It’s nice to see the stock market isn’t completely separated from reality:
World financial markets were rattled by the setbacks in fighting the pandemic, which cloud prospects for recoveries of economies mired in their worst downturn since the Great Depression of the 1930s.
Asian shares fell Thursday after the Dow Jones Industrial Average lost over 700 points overnight for a drop of 2.7% and the broader S&P 500 fell 2.6% [Elaine Kurtenbach, “Masks, Travel Restrictions, Testing as Virus Surges,” AP, 2020.06.25].
Remember what I said in March: we don’t whip coronavirus and go back to normal in one go. We haven’t saved those two million lives yet. If we want to pull off that win and save our hospitals fro catastrophic overload, we’re going to spend the rest of this year and a good chunk of the next staying home, staying six feet apart and masked when we don’t, and closing down the schools and bars as part of an ongoing cycle of shutdowns to rein in then coronavirus.
Even when we restore a functional federal government with the effective, conscientious leadership of Joe Biden, we’ll still have a lot of work to do to beat back coronavirus and let the stock market find other reasons to bob and weave.
This is still the first wave of covid-19. Texas guv ordered people to stay home, it is getting so bad there, but he still refuses to shut down the state. Today may be A-Butt’s last stand. (no pun intended)
I hope Joe Biden has learned the lesson that sometimes a leader steps out of the way and lets the experts in the field drive the policy. Maybe he already knew this. Maybe he understands that being an expert on everything isn’t a qualifier to be President.
The stock market is a lagging indicator of reality, if it ever reflects reality at all. Right now it’s vastly overbought. A 700 point drop is probably an order of magnitude less than it should sink to reflect reality in the US.
The stock market is a fraud. Simple as that. These guys are selling one another the same old tired bunk with taxpayer money that they did in 2008. Check this out to see that there is no value in the market…natta. It needs to fold the tent and drop about 10,000 points without any further taxpayer injections of cash to this money hole.
“To be sure, Wall Street got a small respite after U.S. regulators said they would ease restrictions on banks that were implemented following the financial crisis.
The Federal Deposit Insurance Commission said it would allow banks to more easily make large investments into funds such as venture capital funds. Banks will not have to set aside cash for derivatives traders between different affiliates of the same firm, potentially freeing up more capital.
Bank stocks rallied across the board on the news. JPMorgan Chase, Bank of America and Citigroup were all up more than 2%. Wells Fargo gained 3.6%. Goldman Sachs was up 3.1% and Morgan Stanley advanced 2.6%. The SPDR S&P Bank ETF (KBE) jumped to trade more than 2% higher.
“When we think about a recession of the magnitude that we have, there’s going to be some credit write-offs by banks,” said Art Hogan, chief market strategist at National Securities. “The fact that they’re going to have more working capital makes markets breath a sigh of relief.” https://www.cnbc.com/2020/06/24/stock-market-news-futures-coronavirus.html
Do you get it? When was the last time you say these bankers (thieves and liars) get to do more investments? Here is a hint: “The financial crisis was primarily caused by deregulation in the financial industry. That permitted banks to engage in hedge fund trading with derivatives. Banks then demanded more mortgages to support the profitable sale of these derivatives. … That created the financial crisis that led to the Great Recession”
As Yogi Berra would say “It’s deja vu all over again”. We need 3 trillion right now put into the hands of working people, healthcare, schools, city, county and state governments. Infrastructure to include a better way to produce, harvest and distribute food. Out with the old and in with the new. Pay producers what they are worth as well as the rest of the essential workers that feed our sorry arse’s.
Jerry hit the nail on the head. The stock market is a fraud. And it is not a stretch to call our entire economic system a fraud. It is built on consumption and the American people are running out of cash AND credit. The COVID crisis makes it impossible for working class Americans to maintain their paltry wages. The working class must risk their health to pay the bills because the state will not support them during a pandemic! It is a purge. On top of the economic and health crises, we are now finally facing up to our history … enter the social crisis. Young people see that our systems are fraudulent and are literally taking matters into their own hands.
Corporate Capitalists are going to move further to the right in an attempt to maintain control. They will use all levers of power available to them … police, FBI, ATF, Homeland Security, etc. If Biden wins, then we get a pause in the acceleration towards right wing extremism. What I am afraid of is what comes after Biden? If the Democrats fail AGAIN to address the sytemic problems inherit to the US system, then who will be the next Republican president? You think Trump is bad? Can you imagine a competent Trump? Can you imagine a competent neo-fascist?
We don’t have a lot of room for error here. The biggest crisis will hit at the end of the 20’s. Failure to address the causes of the climate crisis might be the final straw.
“The old world is dying, and the new world struggles to be born: now is the time of monsters.”
― Antonio Gramsci
The less financial institutions are regulated, the more they fail to deal in the real economy, and the more they hurt main street businesses and workers. If you have a capitalist economy you have to have a strong financial system that works for people. You get that through regulation, and you lose it through deregulation.
I don’t think corporate capitalists are all heading right. People who sell goods and services to the public see that’s a dead end. They can’t survive selling to righty white folks only. It’s an ever-decreasing demographic, and many of them don’t make enough to keep them profitable. Now heavy manufacturing, military production, mining, and some construction have long depended on government spending, subsidies, cushy tax policy and light regulation. These industries are always the target of totalitarian governments. They either take them over as in the USSR and the People’s Republic of China or they co-opt them, as in Italy and Germany prior to World War II.
Mr. Pay, which begs the question what is the real economy when you don’t manufacture anything but blue sky? Most people don’t know what a derivative is. Here is what it is
“A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (like a security) or set of assets (like an index). Common underlying instruments include bonds, commodities, currencies, interest rates, market indexes, and stocks.”
The “two or more parties” can actually be hundreds owning hundreds of pieces of a single mortgage.
When white collar executives hit the unemployment line, things have a way of changing quickly. Macy’s got the tax cuts and here we are. “The company currently estimates the deferred tax impact of the federal tax corporate rate reduction will result in a non-cash tax benefit of approximately $550 million to $650 million.”
“Macy’s, Inc. Announces Restructuring to Address Sales Impact from the COVID-19 Pandemic
Actions announced today anticipated to create approximately $630 million per year in savings
Eliminates approximately 3,900 corporate and management roles and is committed to maintaining a lower cost base
Most remaining furloughed colleagues returning to work beginning July 5, 2020
NEW YORK–(BUSINESS WIRE)– Macy’s, Inc. (NYSE:M) today announced details of a restructuring that will align its cost base with anticipated near-term sales as the business recovers from the impact of the COVID-19 pandemic, including the closure of stores from March 18 through May 4, 2020 and gradual re-opening.
The company will reduce corporate and management headcount by approximately 3,900. Additionally, Macy’s, Inc. has reduced staffing across its stores portfolio, supply chain and customer support network, which it will adjust as sales recover.” https://www.macysinc.com/investors/news-events/press-releases/detail/1630/macys-inc-announces-restructuring-to-address-sales
Add this all up and you get over a BILLION DOLLARS in their pockets for some walking around money. Stores close and folks get fired, but the American taxpayer doesn’t seem to catch on…yet.
The Real Economy is Sally Jones cutting Jim Smith’s hair. She takes the $20 from that, plus $3.50 tip, and like payments throughout the month, to pay the local guy to repair her clippers, pay the rent, utilities, and other bills on her shop. She pools $ with her hubs to pay on the mortgage, make a car payment, buy groceries, etc.
That’s the Real Economy. It’s not measured in great detail and featured like the regular NYSE and NASDAQ numbers, but it’s the economy that matters to the wide majority of us.
Elizabeth Warren needs to be our next Secretary of the Treasury because she knows exactly what the Real Economy is and how to get it humming.
More bad news …
https://jacobinmag.com/2020/06/jay-clayton-sec-securities-exchange-commission-trump
jason, but only if trump is reelected. Audrey Strauss has been appointed to replace Berman. She is a tough cookie and will very ably take Berman’s place in the meantime.
“The markets showed red this week. December corn prices dropped 21.25¢ and November soybean prices dropped 19.25¢ for the week ending June 26. September wheat prices declined 9.5¢.”
Farm Journal Ag Web
is.gd/hfkp30
What would happen if Farm Flunkie didn’t profess to “love” farmers?