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Offline RE

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📉 Stocks plunge into bear market territory
« Reply #735 on: March 12, 2020, 01:43:35 PM »
How LOW can we GO?


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Offline RE

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📉 Dow drops 1,300, trading halted again, Ackman says shut down country
« Reply #736 on: March 19, 2020, 05:43:04 AM »
You can strike out "correction" and "bear market" and go to CRASH!   :o

Do not pass Go, do not collect $200.


Stock market live Wednesday: Dow drops 1,300, trading halted again, Ackman says shut down country
Published Wed, Mar 18 20207:26 AM EDTUpdated Wed, Mar 18 20205:34 PM EDT
Maggie Fitzgerald   @mkmfitzgerald
Pippa Stevens    @PippaStevens13
Fred Imbert   @foimbert

watch now
Dow falls more than 1,500 points amid coronavirus fears—Four experts on the markets

Stocks hit a new coronavirus crisis low Wednesday as investors worried governmental response to the pandemic wouldn’t be sufficient. A key market-wide circuit breaker was triggered for the second time in just three days as volatility continued to roil Wall Street. Here’s what happened:
5:31 pm: NYSE to temporarily close floor, move to electronic trading after positive coronavirus tests

The New York Stock Exchange said Wednesday it will temporarily close its historic trading floor and move fully to electronic trading after two people tested positive for coronavirus infection at screenings it had set up this week.

All-electronic trading will begin on March 23 at the open, the exchange said. The closure was in part as a result of positive coronavirus tests of two people, Stacey Cunningham, President of the NYSE, told CNBC. The entrants were stopped at the medical screenings at the Big Board. - Li
4:30 pm: Sell-off by the numbers

    Dow closed down 6.3% after hitting a low of 18,917.46 its lowest level since Nov. 21, 2016
    This month: Dow is down 21.69% on pace for its worst month since Oct. 1987 when the Dow lost 23.22%
    This year: Dow is down 30.27% on pace for its worst year since 2008 when the Dow lost 33.84%
    Dow is 32.7% below its intraday all-time high of 29,568.57 from Feb. 12

    S&P closed down 5.17% hitting a low today of 2,280.52 its lowest level since  Feb. 2, 2017
    This month: S&P is down 18.81% on pace for its worst month since Oct. 1987 when the S&P lost 21.76% 
    This year: S&P is down 25.76% on pace for its worst year since 2008 when the S&P lost 38.49%
    S&P is 29.32% below its intraday all-time high of 3,393.52 from Feb. 19

    Sectors: 11 out of 11 sectors were negative Wednesday led by Energy down 14.24% — Francolla

4:15 pm: Sentiment indicators don’t matter now, Josh Brown says

The fear about the coronavirus makes traditional measures of investor attitudes less relevant, Ritholtz Wealth Management CEO Josh Brown said after Wednesday’s sell-off. “I don’t think sentiment matters anymore. I think all those Investors Intelligence surveys — you can throw them out,” Brown said on “Closing Bell,” adding that investors were more focused on health issues and other aspects of the pandemic. “A lot of the moves we’re seeing are based on people taking money out of the market that they think they’re going to need to live on,” Brown said. He added that news about successful treatments of the coronavirus could help the market bounce back. — Pound
4:09 pm: Six Dow stocks close in the green

Amid Wednesday’s violent market dive, six stocks in the Dow Jones Industrial Average ended the day in positive territory. Walgreens Boots Alliance closed up 6.5%, Cisco Systems rose 5.2%, Walmart jumped 2.8% and 3M popped 1.9%. Pfizer and Verizon both ended the day up less than 1%. – Fitzgerald
4:01 pm: Dow closes down 1,300 points

The stock market tumbled again as investors grew increasingly concerned about the economic fallout from the coronavirus. The Dow closed the session more than 1,300 points lower, after plunging as much as 2,319 points at its session low. The S&P 500 dropped 5.1% and the Nasdaq Composite was down 4.7%. The massive sell-off tripped a trading halt in afternoon trading, the second time in three days. — Li
3:15 pm: Final hour of trading: Stocks head for big losses again

With less than one hour to go, the major averages were headed for another steep decline amid concerns over the economic destruction from the coronavirus. The Dow was down more than 1,600 points, or 7.7%. The S&P 500 and Nasdaq were down more than 6% each. The major averages were all down more than 8% earlier in the day. —Imbert
3:09 pm: Stifel CEO calls for immediate stimulus, says ‘the market needs some certainty’

Congressional leaders and the Trump administration need to push through a fiscal stimulus deal immediately and not fight over details, Ronald Kruszewski, the chairman and CEO of Stifel said on “Power Lunch.” “We need the fiscal stimulus. I don’t care what the heck the plan is at some point. Get one announced. Whether it’s $1,000, $2,000, bailouts, whatever. The market needs some certainty and some action,” Kruszewski said.“That’s a message to Washington. Why we don’t have a fiscal deal done because there’s some political partisanship is ridiculous. This needs to be announced today,” he added. —Pound
2:42 pm: Bill Miller calls this market one of the best buying opportunities of his lifetime

Investor Bill Miller said during Wednesday’s violent market dive that the current climate is one of the best buying opportunities of his lifetime.  “I think this is an exceptional buying opportunity,” Miller said on CNBC’s “The Exchange” on Wednesday. As Miller was speaking, trading was halted because the S&P 500 fell more than 7%, triggering the level 1 “circuit breaker.” - Fitzgerald
1:51 pm: Dow’s historic fall

1:49 pm: Decliners lead advancers 30 to 1

More than 30 stocks traded lower at the New York Stock Exchange on Wednesday for every advancing stock as the coronavirus crisis sell-off reached a new low. In total, more than 2,900 stocks were down at the NYSE while 95 traded higher. —Imbert
1:34 pm: Stocks plunge to session low with Dow down more than 2,000 points

Stock losses accelerated in afternoon trading with the Dow dropping 2,128 points for a 10% loss. The S&P 500 dropped 9%, while the Nasdaq was down 8.3%. - Stevens
1:14 pm: Stocks resume trading

After a 15-minute halt, stocks are trading again. The Dow is down 1,753 points, or 8.3%, while the S&P 500 and Nasdaq are down 7.3% and 6.7%, respectively. - Stevens
1:04 pm: Bill Ackman pleads to Trump to increase closures to save the economy: ‘Shut it down now’

Longtime hedge fund manager Bill Ackman urged President Donald Trump to shut down the country for 30 days to contain the coronavirus, calling it the only option to rescue the economy. “What’s scaring the American people and corporate America now is the gradual roll-out,” Ackman said on CNBC’s “Halftime Report” on Wednesday. “We need to shut it down now... This is the only answer.”“If he can save the country from the coronavirus, he will get re-elected,” Ackman said. - Li
12:56 pm: Trading halted as S&P 500 drops 7%

Stocks are halted for trading after the S&P 500 dropped 7%, kicking in the level one “circuit breaker.” - Stevens
12:30 pm: Natural gas prices fall to lowest level in more than 24 years

Natural gas is down 7% today, and is now trading at its lowest level since Sept. 20, 1995. - Francolla, Stevens
11:50 am: Markets at midday: Stocks tumble once again as volatility reigns supreme

Around midday, the major averages were down sharply once again as Wall Street continued its volatile streak during the coronavirus crisis. The Dow Jones Industrial Average was down more than 1,300 points, or 6.3%. The S&P 500 and Nasdaq fell 6% and 5%, respectively. Those losses offset a sharp bounce from the previous session, which was sparked by hopes of massive fiscal stimulus. —Imbert
11:43 am: Aerospace and Defense stocks on pace for worst month ever

The iShares U.S. Aerospace & Defense ETF is down 41% in March, on pace for its worst month ever back to its inception in 2006. The index is led lower in part by Spirit Aerosystems, Boeing, TransDigm, all on pace for their worst months ever.

    Spirit Aerosystems is down almost 68% this month, on pace for its worst month ever back to its IPO in 2006
    Boeing is down over 62% this month, on pace for its worst month ever through 1972
    TransDigm is down almost 57% this month, on pace for its worst month ever back to its IPO in 2006 — Francolla, Fitzgerald

11:35 am: Amid the market volatility, analysts say buy these stocks: Zynga, Kroger, Hershey, Ralph Lauren & more

    Morgan Stanley downgraded Coca-Cola and Monster Beverage to equal weight from overweight.
    Bank of America upgraded Tesla to neutral from underperform.
    Bank of America downgraded Levi Strauss to neutral from buy.
    Bank of America upgraded Ralph Lauren to buy from neutral.
    Credit Suisse upgraded Hershey to outperform from neutral.
    Telsey upgraded Kroger to outperform from market perform.
    Bernstein upgraded Campbell Soup, General Mills, Conagra Brands and Kellogg to market perform from underperform.
    Oppenheimer initiated Zynga as outperform.
    Oppenheimer initiated Sony as outperform.
    Credit Suisse named Constellation Brands a top pick.
    JPMorgan upgraded D.R. Horton to overweight from neutral and downgraded Lennar and PulteGroup to neutral from overweight.
    Credit Suisse upgraded Walmart to outperform from neutral.
    BTIG upgraded Dunkin’ Brands to buy from neutral.
    Goldman Sachs added O’Reilly Automotive to the conviction buy list.
    Barclays downgraded American Airlines to equal weight from overweight.
    Longbow upgraded Domino’s to buy from neutral.
    Nomura Instinet initiated Stitch Fix and The RealReal as buy.
    UBS upgraded Caterpillar to neutral from sell.

Read more on the analyst calls of the day here. — Bloom
11:32 am: Oil plummets 16% to more than 18-year low, on pace for worst month ever

Oil plummeted 16% to a more than 18-year low on Wednesday as the coronavirus pandemic continues to sap demand for crude and as rising worries about a global recession lead to fears of longer-term demand destruction. U.S. West Texas Intermediate crude fell 16.1%, or $4.35, to $22.60 per barrel. International benchmark Brent crude shed 9.4%, or $2.71, to trade at $26.02, its lowest level since 2003. Oil is getting hit on both the supply and demand side. A slowdown in worldwide travel and business activity is weighing on demand, just as powerhouse producers Saudi Arabia and Russia prepare to ramp up production. - Stevens
11:15 am: Dow tanks 1,400 points

The sell-off deepened in late-morning trading, with the Dow plummeting more than 1,400 points. The S&P was down 6%, threatening to trigger a key exchange-mandated circuit breaker. If the S&P 500 drops 7%, trading will pause for 15 minutes.— Li
10:40 am: Emerging Markets ETF on track for worst month since 2008

The iShares MSCI Emerging Markets ETF (EEM) is down 6%, bringing its month-to-date losses to more than 21%. The ETF is on track for its worst month since October 2008. — Francolla, Stevens
10:35 am: Walmart jumps 5%, gets an upgrade from Credit Suisse

While the broader market moves lower, shares of Walmart are up more than 5% as Credit Suisse upgraded the stock to an outperform rating on Wednesday. “We see this unfortunate period accelerating structural changes in consumer shopping, possibly by 5+ years, as they are introduced to new retailers and new shopping methods,” the firm said. Credit Suisse raised its full-year 2021 earnings estimates, saying the multi-channel retailer will benefit from a jump in online grocery and delivery, among other things. – Stevens
10:24 am: Market comes back a tad, Dow now down 950 points

Stocks rebounded slightly from their steep opening losses. The Dow traded about 950 points lower after plunging 1,365 points at its low. The S&P 500 dropped 4% after tanking 5.6% at the open. Wall Street’s fear gauge the Cboe Volatility Index, known as the VIX, fell 6% to about 71, after hitting a record close of 82.69 on Monday. -- L
9:48 am: Bernanke, Yellen push Fed to buy corporate bonds

Former Federal Reserve chairs Ben Bernanke and Janet Yellen are urging the central bank to buy corporate bonds. Though the authority to do goes beyond the central bank’s authority, it can get the permission from Congress. Bernanke and Yellen said doing so would “help restart” the investment-grade part of the market that “is under significant duress.” – Cox
9:46 am: Investor Ackman says Trump should shut down US, says markets would ‘soar’

Investor Bill Ackman advised President Donald Trump on Wednesday to shut down the U.S. for one month in an effort to contain the novel coronavirus and said financial markets would rally in response to such decisive action. Ackman, who founded Pershing Square Capital Management, called on the president to both close the nation’s borders as well as offer Americans a one-month rent, interest and tax holiday. “The moment you send everyone home for Spring Break and close the borders, the infection rate will plummet, the stock market will soar, and the clouds will lift,” the hedge fund manager wrote. — Franck
9:40 am: Deutsche sees US GDP cratering 13%

The U.S. economy will contract by 13% in the second quarter because of the coronavirus pandemic, Deutsche Bank said in a new forecast. A drop that sharp would be “significantly beyond the range of modern historical experience,” the firm said, and would be the biggest “going back to at least World War II.” — Sheetz
9:39 am: Circuit breakers could be triggered again

Wild swings continued to roil Wall Street on Wednesday, with the S&P 500 dropping more than 5% at the open. The market is at risk to trip the so-called circuit breakers for the second time this week. According to the New York Stock Exchange, a market trading halt may occur at “three circuit breaker thresholds” on the S&P 500 due to large declines and volatility. The exchange classifies this at three levels based on the preceding session’s close in the S&P 500.
The rules, which apply to regular trading hours only, are as follows:
·      Level 1: If the S&P 500 drops 7%, trading will pause for 15 minutes.
·      Level 2: If the S&P 500 declines 13%, trading will again pause for 15 minutes if the drop occurs on or before 3:25 p.m. ET.
·      Level 3: If the S&P 500 falls 20%, trading would halt for the remainder of the day. A Level 3 breach can be triggered at any time. — Li
9:31 am: Dow tanks 1,300 points at the open

The Dow Jones Industrial Average plunged 1,300 points at the open, while the S&P 500 dropped more than 5%, at risk of triggering a market-wide circuit breaker for the second time in just three days. If the S&P 500 drops 7%, trading will pause for 15 minutes. — Li
9:13 am: Boeing stock on pace for worst month ever

Shares of Boeing tanked another 20% in premarket trading on Wednesday, bringing its losses this month to a whopping 64%. The plunge put the aircraft manufacturer on track for its worst month in history. On top of the consequences of two fatal crashes of its 737 Max aircraft, Boeing took a big hit from the coronavirus outbreak that disrupts the global supply chains and the travel industry. The second worst month for the company was in September 2001, when the stock lost nearly 35%. – Li, Francolla
8:51 am: Sterling tumbles to lowest level since 2016 against the dollar

Sterling slid below $1.19 on Wednesday to hit its lowest point since October 2016 as liquidity concerns sent the dollar surging and hammered currencies around the world. The pound fell 1.5% on the session to hit $1.1873, its lowest level since an overnight flash crash in October 2016 and below the levels seen in the aftermath of the Brexit referendum. —Smith
7:53 am: Oil prices continue to slide, hit lowest levels since 2003

The price of oil continues to fall as the coronavirus pandemic leads to major economies restricting movement within major cities and expectations of a recession grow. West Texas International futures have declined 5.8% to trade at $25.38 a barrel and hit its lowest level since 2003. Futures for International benchmark Brent crude slipped about 3.5% and are trading at under $28 per barrel. — Pound
7:51 am: Treasury yields charge higher after White House floats $1 trillion stimulus plan

Long-term U.S. debt yields continued to rise on Wednesday after Treasury Secretary Steven Mnuchin said the White House would like to see a $1 trillion stimulus package to help insulate the economy from a downturn. The prospect of such a massive stimulus plan and a deluge of additional U.S. debt put outsized pressure on Treasury prices and sent the 10-year yield up more than 30 basis points on Tuesday. The 10-year rate, often used by banks as a benchmark for loans, has ripped from around 0.65% on Monday to 1.11% at the latest reading. — Franck
7:38 am: Regeneron rises on hopes of coronavirus drug

Shares of biotechnology company Regeneron rose nearly 2% in premarket trading on Wednesday, the day after the company said it aims to have doses of a potential drug for COVID-19 ready to start human clinical trials by early summer. The antibody is believed to be a treatment for the virus, as well as a preventative drug. Shares of Regeneron rose more than 11% on Tuesday. – Fitzgerald
7:35 am: Coronavirus cases jump, worrying Wall Street

A spike in coronavirus cases continues to worry investors, who are hoping for government stimulus to offset the economic impacts of the virus. Worldwide coronavirus cases top 200,000 for the first time, according to data compiled by John Hopkins University. Italy has more than 2,500 virus related deaths as of Tuesday evening, the country’s health ministry said. Iran’s death toll from the coronavirus climbed to 1,135 with 147 new deaths in the past 24 hours, a health ministry official told state TV on Wednesday. The total number of infected people across the country has reached 17,361. Plus, European leaders agreed Tuesday to close the European Union’s external borders for 30 days in a new effort to slow the spread of the coronavirus pandemic. Singapore, Hong Kong and Taiwan also reported a rise in cases. France, which has seen a sharp spike in cases in recent weeks, said it could start seeing a slowdown of coronavirus infections in about eight to 12 days following the government’s decision to lock down the country, Health Minister Olivier Veran said Wednesday. —Fitzgerald
7:28 am: Gundlach says it’s ‘ludicrous’ to think US won’t enter a recession

DoubleLine Capital CEO Jeffrey Gundlach believes there’s a 90% chance the United States will enter a recession this year. The “Bond King” said that last week his odds stood at 80%, but that as the coronavirus outbreak continues to halt travel and shutter businesses worldwide, he now places the odds at 90%. Still, Gundlach added that he was incrementally less negative on the market’s outlook given the magnitude of the federal government’s response. “I think you’re supposed to be staying liquid, I think you’re supposed to be waiting for opportunities,” he said. “We all know that the stock market is down a lot. We know the junk bond market’s down a lot. ... Will the market snap back? Of course it will.” —Stevens
7:25 am: Dow futures indicate 1,000-point drop

U.S. stock futures tumbled on Wednesday, reaching their so-called limit down level, indicating declines of about 5% for the major averages. Dow Jones Industrial Average futures were down 821 points, indicating a loss of 1,031 points at the open. S&P 500 and Nasdaq 100 futures were also at their downside limit. Investors turned their eyes to the ETFs that track the major averages for a better indication of what the open will look like. The SPDR S&P 500 ETF Trust (SPY) was down 6.4% in the premarket. The SPDR Dow Jones Industrial Average ETF Trust (DIA) traded 6.7% lower while the Invesco QQQ Trust dropped 6.3%. Those losses come after a sharp reversal in Treasury yields unnerved traders as they weighed a potential $1 trillion stimulus package.

With reporting by Yun Li, Jeff Cox, Tom Franck, Elliot Smith, Gina Francolla, Michael Sheetz and Jesse Pound.

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    DALLAS, TEXAS - FEBRUARY 26: Team owner Mark Cuban looks on during a press conference to introduce Cynthia Marshall as the new Dallas Mavericks Interim CEO at American Airlines Center on February 26, 2018 in Dallas, Texas.
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    An employee scans grocery items for pickup order at a Walmart Inc. store in Burbank, California, U.S., on Tuesday, Nov. 26, 2019.
    One Dow stock is seeing its best month in years as markets crumble
    An aisle of toilet paper is nearly empty at a Kroger grocery store . Shoppers have been panic buying toilet paper, hand sanitizer, paper towels, cold and flu medicine, and other items on Coronavirus epidemic fears.
    Why there will soon be tons of toilet paper, and what foods could be scarce: supply chain experts
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    Traders work at the New York Stock Exchange in New York, the United States, on March 18, 2020. The New York Stock Exchange said Wednesday it will temporarily close its trading floor and move to fully electronic trading because of the COVID-19 outbreak.
    Stock futures point to more losses a day after the Dow closed below 20,000 for first time since 2017

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Offline RE

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📉 This Is Not a Recession. It’s an Ice Age.
« Reply #737 on: March 22, 2020, 04:47:01 AM »
The markets are not normal, either. The stock market lost 20 percent of its value in just 21 days—the fastest and sharpest bear market on record, faster than 1929, faster than 1987, 10 times faster than 2007.


This Is Not a Recession. It’s an Ice Age.

No one alive has experienced an economic plunge this sudden.

March 20, 2020
Annie Lowrey
Staff writer at The Atlantic

New York Stock Exchange shrouded in shadows
Drew Angerer / Getty

We can’t say we’re in a recession yet, at least not formally. A committee decides these things—no, really. The government generally adopts the view that a contraction is not a recession unless economic activity has declined over two quarters. But we’re in a recession and everyone knows it. And what we’re experiencing is so much more than that: a black swan, a financial war, a plague. Maybe things feel normal where you are. Maybe things do not feel normal. Things are not normal. For weeks or months, we won’t know how much GDP has slowed down and how many people have been forced out of work. Government statistics take a while to generate. They look backwards, the latest numbers still depicting a hot economy near full employment. To quantify the present reality, we have to rely on anecdotes from businesses, surveys of workers, shreds of private data, and a few state numbers. They show an economy not in a downturn or a contraction or a soft patch, not experiencing losses or selling off or correcting. They show evaporation, disappearance on what feels like a religious scale.

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What is happening is a shock to the American economy more sudden and severe than anyone alive has ever experienced. The unemployment rate climbed to its apex of 9.9 percent 23 months after the formal start of the Great Recession. Just a few weeks into the domestic coronavirus pandemic, and just days into the imposition of emergency measures to arrest it, nearly 20 percent of workers report that they have lost hours or lost their job. One payroll and scheduling processor suggests that 22 percent of work hours have evaporated for hourly employees, with three in 10 people who would normally show up for work not going as of Tuesday. Absent a strong governmental response, the unemployment rate seems certain to reach heights not seen since the Great Depression or even the miserable late 1800s. A 20 percent rate is not impossible.

More by Annie Lowrey

    U.S. Senator Burr
    An Invitation to Corruption
    Annie Lowrey
    A staffer for Representative Katie Porter holds a board outlining the cost of coronavirus testing.
    As Usual, Americans Must Go it Alone
    Annie Lowrey
    Traders work on the floor of the New York Stock Exchange.
    The Fed Did Not Just ‘Spend’ $1.5 Trillion
    Annie Lowrey

State jobless filings are growing geometrically, a signal of how the national numbers will change when we have them. Last Monday, Colorado had 400 people apply for unemployment insurance. This Tuesday: 6,800. California has seen its daily filings jump from 2,000 to 80,000. Oregon went from 800 to 18,000. In Connecticut, nearly 2 percent of the state’s workers declared that they were newly jobless on a single day. Many other states are reporting the same kinds of figures.

These numbers are subject to sharp changes; things like large plant closures lead them to jump and fall and jump and fall. But for them to rise so precipitously, across all of the states? To stay high? That is new. The economy is not tipping into a jobs crisis. It is exploding into one. Given the trajectory of state reports, it is certain that the country will set a record for new jobless claims next week, not only in raw numbers but also in the share of workers laid off. The total is expected to be in the range of 1.5 million to 2.5 million, and to climb from there.

None of that is surprising. The economy needs to halt to protect lives and sustain the medical system. Planes have been grounded, conferences canceled, millions of Americans told not to leave their homes except to get groceries and other necessities. Because of the emergency measures now in place, businesses have had no choice but to let workers go. The list of employers laying off workers en masse includes cruise lines, airlines, hotels, restaurants, bars, cabinetmakers, linen companies, newspapers, bookstores, caterers, and festivals. I started adding up numbers in news reports, and quit when I hit 100,000.

The economy had been plodding along in its late expansion, growing at a 2 or 3 percent annual pace. Now, private forecasters expect it will contract at something like a 15 percent pace, though nobody really knows. A viral quarantine is impossible to model, because modeling would mean knowing how long the necessary emergency measures will last and how well the government will respond with some degree of accuracy. Still, real-time measures show a consumer-economy apocalypse. One credit-card processor said that payments to businesses were down 30 percent in Seattle, 26 percent in Portland, and 12 percent in San Francisco. Nearly every state is seeing dramatic declines, with hotels and restaurants hit particularly hard.

The markets are not normal, either. The stock market lost 20 percent of its value in just 21 days—the fastest and sharpest bear market on record, faster than 1929, faster than 1987, 10 times faster than 2007. The financial system has required no less than seven emergency interventions by the Federal Reserve in the past week. The country’s central bank has wrenched interest rates to zero, started buying more than half a trillion dollars of financial assets, and opened up special facilities to inject liquidity into the financial system.

Yet in the real economy, everything has halted, frozen in place. This is not a recession. It is an ice age.

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Annie Lowrey is a staff writer at The Atlantic, where she covers economic policy.
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Offline RE

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📉 3 Reasons Why the Dow Will Crash Below 20,000 in 2 Weeks
« Reply #738 on: April 24, 2020, 01:57:21 AM »

Published: April 22, 2020 4:36 PM UTC
3 Reasons Why the Dow Will Crash Below 20,000 in 2 Weeks

The Dow has been pushed higher by false hope, but its rebound will be short-lived as three big stock market events crush this legless rally.

Laura Hoy @Laura_h_says
Dow Jones, 20,000

Remember the first time the Dow crossed 20,000? Well, the blue-chip index could be doomed to re-test this prior psychological support in the next few weeks. | Image: REUTERS/Brendan McDermid

    The Dow will retest previous lows as economic reality cripples the bear-market rally.
    Deflation, Warren Buffett, and an economic false start will likely zap investor confidence in the coming days.
    Patient bears will be the ultimate winners when it comes to market timing.

The Dow Jones Industrial Average was modestly higher Wednesday, as all 30 of its components ticked higher after back-to-back losses. Yet again, the optimism was fueled by nothing in particular. Instead, a rally built on overzealous optimism and false hope continued to push the index skyward.

But those waiting on the sidelines for the inevitable stock market crash might not have to wait much longer, as the Dow is probably heading below 20,000 in two weeks.
Deflation Will Crush the Dow’s Rally

Perhaps the biggest threat to the stock market’s recent rally is deflation. The Federal Reserve has been adamant that despite its unprecedented intervention, inflation won’t be a problem. But there could be a more significant issue on the cards: deflation.
us oil prices
Oil prices fell under severe pressure and went negative. That could be a magnified version of what we’re about to see for the rest of the U.S. economy. | Source: CNN

This week we saw U.S. oil futures dip into negative territory. That could be a microcosm of what’s going on in the broader U.S. economy.

Oil contracts went negative for the first time because the world is running out of places to store it amid declining demand due to coronavirus. While we likely won’t run out of places to store excess inventory or unused services, that won’t stop a lack of demand from weighing on prices.

Enter deflation, one of the main reasons for the Great Depression. A rapid decline in the price of goods and services due to low demand creates a domino effect for the rest of the economy. Lower demand equals lower corporate revenue. Lower corporate income equals more layoffs. More layoffs mean less consumer spending. Rinse and repeat.
deflation, fed bank of st. louis
Deflation could become a real concern if consumers don’t start spending. | Source: St. Louis Fed

Deflation is a horrible signal that no investors want to see, and we won’t know how far inflation fell in April until mid-May. But the Fed considers the Personal Consumption Expenditures Index a key gauge of inflation. In March, it’s expected to show a 0.3% decline when the data set is released on the 30th. Imagine if the drop is steeper.
Stalled Economic Revival

The Fed’s massive fiscal interjection has kept the market afloat so far, with traders banking on a return to normalcy in the months ahead. Donald Trump’s Reopen America Again plan has been a massive reason for investor optimism. But what if restarting the economy doesn’t offer the sharp recovery the market has been betting on?

Evidence suggests it might not.

For one thing, only consumers can decide when the economy reopens, and preliminary data show they’re not quite ready. Looking at data from China, it’s clear that post-coronavirus consumers are still very cautious.
UBS data show Chinese consumers didn’t return to their regular spending habits when lockdown measures were lifted. | Source: UBS

Chinese consumers continued to spend considerably less on shopping, dining, and outdoor entertainment despite a lack of lockdown restrictions. If Americans follow the same pattern, the economic consequences will be disastrous. Nearly 70% of U.S. GDP is the result of household spending.

The slowdown in consumer spending is assuming the economy is open. There’s a good chance that it will have to be shut down once again if a second wave of coronavirus takes hold of cities that pushed reopening too soon. The University of Washington’s latest coronavirus model shows the death toll increasing 10% amid relaxed social distancing measures.
Berkshire Hathaway Earnings Are a Bell-Weather

If inflation data and a failed reopening aren’t enough to dull investors’ enthusiasm about the Dow’s legless rally, a warning from Warren Buffett might. The legendary investor has always advised against selling into a stock market crash—a fact that many have taken as a good reason to buy now.

But it’s important to note that Buffett also believes in exercising caution when the market is greedy, and greed is exactly what this market reflects.

The Fed’s consumer sentiment survey shows where investors see the stock market going. Despite the economic shutdown, investor sentiment actually increased in March. That’s greed, not fear.
Investors got greedier, not more fearful, as the economy shut down. | Source: N.Y. Fed

Buffett has been stockpiling cash recently, leading many to believe he’d make a big move during this downturn. The fact that he hasn’t speaks volumes.

Of course, we won’t know for sure whether the Oracle of Omaha has started putting his cash to work until Berkshire’s Q1 results on May 1. But the fact that he’s been mostly silent so far suggests he’s not betting on a turnaround just yet.

In any case, if Buffett is still holding on to all that cash—or worse, he’s adding to it—the bulls who’ve been pushing the Dow upward will be severely disappointed.

    Disclaimer: The opinions expressed in this article do not necessarily reflect the views of and should not be considered investment advice from As of this writing Laura Hoy did not hold a position in any of the aforementioned securities.

This article was edited by Sam Bourgi.
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Wall Street points toward sharply lower open amid renewed virus concerns

Stock futures dropped in early trading on Monday, pointing to more losses ahead as investors grapple with signs of a second wave of coronavirus cases as the U.S. economy reopens.

Futures on the Dow Jones Industrial Average lost 538 points, or 2.1%. S&P 500 futures fell 1.8%. Nasdaq-100 futures dropped 1.3%.

Stocks which stand to benefit the most from a successful reopening led the losses in premarket trading. Carnival and Royal Caribbean cruise lines each lost more than 8%. United Airlines lost 8.2%. Retailers Kohl’s and Gap declined. These types of stocks surged in May as investors bet that the worst of the virus was over.

The early action in futures markets followed a big pullback last week triggered by rising fears of a resurgence in the virus as well as investors’ profit-taking after the massive comeback.

The Dow and S&P 500 lost 5.5% and 4.7% last week, respectively, while the Nasdaq shed 2.3%. All three major equity benchmarks suffered their worst week since March 20.

“The meltup may need to take a break, as sentiment has turned too bullish too rapidly,” Ed Yardeni, president and chief investment strategist at Yardeni Research, said in a note on Sunday. “Now that reopening is happening, there’s fear of suboptimal results: less social distancing triggering a second wave of the virus, followed by another round of lockdowns.”

States in the reopening process including Alabama, California, Florida and North Carolina are reporting a rise in daily new coronavirus cases. Texas and North Carolina reported a record number of virus-related hospitalizations Saturday.

Meanwhile, Governor Andrew Cuomo warned New Yorkers against triggering a second wave of the coronavirus. He said on Sunday the state has received 25,000 complaints about businesses violating rules of the phased reopening, threatening to take liquor licenses from bars and restaurants.

“The Covid deterioration in certain states will stay an overhang for the market, although it would take a sustained increase in US numbers overall to spark a dramatic shift in the narrative,” Vital Knowledge founder Adam Crisafulli said in a note on Sunday.

Treasury Secretary Steven Mnuchin told CNBC on Thursday that shutting down the economy for a second time to slow Covid-19 isn’t a viable option as it will “create more damage.”

After last week’s sell-off, the S&P 500 is down 5.8% on the year, still more than 38% higher from its March low. The 30-stock Dow is down 10.2% year to date.
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📉 Get Ready: 10 Reasons a Second Stock Market Crash Is Coming
« Reply #740 on: June 21, 2020, 06:15:30 AM »

Get Ready: 10 Reasons a Second Stock Market Crash Is Coming
Equities have had a ferocious rebound from the March 23 lows, but a bounty of negative catalysts remains.

Sean Williams
Jun 20, 2020 at 5:51AM
Author Bio

There's little question that when 2020 comes to a close, investors will not soon forget it.

For a nearly five-week period, beginning Feb. 19, panic and a record amount of fear regarding the coronavirus disease 2019 (COVID-19) pandemic sent the broad-based S&P 500 (SNPINDEX:^SPX) to its quickest bear market descent in history. Before it was over, the benchmark index had shed 34% of its value.

Over the subsequent 11 weeks following the March 23 bottom, the S&P 500 bounced more than 40% off of its lows and got within sight of an all-time high. In fact, the technology-heavy Nasdaq Composite did hit a record high of more than 10,000. All of this was accomplished as the unemployment rate hit levels not seen since the Great Depression, nine decades earlier.

While there's no question that the stock market has a history of bottoming out well before the U.S. economy does, there's a veritable laundry list of reasons to believe that this rebound rally in equities has come way too far, way too fast. I present to you 10 reasons why a second stock market crash is coming.
A paper airplane made out of a 20-dollar bill that's crashed and crumpled on the financial section of the newspaper.

Image source: Getty Images.
1. Our COVID-19 knowledge is still evolving

Let's start with the basics: we still don't know everything there is to know about COVID-19. Seemingly every week there are conflicting reports about how easy or difficult it is to transmit the SARS-CoV-2 virus that causes COVID-19, and what tactics actually work (or don't work) in suppressing the disease. Even early-stage clinical trials have been conflicting, with early promise on hydroxychloroquine paving way to major disappointment once additional clinical studies were ramped up. There's a lot that we just don't know yet about COVID-19, and that makes predicting its near-term economic impact very difficult.
2. A second wave of infection appears likely

Another problem is that a second wave of infection appears likely. Although some countries have done a great job of weeding out the coronavirus, other previous hot spots have begun to see a re-emergence, such as Beijing, China.

Within the U.S., certain states that have predominantly reopened their economies, such as Arizona and Texas, have also witnessed a significant uptick in positive COVID-19 cases and hospitalizations recently. Though President Trump has vowed to not shut the U.S. down if a second round of COVID-19 infections occurs, it's all but a certainty that it would hurt business activity.
3. Business activity will be slow to bounce back

Speaking of business activity, the reopening of the U.S. economy is going smashingly well, according to President Trump. But in spite of a record 17.7% increase in May retail sales, many retail categories have dealt with a sales slump of between 20% and 60% over the past four months.  The simple fact that the U.S. still has 20.93 million continuing unemployment claims, as of May 30, speaks volumes. For context, there were only 1.7 million continuous claims in early March, suggesting that this economic recovery will be a slow slog.
A businessman holding up a cardboard sign that reads, Looking for a job.

Image source: Getty Images.
4. Stimulus funding is nearing an end

Don't overlook the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a source of future downside. While the $2.2 trillion CARES Act did provide money to distressed industries and small businesses, and is responsible for more than $267 billion in direct payouts to American workers and senior citizens, the $260 billion directed toward expanding the unemployment benefits program is slated to end on July 31, 2020.

For those unfamiliar, approved unemployed persons are netting $600 a week extra for the time being. This acts as a possible disincentive to return to work, and will most likely create a financial shock once this funding ends in six weeks.
5. Second- and third-quarter earnings will be awful

There's also no sugarcoating that second-quarter operating results are going to be abysmal. The Atlanta Federal Reserve is forecasting a decline in real gross domestic product for Q2 of around 45%, as of June 16. For certain industries, such as airlines, we're likely to see revenue down perhaps 90% from the prior-year period. In other words, it's going to be brutal and ugly -- yet the stock market is within reach of new all-time highs.

Considering that the ramp-up of economic activity in the U.S. has been slow, and it may stay that way if a second round of COVID-19 infections hits, third-quarter operating results may feature a similar year-on-year decline.
6. Wall Street can't provide stepping stones for Q2 or Q3

A sixth -- and often overlooked -- reason a stock market crash is coming is Wall Street's inability to provide a stepping stone for publicly traded companies to leap over.

You see, far more often than not, publicly traded companies provide guidance that allows them to overshoot Wall Street's profit consensus. This leads to investors paying more attention to a company's relative performance to Wall Street's consensus rather than to how it did versus the prior year or sequential quarter.

For at least the second and third quarter, the vast majority of public companies have withdrawn their guidance due to COVID-19. This makes consensus sales and profit estimates difficult to come by, and will force investors to make (ugly) year-on-year sales and profit comparisons.
A hand reaching for a neat stack of cash in a mouse trap.

Image source: Getty Images.
7. Say goodbye to share buybacks and some dividends

Investors should also be concerned about the reduction in capital return plans associated with COVID-19. We've already seen most major airlines shelve their share buybacks and dividends, with major banks also halting their common stock repurchasing.

According to investment bank Goldman Sachs, stock repurchases in the S&P 500 are expected to decline by 50% in 2020 to $371 billion, which would be the lowest level for buybacks in 10 years. Without buybacks to prop up earnings per share, stock valuations could be tossed under the microscope in the months to come.
8. Mortgage loan defaults are likely to rise...

Having nearly 21 million people out of work and collecting unemployment, as well as facing the end of the unemployment benefits expansion, it's only logical to expect rental and mortgage defaults to rise during the second half of 2020.

Based on recently released data from the Mortgage Bankers Association, the seasonally adjusted mortgage delinquency rate for all outstanding loans jumped 50 basis points to 2.67% in the first quarter of 2020. That ties the largest single-quarter jump dating back to when the culling of mortgage data began back in 1979. While this delinquency rate remains historically low, a survey from Apartment List found that 30% of Americans missed their housing payments in June. Translation: Delinquency rates are going to soar.
9. ... As are auto loan delinquencies

The problem for the auto industry is that loan delinquencies were already rising well before the COVID-19 pandemic hit. As recently as the third quarter of 2019, 2.43% of borrowers with indirect auto loans were at least 30 days overdue on their payments, per American Banker, marking an eight-year high. But following Q1 2020, the median amount of delinquent loans tied to autos among large banks and lenders stood at 7.5%!

Even though the auto loan market pales in size to mortgage loans, it's not something that can simply be swept under the rug. It will have negative financial implications on the financial sector.
A printing press producing one-hundred-dollar bills.

Image source: Getty Images.
10. The Federal Reserve has used up its "traditional firepower"

Finally, a second stock market crash is highly plausible because the Federal Reserve has used up its traditional monetary resources.

Historically, the average recession has been met with the Fed reducing the federal funds rate -- the overnight lending rate between depository institutions -- by 500 basis points. The problem is that the Fed only expanded the fed funds rate to a peak range of 2.25% to 2.5% during the longest economic expansion in U.S. history. Having reduced the fed funds rate back to an all-time low of 0% to 0.25%, the Fed has been left with no other choice but to lean on unconventional measures, such as quantitative easing (QE). To be frank, QE has a questionable track record over the long run.

Though it remains possible that the stock market could motor to a new all-time high, it seems far more likely that stock market crash round two is coming.

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Sean Williams has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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