U.S. Recession short term

[stompix]

China appears to actually be ahead in the stock market for the month of March compared to all the other nations.

Which makes me think that this is an elaborate plan for the world economies to crash while China stays afloat. Then again, it must be more of me being into conspiracies but who knows?

Nope, not a conspiracy, just a lot of cash injected in the last two months, with hundreds of billions being offered from the start of February.

On Monday, the PBOC also injected a total of 1.2 trillion yuan (US$236 billion) into money markets through reverse bond repurchase agreements. Markets had widely expected the liquidity move but most analysts thought rate cuts might follow later once the economic impact was more clear.
The injection is one of 30 measures announced by Chinese authorities over the weekend to buttress the economy against disruption from the outbreak, which originated from the central Chinese city of Wuhan.

One week later:

China will offer 500 billion yuan of relending and rediscounting funding to commercial banks for loans to small firms and the agricultural sector. The interest rate of the funding will be lowered by 25 basis points.

A few days later:

The People’s Bank of China said 209.5 billion yuan in bonds related to fighting the virus have been issued as of Tuesday.

They have been pumping money in everything, billions after billions, and the cherry :

https://www.bloomberg.com/news/articles/2020-02-03/china-is-said-to-restrict-stock-sales-by-brokerage-prop-desks

The China Securities Regulatory Commission told some brokerages that their proprietary traders aren’t allowed to be net sellers of equities this week, said the people, asking not to be identified discussing a private matter.

But, if truly the US enters a recession for more than a few trimesters, everyone is screwed, China will just fall a few months later in the whole alongside Europe and the rest, let's just hope it won't be that long. Almost 2% of the employees here have already been sent home with pay cuts or worse, if this lasts for 3 months...

The fed is really out of control and the oil with its decreasing supply and the pandamic making it much worse.

Why would the price of oil be a major player in this? It's peanuts money compared to the stimulus package to prop shale drillers for years, and the US benefits from cheap oil prices.

[buwaytress]

@dothebeats, 1987 repeat will be good for the US, but so will the 1950s flu that also brought on a recession. Recovery as almost as swift and as steep as the downturn. A lot like Bitcoin trajectory in short timeframes, really. Massive crashes, and then parabolas.

@stompix where are you located? I got family in SEA and almost everyone has been asked to go on leave without pay indefinitely. No welfare protection like in Europe.

[exstasie]

People are expecting 2008 crisis repeat, but 2008 crash wasn't as sudden as upcoming one. So 1987-like crash model is more correct for the current situation.

I've been anticipating a 1987-style recovery for weeks. However, now that the course of the pandemic is becoming so bad in the US (infections not expected to peak for another month) I'm not sure anymore. My model was based on the idea that infections would quickly peak over a few-week period and then we would enter the recovery stage.

I didn't plan on the US government blundering the pandemic response so carelessly and negligently. The misinformation about masks from the CDC, the mask and ventilator shortages, the complete lack of urgent response was all very unexpected to me. It's unbelievable that Trump is becoming so popular during this crisis because his administration (and the Obama administration) completely eradicated any chance of a fast recovery. Neither administration re-stocked medical stockpiles after the H1N1 outbreak. Trump even dismantled the NSC pandemic office charged with responding to these emergencies. There was virtually zero coordination of an epidemic response at the national level.

This whole experience is a monumental failure of the US government and I'm beginning to worry the markets (and everyday American workers) are going to pay very dearly for it over the next year.

[adaseb]

Even if Corona goes way sometime in the next 3-6 months, it doesn't mean the SP500 or DOW30 will hit a new ATH very soon. You need to understand that the US stock markets were very stretched and inflated. People were buying stocks like crazy, and there was less supply, and hence why we kept getting new ATH every few weeks for years. Similar to what happened with BTC in 2017.

So if the bear market is over, it could be 10 years before we break those highs again. Also keep in mind that the Boomers who got tons of money in their retirement, will most likely start cashing out in the near future and it will lead to oversupply of shares and cause the markets to trade sideways or downwards. So it might not be a repeat of 2008 where it hit a new ATH a few years later.

[stompix]

@stompix where are you located? I got family in SEA and almost everyone has been asked to go on leave without pay indefinitely. No welfare protection like in Europe.

Yeah, I'm in Europe, not the northern part but still, we have some measures in place.
But the numbers don't look good at all, the villages that rely on tourism are dead, the ones that relay only one big factory like the audi plant or skoda are also hanging by a thread, they have money to pay the employee for a while but what will happen next? What if there is no demand for cars?
One of my friends started a luxury barbershop in a mall in December....I have no courage to start chatting with him and ask how he is...

The problem is that no matter how wealthy the state no matter how you reduce your necessities, there won't be money, plus you need a lot of money to start again the entire economy. We might be safe for a few months, if this goes beyond June we're all going to experience a true recession, unlike 2007 which will be a joke compared.

It's unbelievable that Trump is becoming so popular during this crisis

Nothing about Trump makes sense...

There was virtually zero coordination of an epidemic response at the national level.

When Trump say it's just the flu, the others say it's far worse and he should take measures, then he goes 180 degrees with his stance and it's a pandemic and he wants to close NY but the others now oppose...yeah you're far worse than us here in Europe with our failed Chinese testers and masks that let butterflies go though...

[buwaytress]

The problem is that no matter how wealthy the state no matter how you reduce your necessities, there won't be money, plus you need a lot of money to start again the entire economy. We might be safe for a few months, if this goes beyond June we're all going to experience a true recession, unlike 2007 which will be a joke compared.

Absolutely, people need to eat and pay the bills so for as long as the state can shoulder some of that burden, it'll be fine. Same as what I always say about Bitcoin (people aren't gonna go out and buy more in crisis, they're gonna buy rice and bread first). But it's not going to work out if things go on like this, economy wise. The system really needs to break beyond repair.

This will be bad, and like you, I feel terrible about those whose livelihoods rely on mobility. My two siblings work in event management and hotel industry, so those were actually going down even second half of 2019. Then when Chinese tourists and businessmen stopped coming, that was it.

[fiulpro]

Short term ?
Is this it ?
No I do not think this recession is going to last short term , the people are already getting into the line and doing what they can do , people are jobless , how are they supposed to feed their families ?
How is anything going to happen normally now ? People are not understanding the severity of the situation and still roaming around the streets .
I do think this won't be short term until and unless , they are able to control the graph .

[bitgolden]

What China is doing is not a permanent solution neither, what USA has always done and is doing is not a solution neither. By giving companies a lot of money you are not fixing the problem, these companies will need money again next time there is a crisis.

You need to build a federal branch that is like insurance, FED is obviously in love with these huge banks so there should be laws preventing FED from doing whatever the hell they want as well, people keep saying that FED is independent but that doesn't mean it is unregulated neither, can they print out 500 trillion!!! dollars tomorrow? No, that would be suicide, so that means there is a limit, there is a regulation, that should be tighter. Every company should be paying federal taxes, and every company should pay some sort of voluntary "insurance" money as well, if they don't pay that, when they crash, nobody helps them, if they do pay, during these days they get bailed out.

[The Sceptical Chymist]

The United States will be in a recession. The question is, will this be a 1987 type of recession or a 2008/2009 type of recession.

I'm not so sure about that, and I'm also questioning whether there was any type of recession in 1987.  I'm aware that the stock market plunged in October of that year, but it rebounded relatively quickly and the bull market didn't implode until April 2000.  That crash in 1987 wasn't even related to the economy if I remember correctly--there were a lot of folks blaming it on programmed trading.

And yeah, unemployment has spiked but there's a very clear cause for that--a lot of businesses have been forced to shut down.  That's not a permanent thing, though.  With an outbreak like with this strain of coronavirus, there's no way the whole world needs to be on lockdown for an extended period of time.  IMO there's been a lot of overreaction to this thing, though the consequences have been quite real.

[thesmallgod]

China appears to actually be ahead in the stock market for the month of March compared to all the other nations.

I just imagine how China keeps doing this. Despite the fact that the virus started from them, they are still ahead in stock market which I believe will continue to top because a lot of businesses are already starting to operate back. even wuhan in which the virus pandemic first started is no more locked down. All these are really unbelievable.

[figmentofmyass]

The United States will be in a recession. The question is, will this be a 1987 type of recession or a 2008/2009 type of recession.

I'm not so sure about that, and I'm also questioning whether there was any type of recession in 1987.  I'm aware that the stock market plunged in October of that year, but it rebounded relatively quickly and the bull market didn't implode until April 2000.  That crash in 1987 wasn't even related to the economy if I remember correctly--there were a lot of folks blaming it on programmed trading.

they say it was a black swan caused by algorithmic trading. there was no recession afterwards, but i think that speaks past what rambogoham1 is saying: could this be another black swan event followed by a hasty recovery like in 1987, or is it a more prolonged and much more painful collapse like 2008?

looking at the all the headlines and projections, the situation in the USA is gonna get much worse over the next couple weeks. i'm betting on something more like 2008.

And yeah, unemployment has spiked but there's a very clear cause for that--a lot of businesses have been forced to shut down.  That's not a permanent thing, though.

but how long could it last? that's what the markets are freaking out about.

[Mpamaegbu]

The United States will be in a recession. The question is, will this be a 1987 type of recession or a 2008/2009 type of recession.

I don't know what the globe stands to actually gain with the desire of people hoping the America economy plunges into a recession. The proposed/expected recession may not even happen only to the US, givien the pandemic situation the world in faced with now. It will also hit many other countries. However, whatever happens I don't believe the US recession (if it eventually happens) will be anything deep like what the US experienced in 2008 financial meltdown.

[Gozie51]

Each recession to one degree or another is not similar to the previous one.
As a rule, the stronger the economic ties between countries have grown, the more these countries are dependent on each other,
which means that a sharp break in such ties can easily lead to disastrous consequences for the economy.

This is a clear reason that countries should try and move away from total dependence. With the current situation of covid-19, the dependent countries are the ones suffering more.

I hope that after this episode, so many countries would try and be a strong competitor in the global economy by becoming technologically advanced.

[FanatMonet]

This recession will have a big impact on the deciding factor whether the US economy will head to a long recession or a short one, China is making a good move, I commend that because for me that is how you play politics, you make a good decision out of the bad situation.

There can not be a long or short-term recession, or there is a recession, and it causes enormous damage to the economy, even if it occurs in a relatively short period of time, or it does not occur, there are no other options. And a recession in a country like the United States will surely hit everyone else.

[exstasie]

Brutal US unemployment numbers just came out, eclipsing last week. 6.6 million!

https://www.nbcnews.com/business/economy/record-6-6-million-americans-filed-unemployment-last-week-n1174776

A record 6.6 million Americans filed for unemployment benefits last week, the latest brutal reminder of the toll the coronavirus pandemic is taking on the U.S. economy.

Still, some economists said the actual number of unemployed could be much higher, since many applicants had experienced trouble filing a claim, as state labor departments became overwhelmed.

SPX futures have already dumped 75 points on the news. BTCUSD is still looking strong though. Let's see if it can shake off that stock market correlation.

[Sadlife]

It's really suspicious how china's economy already doing well after the virus outbreak in their country. But so much with conspiracy theories, i think 1987 and 2008 recession wont compare to this one because the fed is printing unlimited money to inject into the system and would be buying bonds, treasures and in the future corporate debt. If this recession came through then this would end the USD.