Posted on 05/12/2020 6:07:05 AM PDT by SeekAndFind
Here are four reasons why Americans are ready for an economic rebound never seen before in world history:
1. US optimism for an economic recovery is at an all-time high for most sectors.
People are ready to begin making money again like never before:
More & more sectors are showing record-breaking short term optimism.
We previously noted this in tech, healthcare, small caps.
Now, short term optimism for sectors like energy, retail, homebuilders, & materials are reaching *HISTORIC* and *OMINOUS* levels@sentimentrader pic.twitter.com/HH4aoWh4bj
— Troy Bombardia (@bullmarketsco) May 6, 2020
2. Theo Vermaelen at Knowledge.Insead.edu notes reasons for the optimism in the economy in the US. His first reason is:
First, the fall in stock prices is not the result of the collapse of an asset bubble. It is due to the interruption of economic activity to fight a disease. In contrast to 2001 and 2008, there is no reason to assume that asset prices and economic activity will not revert to their previous levels. This reversion could come soon, depending on how long it takes to manage the disease.
3. Stocks have already recovered up to 30% of what was lost when the market went sour. Theo says:
Second, while the S&P 500 dropped 30 percent between 1 January and 24 March, just a few weeks later (17 April) the loss is now only 10 percent, making it possibly the shortest bear market in history. Of course, markets could be wrong, but I believe there is an increased understanding that the value of a company is measured by the present value of expected cash flows from now until infinity.
4. Theo also explains how the actions taken by Trump have saved the market:
Third, in 2008 “evil” bankers were blamed for the financial crisis and they had to be punished. Hence Lehman Brothers was not bailed out, which created a panic on Wall Street. Today, corporations are not in the firing line and governments have responded by helping firms to deal with their short-term cash flow shortages. Voters haven’t expressed any outrage at bailing out the private sector, in contrast to 2008. Various initiatives from the US government include the Federal Reserve lowering interest rates to zero, starting a US$700 billion open-ended quantitative easing programme and lowering capital requirements for banks, as well as President Donald Trump’s initiative to launch an unprecedented US$2 trillion COVID-19 rescue programme and reopen the US economy.
5. Of those unemployed in the record breaking news for April, 75% are temporarily unemployed. These people expect to be back at their work soon:
The report indicated that a clear majority of April’s job losses — roughly 75% — are considered temporary, a result of businesses that were forced to suddenly close but hope to reopen and recall their laid-off workers. Whether most of those workers can return to their jobs anytime soon, though, will be determined by how well policymakers, businesses and the public manage their response to the public health crisis.
Wondering what Fauci’s testimony today will do to this when he lets it rip.
Well, we’ll certainly have record breaking price inflation. You don’t hand out government (taxpayers) money like free breath mints without hitting prices hard.
Silliness. Many jobs are never coming back. Lockdown has been ruinous for tens of millions. In PA we have lost 500 jobs for every death, and 33 jobs for each CASE.
Only if they had opened up two weeks ago. The continual foot-dragging is going to make this FAR worse than it would have been.
Yes, that's another major problem looming. All of the money and 401ks saved up will be greatly diminished in value. Sad.
Well, we’ll certainly have record breaking price inflation. You don’t hand out government (taxpayers) money like free breath mints without hitting prices hard.
mind-boggling delusion....
Ever week of economic lock-shut down = 3 weeks for recovery.
But on reflection, what will all this money chase?
There one article that people were so concerned about the future they were actually saving money.
That is why the feds print the money!
I think that there is a tremendous pent-up demand the likes of which haven’t been seen since the end of WWII.
It really depends. Money is a savings account or any fixed income investment will be eroded by inflation.
In general, stock investments tend to keep up and grow.
As soon as the Blue state tyrannical governors are tossed from office this November.
I’m optimistic: From a personal perspective, many of us have been holding back, waiting and hoping, saving, but when the green light appears I believe 2 months of holding back will erupt into a spending spree. Vacations, going out to eat, buying new clothes, that new lawn mower and garden stuff, perhaps a new car, on and on. I understand much of this sh@t is made in China, and that’s terrible, but money spent in US stimulates the entire US economy. Jobs open up, optimism abounds. I hope I’m correct.
I can guarantee that he will try to throw a wet blanket on any enthusiasm about opening the economy.
I’m optimistic: From a personal perspective, many of us have been holding back, waiting and hoping, saving,
Remember the Carter inflation. I knew a woman wh’s parents had to come out of retirement because massive price inflation decimated THE VALUE of their savings.
This could also be a good way to reduce the SS problem. Let prices and wages both go up, but don’t increase SS benefits (much). It will be a hard slam on those receiving social security (like me) and trying to live on it, but it will reduce the financial problem.
Also, price inflation will monetize the debt. That would have been dangerous in the past because debtors like China might not have responded favorably. But them being the source of the problem, what are they gonna do about it now or, more precisely, how can they justify a “bad” response when everyone knows they caused this mess.
It’s going to be a very interesting decade, that’s all I got to say. VERY interesting. Kinda like the late 30’s and early 40’s.
VERY interesting. Kinda like the late 30’s and early 40’s.
Just to be clear on my position and I think you have the same.
The only cure for what ails us is tough times. Never fun, whether personal or national.
I hope we learn the right things.
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