Why has the market not tanked ?

Bob24

The Tetrarch wrote: »

The stock market was too high before the coronavirus panic.
Market Cap v GDP was 151%. Today it is 137.8% estd.

The stock market fell when the epidemic escalated, and jumped back up when the epidemic was on the wane. The epidemic became the market story.
When coronavirus is in the rear view mirror investors will realise that the market is well overvalued. Their optimism has no foundation.

Will there be company bankruptcies in the USA?
Wave of U.S. Bankruptcies Builds Toward Worst Run in Many Years. Bloomberg (two days ago)

Over-optimism might play a role, but my opinion is that central banks and monetary policies play a bigger one.

I.e. many investors do see how bad the situation will be on the ground and that it will affect corporate profits, but at the same time the expect central banks to keep the funny money flowing, and they have nowhere else to go to get some yield.

Diairist

Such a civilized thread! Hardly any shouting and the logic makes sense.

As in an earlier comment, money actually has nowhere to go - Krugman is right. It is problematic that deflation has started in most developed economies. IMHO interest rates will have to stay low, no inflation to be choked off by raising rates (thus making corporate borrowings expensive). This will encourage share buying for what ... a few years?

Was it Mohammed El Erian that used the phrase 'destroying savings'? The lack of earnings is doing more harm to the average American that we know.

ShineOn7

A timely bump for this thread I think. I've savings still waiting to take a plunge but everything looks overpriced at the moment and bare zero reflection on the world economy

Have the Fed and other central bank stimulus packages not dried up yet?

Thoughts on a Q3 or Q4 crash? And I mean a proper crash, not a dip

peterofthebr

looking at US the FED will step in if there is a crash. at the moment the only way a massive drop (like back in march) will occur before Nov is if trump himself gets covid...IMO

ShineOn7

Let's say Trump wins in November, and I think he's still odds on favourite to do so, will a crash happen in December/January?

Surely at some stage the Fed stops artificially keeping it in the green

homewardbound11

peterofthebr wrote: »

looking at US the FED will step in if there is a crash. at the moment the only way a massive drop (like back in march) will occur before Nov is if trump himself gets covid...IMO

If trump gets COVID the market will probably go up even further . The way this has been panning out anything is possible .

peterofthebr

ShineOn7 wrote: »

Let's say Trump wins in November, and I think he's still odds on favourite to do so, will a crash happen in December/January?

Surely at some stage the Fed stops artificially keeping it in the green

they cant they done this before a few years ago they said they were reducing thir holdings [fed] they had after the financial crash, the market went red quickly and the fed just kept buying[although allot more quietly]. FEd gives money to companies like blackrock to invest in key usa companies(as FEd cant buy itself] but all central banks are doing this now -so as long as there is confidence in the dollar, and they [eg: trump] decides to not pay US debt to foregn holding countries, ...so to infinity and beyond :rolleyes:

borderfox11

ShineOn7 wrote: »

A timely bump for this thread I think. I've savings still waiting to take a plunge but everything looks overpriced at the moment and bare zero reflection on the world economy

Have the Fed and other central bank stimulus packages not dried up yet?

Thoughts on a Q3 or Q4 crash? And I mean a proper crash, not a dip

yeah but if there's another crash will you buy? or will you say "hmm i think this might go even lower!!!" i suspect the latter ...

this is why market timing is extremely difficult - time in the market beats timing the market, as they say

1st dalkey dalkey

Second wave, no second wave.
Trump wins, Trump loses.
China trade war, no China trade war.
Hard Brexit, soft Brexit.

Whatever. Life goes on. Demand will exist and it will be serviced.

The really odd thing now is that in a time of excessive uncertainty the market is so high.
Normally in times of uncertainty there is opportunity in the markets to get a few bargains.
But with so much money around now there are very few bargains, in fact none that I would call bargains.

It's an odd world where money is almost worthless. Ireland borrowed at negative rates the other day, paying back less in 7 years then it borrows today. What does that say about the next 7 years?

Stormington

The stock market was too high before the coronavirus panic.

Too high relative to what?

Assets are repricing due to the increase in liquidity. Many traditional industries will lag as sector rotation kicks in to reflect post-Covid changes.

Wake me up after Tesla hits 2k and Apple hits 700.
Both USD figures.