Financial Markets Meltdown

[Justfishin73]

Markets whipsawing more than my wife at that time of the month

[Scott h]

Originally Posted by The Elkster

Q1 numbers should be fun. Rate manipulation isn't going to fix this supply issue. Markets will move sideways until more evidence of the virus impact hits home. Supply chains are only starting to feel the effects of China's continued export situation and global tourism related industries are going to be hammered. Already lots of large gatherings cancelled globally. Long way to go on this one. Stay tuned.

I think thats what everyone is waiting for, what going to happen next. If the infection rate decreases things will probably slowly settle. If there are more deaths/infections (particularly in the US) they'll get worse. If it gets full recognition as a pandemic things will really head into the hopper.

[Scott h]

Originally Posted by bdub

FED just made emergency 50 bps rate cut.

We are going to see if cheap money is the vaccine for the virus. I expect a bounce that won't last. If you want to lighten up I think this may be the last chance but who knows. Not advice, just opinion.

Agree. They are trying to fix a health issue, the same way they would fix a financial one.

[bdub]

Originally Posted by Scott h

Agree. They are trying to fix a health issue, the same way they would fix a financial one.

They also did a oversubscribed $100+ billion repo operation yday. They are crapping bricks that this thing is going to evolve into financial crisis as well as a pandemic.

Just watching the FED's Powell speaking on the rate cut. First thing he did was cough at the start of his speech lol. Is he infected? Maybe that's why we got the 50. Seems his speech isn't calming markets anyway.

https://www.marketwatch.com/story/fe...bed-2020-03-03

[Justfishin73]

Timberrrrr!!!

[1stLand]

I knew yesterday was going to be a Dead Cat Bounce.

[Justfishin73]

Originally Posted by 1stLand

I knew yesterday was going to be a Dead Cat Bounce.

Yup, down 900 pts and dropping like a rock, last hour should be ugly

[The Elkster]

Originally Posted by bdub

They also did a oversubscribed $100+ billion repo operation yday. They are crapping bricks that this thing is going to evolve into financial crisis as well as a pandemic.

Just watching the FED's Powell speaking on the rate cut. First thing he did was cough at the start of his speech lol. Is he infected? Maybe that's why we got the 50. Seems his speech isn't calming markets anyway.

https://www.marketwatch.com/story/fe...bed-2020-03-03

It is already a financial crisis people just haven't accepted that yet. The coming days and months will be revealing. Supply chain fragility will be exposed and the crating of Chinese consumerism will be reflected on Q1 reports and beyond.

[raab]

The party is over boys, get ready for a recession. Sold the last of my stock an hour ago. Going to keep the cash on hand and hopefully pick up some real quality stock at a huge discount.

[Justfishin73]

They sure tried to hold that 26,000 line

[The Elkster]

For anyone curious about supply chain news this site seems decent.

https://theloadstar.com/

"Tough times for forwarders, as factory shutdowns and lack of boxes bite"

"Air freight rates soar: 'it’s all about deep pockets and whether shippers can pay"

"Bangladesh's key garments sector hits a wall with shortage of raw material"

[elkhunter11]

Originally Posted by raab

The party is over boys, get ready for a recession. Sold the last of my stock an hour ago. Going to keep the cash on hand and hopefully pick up some real quality stock at a huge discount.

The rally seems to have been short lived despite the rate cut. I am going to sit and wait, no desire to get back in until things calm a bit.

[fishtank]

So the one that are 80% cash, have plenty of ammo to just average down.. go in slow and carefully, cause I think another steep drop coming once they decide what’s happening in the USA . That call on a dow 24000 for March 18 going to soaking in big $$$

[TBark]

TSX is still above March 1 2019.
So a year of gains is gone, no panicking yet.
And I’m not TSX based anyways, I’ll lose aprx half the TSX loss.

TBark

[Zip-in-Z]

Today didn't end very well unless you own a gold mine .... don't believe tomorrow will be any better.

D.

[elkhunter11]

The markets are opening strong, supposedly due to Biden doing well yesterday. Now to see how long the rally lasts.

[bdub]

Originally Posted by elkhunter11

The markets are opening strong, supposedly due to Biden doing well yesterday. Now to see how long the rally lasts.

I think today is just a distraction away from the main driver of the correction. If you look at the sector breakdown on the SP500, healthcare is about 16% of the market. Healthcare stocks are moving bigtime on Biden. United Health for one is up about 12% on the fact that Bernie's chances for leader isn't looking so good.

I'm focusing on the virus statistics/narrative still, until news gets better (outside of China) I think we are still in risk off. Good chance we are going to continue to see these big day to day moves until things settle down. The VIX is still elevated but off its highs, I am still watching and waiting before adding anything. We are going to see another cut out of the Bank of Canada today in sympathy with the FED. I think in the long run the cuts are a mistake but who knows.

[Buckhead]

Originally Posted by elkhunter11

The markets are opening strong, supposedly due to Biden doing well yesterday. Now to see how long the rally lasts.

You probably won't see a sustained rally until the Baltic Exchange Dry Index gets near or above the 1000 mark.

[Big Grey Wolf]

I like young Parker on Yukon Gold show, his safe full of 6-7000 ounces of Gold is getting more valuable every day. Old Beets did not do to well in his gold production with all his old equipment breaking down.

[Twisted Canuck]

BOC announced their rate cut, they went a full 50 bps. I was wondering if they would follow fed all the way or just go 25 bps....

I think in the long term this is gonna bite the economy, and the markets, in the butt, but what do I know. Cheap money and people just pile up more debt seems like. Not a sustainable model.

In the meantime my (small) mortgage is up for renewal in June, and they were already offering me a pretty good rate for early renewal. I told them I was holding off because I expected a rate drop (this was a month ago)....glad I waited. Should get something very good in the next month or so.

[elkhunter11]

It looks like the TSX rally is based on the interest rate cut today. Now to see what happens by the end of the week, the US rate cut only propped the DOW up for hours, then it took Biden doing well yesterday to spur the DOW today. Unless good news comes on the virus threat, there isn't a lot left to prop up the markets.

[raab]

Originally Posted by Twisted Canuck

BOC announced their rate cut, they went a full 50 bps. I was wondering if they would follow fed all the way or just go 25 bps....

I think in the long term this is gonna bite the economy, and the markets, in the butt, but what do I know. Cheap money and people just pile up more debt seems like. Not a sustainable model.

In the meantime my (small) mortgage is up for renewal in June, and they were already offering me a pretty good rate for early renewal. I told them I was holding off because I expected a rate drop (this was a month ago)....glad I waited. Should get something very good in the next month or so.

The problem for the economy right now is that the people under 40 can't build up cash the same way as their parents did. Low interest rates are going to cripple the economy at some point when the house of cards fall. People need real wealth, created by real capital. Not more debt to make a bigger issue down the road.

[Scott h]

Originally Posted by raab

The problem for the economy right now is that the people under 40 can't build up cash the same way as their parents did. Low interest rates are going to cripple the economy at some point when the house of cards fall. People need real wealth, created by real capital. Not more debt to make a bigger issue down the road.

LOL !! I was looking at the death rate percentages and thinking that this could be a HUGE period in time for massive wealth transfers. Those dying at the highest rates are in fact baby boomers and the ones being spared are Gen X and below.

[j335]

Originally Posted by Twisted Canuck

BOC announced their rate cut, they went a full 50 bps. I was wondering if they would follow fed all the way or just go 25 bps....

I think in the long term this is gonna bite the economy, and the markets, in the butt, but what do I know. Cheap money and people just pile up more debt seems like. Not a sustainable model.

In the meantime my (small) mortgage is up for renewal in June, and they were already offering me a pretty good rate for early renewal. I told them I was holding off because I expected a rate drop (this was a month ago)....glad I waited. Should get something very good in the next month or so.

The 5yr CAD gov yield dropped ~0.65% since early Feb, so expect around that for a lower rate. I'm guessing March will be a better rate vs April, but markets aren't getting better so my guess is fall could be a better rate yet, but the 5yr yield is only 0.85% so no much room to go down? I'm no expert on this, but fixed rates are set off the bank yield which typically follows the BOC rate (but not always). I'm looking into my penalties for switching into the lower rates.

[Twisted Canuck]

I think you are probably seeing it pretty close to how it will shake out, but again, who knows? I'm waiting to see how the Big 5 react this week, their cuts may or may not follow BOC.....and once I see some numbers I can go from there.

As an aside, really big gains today, +355 TSX +1075 Dow currently....seems a little much for dead cat bounce, crediting Biden winning Super Tuesday is almost as ludicrous in my mind....again, what do I know. The market will market, as always.

[KinAlberta]

Originally Posted by raab

The problem for the economy right now is that the people under 40 can't build up cash the same way as their parents did. Low interest rates are going to cripple the economy at some point when the house of cards fall. People need real wealth, created by real capital. Not more debt to make a bigger issue down the road.

Can’t? Won’t is more like it. Even when bailed out over and over by central banks. They live a high life and don’t save a penny.

[bdub]

To put the recent market moves in perspective here are some returns from the GFC of the SP500 through one of it's more volatile periods. These are log returns from a very volatile 1 month period in fall 2008. At this point the market was still 5 months ish from bottoming and the SP would drop another 37%.

9.219%, -5.276%, 0.455%, 4.112%, 1.360%, 3.928%, 5.911%, 1.140%, 7.922%, 1.183%, -10.957%, 0.534%, 9.470%, -4.163%, 0.623%, -4.658%, 3.128%, 6.295%, -1.255%, 3.512%, 3.228%, -10.246%.

In the period from Aug 15/08 until June 9/2009 we had 58 trading days with moves up or down of greater than 3%.

Trying to pick a spot to get in at without some sort of rules through this type of volatility is enough to turn many guys into mental cases. Not saying we are going to experience the same chop for as long as back then but it's a real possibility. The last several days have given us a taste of extremes in volatility. Be prepared to possibly see more extreme daily moves.

(Don't take this a gospel as it's just my quick crunch of the numbers on excel. Verify for yourself. Log returns for daily returns.)

[raab]

Originally Posted by KinAlberta

Can’t? Won’t is more like it. Even when bailed out over and over by central banks. They live a high life and don’t save a penny.

When your getting .5% interest in your savings account your losing money every year it sits there with 2% inflation(really its higher). If you compare that to the 80's and 90's with interest rates between 5-20% thats a major difference. With low interest rates housing is inflated so now young families are paying more for homes, and they're encouraged to take on debt as the money in the future is worth less, then the money today. Sad cycle but its where were at. To really get ahead people need to be able to accumulate capital, and stay out of debt. With increasing taxes, inflation, and consistent money printing the government has made it damn near impossible for the average joe without a financial education to get ahead.

[raab]

Originally Posted by Scott h

LOL !! I was looking at the death rate percentages and thinking that this could be a HUGE period in time for massive wealth transfers. Those dying at the highest rates are in fact baby boomers and the ones being spared are Gen X and below.

Yea, Im hoping the virus gets dealt with here shortly. Would prefer to see the older generation stay around awhile longer. I picked up some Gilead stock as it looks like a good long term hold, but also liking the looks of their drug remdesivir in the fight against Co-Vid19.

[1stLand]

Originally Posted by raab

The problem for the economy right now is that the people under 40 can't build up cash the same way as their parents did. Low interest rates are going to cripple the economy at some point when the house of cards fall. People need real wealth, created by real capital. Not more debt to make a bigger issue down the road.

you got it.
the amount of equity people have in their homes today (the 50 and under crowd) is pretty insignificant. Too much debt. It's unsustainable.