers, go figure.
Also a recession is a cleansing thing (Austrian school). A lot of unproductive people will be fired and a lot of stupid projects will be shut down, creating space for new ventures. You should take risks exactly during the time of a recession, not during the time of market & general confidence all time highs. Same with young age - take risks when you're young and your downside is small.
But it ain't going to be easy.
(contingent on the recession actually materializing).
Here's a PDF version of it: https://mises.org/library/driver
I started a small dev firm in lower mid town manhattan instead. Then 9/11 hit that year.
I know kids that graduated just a year prior actually ended up doing quite well overall. But class of 01 and couple years following, I think jobs were harder to find.
Best of luck. I think timing may still be on your side, but I feel sorry for kids graduating next year.
1) Government makes more treasuries, sells them to the fed, and spends the money on infrastructure. That increases government debt, but improves our deflation situation and shrinks the loan bubble a bit. Preventing a deleveraging.
2) Government literally prints money, and gives it to people. That will rapidly increase inflation, which will increase corporate profits, shrinking the loan bubble a bit, preventing a deleveraging.
3) Don't do 1 or 2 because it basically redistributes wealth. Wait for rich people to spend their massive wealth on CPI-style goods and services, causing poor people to eventually have and spend more money. This takes aeons.
As far as I can tell, the powers that be have decided that #3 is the solution, and absolutely refuse to have a stable monetary system that involves giving anything to poor people.
https://en.wikipedia.org/wiki/Marginal_propensity_to_consume
All of this smells like a massive over-reaction to the coronavirus.
There has been a correction to world markets going on for a while with the US being a possible exception. What actually shakes out it tough to say. Sadly, the markets are controlled just as much by sentiment as by actual hard data so...
Great. How many people will die if coronavirus infections spread as widely as flu infections?
(Which of course means that getting coronavirus is 5x-25x more likely to kill you then getting flu.)
The WHO's current estimate is at 3.4% mortality, near the top of that scale, as of March 3.
> Globally, about 3.4% of reported COVID-19 cases have died. By comparison, seasonal flu generally kills far fewer than 1% of those infected.
> https://www.who.int/dg/speeches/detail/who-director-general-...
https://abc14news.com/about-us/