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Why does the stock market and wall st seem to do well when there is news of mass layoffs?
https://www.democraticunderground.com/10142456598 (record 3.3 million Americans filed for unemployment)https://www.democraticunderground.com/10142456989 (Stocks roar, with Dow spiking 1,300 points)
These stories were posted on the same day.
14 replies
= new reply since forum marked as read
= new reply since forum marked as read
Sometimes called a dead-cat bounce.......
Eternally optimistic, a view from some of the big boys, below. Their tone suggests to me they believe everything will return to normal any day now. I suspect they know better.
Stock market won’t hit coronavirus lows until these 3 criteria are met, says Goldman Sachs
Published: March 30, 2020 at 9:45 a.m. ET
By Chris Matthews
Questions remain regarding coronavirus spread and impact of stimulus
Link: https://www.marketwatch.com/story/stock-market-wont-hit-coronavirus-lows-until-these-3-criteria-are-met-says-goldman-sachs-2020-03-30?mod=home-page
(snips)
To feel confident that the stock market has found a bottom, Kostin and his colleagues say three criteria must be met:
1. The viral spread in the United States must begin to slow, so that the ultimate economic impact of the virus and containment efforts can be understood.
2. There must be evidence that “extraordinary measures” taken by the Federal Reserve and Congress to support the U.S. economy are sufficient. “While the willingness of policymakers to use all the tools at their disposal is clear, only time will tell to what extent the actions succeed in limiting defaults, [business] closures and layoffs,” Kostin wrote.
3. Investor sentiment and positioning must bottom out. Goldman analysts point to their U.S. Equity Sentiment Indicator, which combines nine measures of equity positioning, noting that it has only declined by 1.4 standard deviations, versus standard deviations of between -2 and -3 in recent corrections.
The Goldman analysts also warn investors of another headwind for equities going forward: greatly reduced corporate share buybacks. They point out that nearly 50 U.S. corporations have suspended existing share repurchase authorizations in recent weeks, “representing $190 billion in buybacks, or nearly 25% of the 2019 total.”
“Buybacks have represented the single largest source of U.S. equity demand in each of the last several years, and we believe higher volatility and lower equity valuations are among the likely consequences of reduced buybacks.”
1. The viral spread in the United States must begin to slow, so that the ultimate economic impact of the virus and containment efforts can be understood.
2. There must be evidence that “extraordinary measures” taken by the Federal Reserve and Congress to support the U.S. economy are sufficient. “While the willingness of policymakers to use all the tools at their disposal is clear, only time will tell to what extent the actions succeed in limiting defaults, [business] closures and layoffs,” Kostin wrote.
3. Investor sentiment and positioning must bottom out. Goldman analysts point to their U.S. Equity Sentiment Indicator, which combines nine measures of equity positioning, noting that it has only declined by 1.4 standard deviations, versus standard deviations of between -2 and -3 in recent corrections.
The Goldman analysts also warn investors of another headwind for equities going forward: greatly reduced corporate share buybacks. They point out that nearly 50 U.S. corporations have suspended existing share repurchase authorizations in recent weeks, “representing $190 billion in buybacks, or nearly 25% of the 2019 total.”
“Buybacks have represented the single largest source of U.S. equity demand in each of the last several years, and we believe higher volatility and lower equity valuations are among the likely consequences of reduced buybacks.”
To my knowledge, this virus provides no insider information. I would be afraid to trade baseball cards in this environment.
KY.........
