Economy is dying but market prices are going up?

[Qcrypto]

What feels weird to me is one simple fact.

There is a virus pandemic, more people are dead every day, even more people losing their jobs, there is a lockdown and people dont work.
So how on earth are Market prices (Dow Jones) going up/rebounding? IF anything, they should be dropping because people need basic life needs to survive pandemic, lockdown and isolation. They cash-in whatever they have.

You can see on this image that after the initial crash, the market rebounded and going back up.


If the production has dropped due to decreased labor, the market should be plunging. However that is not the case.

My only answer to that question is "Quantative Easing". This means that government is probably injecting cash in big corporations to keep the economy alive.

Thougts?

[jackg]

[if you want to respond to this, @me don't quote my post]

I think it's probably because it's still a fairly prosperous market. If this all gets solved by q2 or q3 then production will start again... It lost a lot of retail investors also, a lot of banks and insurance companies will still have to be diversified into stocks somewhat even when they're plunging. But I didn't pull out of my long term positions and I imagine a lot of others didn't either... I don't know where it'll go from here down or up but it doesn't look like we'll see another massive crash unless something new comes up.

[Darker45]

My only answer to that question is "Quantative Easing". This means that government is probably injecting cash in big corporations to keep the economy alive.

Thougts?

Quantitative easing is, of course, a big factor. It is somewhat a guarantee that whatever happens the large corporations will not really hit rock bottom because the governments are always there to catch them. This is more or less a bailout. This is good but also sad at the same time. This is, of course, just my opinion but I think this sends the idea that the government is more looking after the welfare of the rich capitalists rather than the common people. The companies and corporations are, of course, providing different kinds of services and goods to the people. They are also providing jobs. But in times like this, money printed out of thin air should be reaching the common folks more than the large corporations; the larger slice of the pie should put food on the table rather than keep a business conglomerate whole.

This is probably the reason why the market is already bouncing. It has already plunged. The impact of the pandemic has already been felt. The massive selling is through. Perhaps the iron is already hot for striking insofar as those who are waiting for the cheap prices are concerned.

[avikz]

Op, you have already given the answer - the market is rebounding partly because of the external stimulus injected by the government. Government is providing additional liquidity to the market as well as to the companies. That's why we see this kind of rebounding.

Also, there is something called "fair value" in stock market. We know a lot of companies had to stop production because of this pandemic so their stocks are trading below their "fair valuation".

But we all know that the situation is temporary and these companies will start operating as soon as this is gone. So people with money, are buying stocks of such companies while they are cheap. Such kind of buying is also another reason why the market is rebounding.

[o_e_l_e_o]

My only answer to that question is "Quantative Easing". This means that government is probably injecting cash in big corporations to keep the economy alive.

It's absolutely due to quantitative easing, and there is no "probably" about it. The Fed have already committed to buying up "unlimited" amounts of assets. They printed $2.2 trillion for the stimulus package last week, and already Trump is tweeting about printing another $2 trillion for infrastructure projects. It took the Fed 8 years to expand their balance sheet by around $3.5 trillion after the 2008 crash. We've now outdone that in a matter of days. Not to mention that they removed the requirement for banks to hold any reserves whatsoever, meaning that they can also create unlimited amounts of money out of nothing and give out unlimited amounts of loans.

There is no limit to what the markets can achieve when you can just print monopoly money endlessly to prop them up. The amusing thing is that even with all this stimulus, they still dropped more than bitcoin did.

But we all know that the situation is temporary and these companies will start operating as soon as this is gone.

Some of them, sure, but there will be a fair few companies which are bankrupted by this.

[Reid]

My only answer to that question is "Quantative Easing". This means that government is probably injecting cash in big corporations to keep the economy alive.

Thougts?

Could it be that the effects are still not visible by now?
You are looking at a year graph so it look more like a drop.
How about we look for just a month?


Credits to google.

It already dropped a lot at a certain point. It looks like it is just correcting for me but not to the extent that it bounces back.
But who knows, maybe you are right.
I also saw one of Trump's statement that he is letting some workers come in. He may have thought about this too since he is a businessman.

[fabiorem]

They are using bitcoin to buy stocks, which cause the price of stocks to go up.

Welcome to "legitimation", OP.

[mersal]

For sure governments going to inject money again and some say it is 5 trillion but the purchasing power is going to get down? Not immediately but in long term so this is wakeup call for every human to move to decentralized to get real value for the curreny when they are holding which will be purely on demand and supply.

[awik p]

Op, you have already given the answer - the market is rebounding partly because of the external stimulus injected by the government. Government is providing additional liquidity to the market as well as to the companies. That's why we see this kind of rebounding.

Also, there is something called "fair value" in stock market. We know a lot of companies had to stop production because of this pandemic so their stocks are trading below their "fair valuation".

But we all know that the situation is temporary and these companies will start operating as soon as this is gone. So people with money, are buying stocks of such companies while they are cheap. Such kind of buying is also another reason why the market is rebounding.

This can be the reason for the increase in price. The stimulus will help certain families enough that they can have excess to invest in bitcoin and other coins. We can expect more investment as more countries too do their stimulus support. It is a time for hodl more coins.

hopefully many countries will begin to understand the use of cryptocurrency. after this epidemic ends hopefully the authorities believe that the use of digital currencies is safer for health, so that the spread of the virus can be used as it is today. and we as bitcoiners will benefit more, because we are starting to invest now

[Lizzylove1]

I want to believe its because of President Donald Trump's stimulus package to the people and the economy, so there is some hope that people are not going to starve to death after all, so people are trading to make money.

[stompix]

What feels weird to me is one simple fact.
So how on earth are Market prices (Dow Jones) going up/rebounding?

There was no real rebound, more like a dead cat bounce

It took promises after promises and stimulus packages to finally stop the crash and make Dow raise up by 4000 points, after dropping more than 10 000.
But since then, it's down again, losing 1500 of what it managed to recover and today is just as bad.

No matter how much cash you inject if the perspectives are bad nobody will keep those stocks, no government has the power to continuously print money to keep the market up while companies shut down production to minimum levels. It was an almost desperate move and I think the timing was wrong, maybe they should have waited for it to crash more, to wait for at least some good signs of the manufacturing and consumption picking up and then inject the money.

hopefully many countries will begin to understand the use of cryptocurrency. after this epidemic ends hopefully the authorities believe that the use of digital currencies is safer for health, so that the spread of the virus can be used as it is today.

Why are digital currencies safer than card or phone payments?
You're fooling yourself thinking that in a crisis like this people and governments will rush buying coins.

and we as bitcoiners will benefit more, because we are starting to invest now

In the end, that's all it matters, doesn't it?

[boyptc]

so people are trading to make money.

They know how the markets work.

Buying while they can and while these stocks are at its bottom. Stock investors don't want to miss this opportunity of buying.

[figmentofmyass]

There is no limit to what the markets can achieve when you can just print monopoly money endlessly to prop them up. The amusing thing is that even with all this stimulus, they still dropped more than bitcoin did.

bitcoin is still down a lot more than stocks, at least all the major indices---not surprising since it crashed almost 65% from the february high! the bounce has been more impressive though, i'll give it that.

There was no real rebound, more like a dead cat bounce

+1. it was a sucker rally. the effects of the bailout news are wearing off and investors are back to selling due to this ongoing stream of bad news---further expected lockdowns, increased unemployment, recession, etc. things are looking rather grim.

[TitanGEL]

I think it is only a bounce and I think it will create another lower lows, the prices is still down so do not get excited. There is opportunities especially for those who want to short sell but the market is really volatile so it is better if we will only put 10% of our portfolio if we want to enter. There is still crisis so for sure that the prices in stocks, indices and also cryptocurrencies will still go down.

[Hydrogen]

Jim Cramer of CNBC's Mad Money fame once discussed tactics utilized to manipulate market prices as a hedge fund manager. This is what he said:

Cramer stated that everything he did was legal, but that illegal activity is common in the hedge fund industry as well. He also stated that some hedge fund managers spread false rumors to drive a stock down: "What's important when you are in that hedge-fund mode is to not do anything remotely truthful because the truth is so against your view, that it's important to create a new truth, to develop a fiction."[34] Cramer described a variety of tactics that hedge fund managers use to affect a stock's price. Cramer said that one strategy to keep a stock price down is to spread false rumors to reporters he described as "the Pisanis of the world," in reference to CNBC correspondent Bob Pisani, who Cramer insinuated was able to be manipulated, saying "You have to use these guys." He also discussed giving information to "the bozo reporter from The Wall Street Journal" to get an article published.[35][36] Cramer said this practice, although illegal, is easy to do "because the SEC doesn't understand it."[37] During the interview Cramer referred to himself as a "banking-class hero."[38]

https://en.wikipedia.org/wiki/Jim_Cramer#Admission_of_market_manipulation

....

The market rose on news claiming china had its pandemic contained. News of the federal reserve injecting capital into flagging markets. News of a bailout bill being signed. And similar events where it seemed circumstances might improve. The media exerts the strongest influence on valuation.

If Jim Cramer is to be believed, hedge fund managers and others have utilized the media to control market prices for a very long time.

[fabiorem]

If Jim Cramer is to be believed, hedge fund managers and others have utilized the media to control market prices for a very long time.

Hedge funds are into bitcoin since at least 2017. They use it as a reserve asset to cover their positions in the fiat gambling machines.

[fiulpro]

Well what you said might be true because I did read a news about Ukraine where to keep the economy of the country alive and to maintain the dollar to UAH RATIO , the government was advising the banks to sell the stocks they are holding of dollars so that they will be able to neutralize the market price and escape the recession (slightly),
Well unfortunately this did not work completely for the Ukrainian government but if the country you are talking about is showing steady growth then it might be working amazing for them .

[The Sceptical Chymist]

There is a virus pandemic, more people are dead every day, even more people losing their jobs, there is a lockdown and people dont work.

The death rate from COVID-19 isn't all that high compared to other causes of death, so keep that in perspective.  Lots of people die from seasonal flu every year, and other infections, and all sorts of other causes.  It isn't as though coronavirus kills everyone who gets infected with it.

Second, the job loss might be a temporary thing and I suspect that whenever this shelter-in-place mandate is rescinded, people will find their old jobs waiting for them.  The only question in my mind is how long that's going to take.  If it goes on long enough, it certainly could do major damage to the economy.

And last, the economy isn't dying.  It's taken a hit, but this situation we find ourselves in is not going to last forever.  I think investors realize this and that's why the stock market hasn't totally collapsed.  Don't know if it's the optimist in me, but I don't think things are as bleak as they're being portrayed.

[Lucius]

And last, the economy isn't dying.  It's taken a hit, but this situation we find ourselves in is not going to last forever.  I think investors realize this and that's why the stock market hasn't totally collapsed.  Don't know if it's the optimist in me, but I don't think things are as bleak as they're being portrayed.

The economy is simply facing a whole new challenge, and no one knows when or how the situation will be resolved - it is only certain that COVID-19 will do great economic damage in the next 3-4 months, and then the post effects will come in the form of a new recession. There are still unknowns as to when the vaccine will be available, and whether the virus will reactivate with the next cold season.

However, some people take advantage of this situation because investing is more profitable when the blood is on the streets, and I think they help a lot to keep the market from sinking deeper. Governments around the world are also taking measures to save their economies, because only those who react quickly can hope to recover in a reasonable amount of time.

With almost 1 million infected (confirmed) and close to 50 000 deaths COVID-19 is far less deadly than seasonal flu so far, but it all depends how long the pandemic will last, that is, how long the governments of the world manage to keep the patient (world economy) alive. I'm not a pessimist by nature, but current markets don't work by any common principles - they are already artificially maintained with huge amounts of fresh money, which is not sustainable in the long run.

[Febo]

Economy is dying but market prices are going up?

There is a virus pandemic, more people are dead every day, even more people losing their jobs, there is a lockdown and people dont work.
So how on earth are Market prices (Dow Jones) going up/rebounding? IF anything, they should be dropping because people need basic life needs to survive pandemic, lockdown and isolation. They cash-in whatever they have.

Stocks are not market prices. Stocks are stocks. And prices of stocks will go up when people will have more money. Loans are at almost zero interest rate. People have same or more money then few montsh ago. There is no reason why stocks price would decrease further.