Stock Markets auto-halt after giant drops

[Eunoli]

A global recession is inevitable: Analysts warn of 'utter carnage' as oil crashes and global stocks tumble

Coronavirus is wiping out the US economy - and doing what the Dems have failed to do - killing Trump's change of reelection.

At the same time as all this is going on the Saudis are launching an oil price war. I don't get how its possible to look at their timing as anything other than a way to further destabilize global markets (even though it will be cheaper to buy gas for a while). They are friends of Trump's, so we won't see any pressure put on them, I'm sure - but this seems almost like an attack to me.

The lack of information and any sense that the government has adults in control is spiraling uncertainty to the point that we're going to end up worse than we were in the great recession, in my opinion. Markets rely on some sense of there being a plan and communication for disasters. We have neither. Combine a failed economy with the lack of leadership we're seeing (he went golfing over the weekend) and I don't see anyone voting for him except his shrinking base.

Trump is the Warren G Harding/Herbert Hoover of this century. The difference is that he also managed to help kill the environment and gravely wound representative democracy while he was at it.

 

[Bartholomew Gallacher]

At the same time as all this is going on the Saudis are launching an oil price war. I don't get how its possible to look at their timing as anything other than a way to further destabilize global markets (even though it will be cheaper to buy gas for a while). They are friends of Trump's, so we won't see any pressure put on them, I'm sure - but this seems almost like an attack to me.

It's not the Saudis launching an oil price war - it's the Russians. And the reason why is quite simple: capitalism, baby!

Fracking is expensive; you can only do it and sell it with a profit if the oil price is above a certain level. By flooding the market with lots of oil for a longer time the price drops like a stone, which makes fracking unattractive and a loss bringer. So this is an attack to drive American fracking companies into bankruptcy. Keep in mind that since 2015 already 208 American oil- and gas drilling companies went bankrupt, piling up 122 billion US$ in debt.

The Saudis just followed that tactic to increase the Russian losses by a good margin.

 

[Beebo Brink]

The GOP thought they could control Trump and get more out of his presidency than they would lose. Surprise!!

 

[Innula Zenovka]

The Guardian have a live blog devoted to the effects on the various markets:

UK and US stock markets suffer worst day since 2008 – as it happened

Stocks have tumbled again in New York, and across Europe and Asia, as Saudi Arabia’s oil price war adds to panic over the coronavirus crisis

www.theguardian.com

 

[Essence Lumin]

I hope Joe or Bernie decide to pick up their microphones and make a strong statement about this alarming situation.

 

[danielravennest]

The lack of information and any sense that the government has adults in control is spiraling uncertainty to the point that we're going to end up worse than we were in the great recession, in my opinion. Markets rely on some sense of there being a plan and communication for disasters. We have neither. Combine a failed economy with the lack of leadership we're seeing (he went golfing over the weekend) and I don't see anyone voting for him except his shrinking base.

The Dow dropped 2000 points today. All those seniors with retirement portfolios are gonna be pissed.

 

[Argent Stonecutter]

The Dow dropped 2000 points today. All those seniors with retirement portfolios are gonna be pissed.

We'll be dead of COVID-19 before we retire anyway.

 

[Chin Rey]

The lack of information and any sense that the government has adults in control is spiraling uncertainty to the point that we're going to end up worse than we were in the great recession

It's too early to say. We may end up with a depression as bad as or even worse than the 1920s one or the economy may even recover for now. But we are in the biggest financial bubble ever and it's been that way for years now, since long before Trump enetered the political scene. Sooner or later the bubble will burst, and the longer it takes, the worse the fall will be.

 

[Brenda Archer]

It's too early to say. We may end up with a depression as bad as or even worse than the 1920s one or the economy may even recover for now. But we are in the biggest financial bubble ever and it's been that way for years now, since long before Trump enetered the political scene. Sooner or later the bubble will burst, and the longer it takes, the worse the fall will be.

This is really true. Some of this is a correction. I’m glad it didn’t wait until after the election, as awful as that is.

 

[bubblesort]

I don't think cheap oil will hurt an incumbent's chances in an election. It might piss off some of the financial class, but the constituents? When gas drops below $2 a gallon, they see that as a sign of a booming economy. That's on top of externalities like cheaper plastics.

 

[Eunoli]

Hard to see an economy where everyone is laid off and no one is buying anything but essentials as booming. That's where we are headed.

 

[Veritable Quandry]

I don't think cheap oil will hurt an incumbent's chances in an election. It might piss off some of the financial class, but the constituents? When gas drops below $2 a gallon, they see that as a sign of a booming economy. That's on top of externalities like cheaper plastics.

Until the layoffs hit. Most of the US oil industry is unprofitable at the current prices. Texas, Louisiana, and Alaska use oil revenue to reduce taxes, making it a double hit when wells shut down.

 

[bubblesort]

Until the layoffs hit. Most of the US oil industry is unprofitable at the current prices. Texas, Louisiana, and Alaska use oil revenue to reduce taxes, making it a double hit when wells shut down.

Just out of curiosity, I checked the numbers on this. Here is a chart from the St. Louis Federal Reserve I put together quick. It shows the unemployment rate, expressed as a percentage, in blue, and top of that, in red, it shows the change of the global price of crude, expressed as a percentage (indicating percentage change in price).

It doesn't look to me like low gas prices correlate with increased unemployment to me. I mean, I could run a regression, but I don't really see the point. The graph is pretty clearly not showing much correlation between these two things. A crude price spike kinda coincided a little with increased unemployment during the recession of 2008, maybe? There were a lot of tings happening in 2008, though, so I doubt oil prices had much impact on that. I think the credit crisis is the confounding factor in the 2008 recession. In other words, both lines are responding to the credit crisis, rather than responding to each other.

 

[bubblesort]

Also... cheap gas boosts other industries. Anything that uses plastic gets cheaper. Travel is cheaper. Energy is cheaper. New construction jobs alone will probably more than replace oil field jobs. Trucking will boom. Trains won't. Trains are more profitable when gas is expensive, and less profitable when gas is cheap. They kind of trade off work with truckers when gas prices change.

Lots of moving parts, but I find it hard to see this as an economic catastrophe. Unless you happen to be some financial class type, who didn't foresee Putin fucking over OPEC, in which case you're stupid, and deserve to lose money.

 

[Veritable Quandry]

Just out of curiosity, I checked the numbers on this. Here is a chart from the St. Louis Federal Reserve I put together quick. It shows the unemployment rate, expressed as a percentage, in blue, and top of that, in red, it shows the change of the global price of crude, expressed as a percentage (indicating percentage change in price).

It doesn't look to me like low gas prices correlate with increased unemployment to me. I mean, I could run a regression, but I don't really see the point. The graph is pretty clearly not showing much correlation between these two things. A crude price spike kinda coincided a little with increased unemployment during the recession of 2008, maybe? There were a lot of tings happening in 2008, though, so I doubt oil prices had much impact on that. I think the credit crisis is the confounding factor in the 2008 recession. In other words, both lines are responding to the credit crisis, rather than responding to each other.

Generally, no. In oil fields, yes.

 

[Eunoli]

The jobs numbers from last month are good. The jobs numbers from next month? Not so much.

We are a service-oriented, consumer-based economy. People are going to be laid off in large numbers in retail, at restaurants, on food carts, in the travel industry, at movie theaters, at sports stadiums...etc. The travel industry is already getting hit hard. A friend who works at hotels has already lost 3/4 of their shifts. We are heading toward a giant recession.

Not to mention, a large portion of people are going to go to work sick - because they have no choice (and pass the virus further and faster because of it). Without paid leave and/or bosses that will fire them for taking the leave they have, they have to go to keep food on their tables. They will make the virus spread faster than other countries with more humane work policies.

Just to be clear, the doubling time for cases outside of China is estimated by the WHO to be 5 days (China is lower because after their lockdown they've been slowing). That means at the current rate of doubling (and that's conservative because the US isn't implementing policies to prevent growth):

Active Cases in the US (following current estimates at doubling every 5 days):
Today: 761
3/15: 1522
3/20: 3,044
3/25: 6,088
3/30: 12,176
4/4: 24,352
4/9: 48,704
4/14: 97,408
4/19: 194,816
4/25: 389,632
4/29: 779,264
5/4: 1,558,528
5/9: 3,117,056
5/14: 6,234,112
5/19: 12,428,224
5/24: 24,936,448

Giving giant tax cuts to the rich and corporations does zero good at times like this when it isn't reinvested in manufacturing and other sectors (hint, it wasn't - it was passed on to stockholders and used for buybacks).

Why the Coronavirus Could Threaten the U.S. Economy Even More Than China’s

 

[Beebo Brink]

The Dow dropped 2000 points today. All those seniors with retirement portfolios are gonna be pissed.

We'll be dead of COVID-19 before we retire anyway.

Yeah, I'm trying to prioritize my concerns. Survival first, then I'll assess how badly this hits my retirement funds.... but still can't help but ponder future scenarios. The plan -- back before the coronavirus pandemic -- was to drop down to 20-30hrs/week in 2021 and then retire at the end of that year. Assuming I'm 1) still alive and 2) still employed by the end of this year, there's no way I'm voluntarily reducing hours in the middle of a recession.

I'm also wondering just how my company would deal with a severe downturn in business given how our income flow is structured. The last-hired-first-fired rule isn't going to work for us. The entry-level job is as a consultant, and it's those young employees who do the vast majority of the actual work. As they climb the corporate ladder, at each new rung they do less of the direct client work and devote more time to client development (aka sales) to obtain new contracts. Thus they get a kickback sales credit on all projects handled by the consulting teams they supervise. By the time they reach managing director level and a really hef6y salary, pretty much all they do is shuffle papers and collect sales credits.

Instead of cutting from the bottom up, I guess you'd slice off segments of the entire project structure: the idle consultants who don't have enough work, but also all the management layer who can no longer suck up the income from those departing consultants. Over the past few years, I've lost most of the client contracts I used to handle (legacy tech), and I spend most of my time now providing internal tech support. Objectively speaking, I'm very disposable, especially since there are no junior tech/consultant positions in my department to buffer me from a layoff. Given how close to retirement I am anyway, I couldn't really hold it against them to boot me out the door so that someone younger could keep their job.

Interesting times up ahead....

 

[Katheryne Helendale]

I don't think cheap oil will hurt an incumbent's chances in an election. It might piss off some of the financial class, but the constituents? When gas drops below $2 a gallon, they see that as a sign of a booming economy. That's on top of externalities like cheaper plastics.

When people watch their 401k's going down the toilet (mine lost nearly 20 percent of its value in the past week), I doubt they'll be thinking we 're in a booming economy. And that's before the layoff notices hit.

 

[Free]

We'll be dead of COVID-19 before we retire anyway.

I'd like to sign up for your optimistic newsletter.

 

[danielravennest]

When people watch their 401k's going down the toilet (mine lost nearly 20 percent of its value in the past week), I doubt they'll be thinking we 're in a booming economy. And that's before the layoff notices hit.

My point with that comment was they will tend to blame the man in charge for the screw-up. For example, in today's news it was reported that Trump classified meetings about the coronavirus. Since health experts typically don't have security clearances (why would they?), they were excluded from such meetings. So they were developing a response without the proper input. This is on top of Trump making up stuff about the disease.