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Micro back to work sunshine and warm weather rally, just before the skies go dark?

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Ceiling Cat

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Feb 25, 2009
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As the provincial governments are announcing the return to work the markets have rallied.
Some stocks added a astonishing gains yesterday and are continuing the rally today. I would not even trust the rally to last out today as I am hunkered in my bunker already.
The markets are unpredictable because in part there are a lot of baby boomers already retired, retiring or close to retirement with their retirement money in the markets. With these geezers fishing the same hole, poking and stirring the waters adding volatility to the markets. This will add uncertainty to the markets as they stay in way too long in times like now and flee like lemming on fire when the markets go south.

Things are about to go bad as the big companies report horrendous first quarters, as new reports scads of businesses casualties that are closed never to re-open, businesses re-opening with a reduced staff and the reports of people now unemployed. Expect a second punch in the stomach as the second quarter is reported it will not be better than the first quarter.
 
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moemoron

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It is definitely rallying on the first positive news in a month. You are also correct, most bear markets tank initially, followed by a rebound (on positive news). The real evaluation/financials are only known when the quarterly results are in, and only then can we determine how bad this truly is.
However, the markets have already received a substantial beating. How much negative is already baked into the price? Financials are down 20%, and travel/entertainment are down 40-50% still. What is their actual impact? Right now is speculative trading.
After the Q2 results are in and this virus fiasco is done, I predict a steady strong bull. Oil prices will still be low, and companies will already have cut all the fat out, and there will be government injection of cash.
 
C

Ceiling Cat

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moemoron said:
Right now is speculative trading.
After the Q2 results are in and this virus fiasco is done, Any news that covid is rebounding, no matter how small will put fear into people. I predict a steady strong bull. Oil prices will still be low, and companies will already have cut all the fat out, and there will be government injection of cash. After CERB payments and the legions of unemployed have been paid. What shape will Canada ( the world ) be in?
Click to expand...


In the short term, I expect a nuclear winter to descend on us. There will be no warmth before the summer of 2021.
 
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Fradi

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Mar 22, 2017
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Chibougamau
If there is anything to be learned about predicting the markets it is not to predict anything because you are bound to be wrong.
Just remember the monkey throwing darts had a better record at predicting the markets than most experts.
 
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moemoron

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Before my statement below, I do agree that this last 'mini bull' is historically flimsy at best. Just from looking at history, every single crash of this magnitude, had a bounce up that was ultimately unsustainable. In the short term I suspect the numbers seen today will be challenged.

Now, for the arguements:
1) CERB payments are only 2000 a month. I am not sure how much of an impact this will have when it gets cut. The bigger thing to keep our eyes on is the employment rate within the coming months. Some companies are holding onto employees hoping the economy recovers, while others have already let employees go with the expectation to re-hire them if the market bounces. If the market doesn't recover fast enough, then more and more will be laid off, and the nuclear winter you are suggesting will become a reality. If the market does recover, then I suspect the current level of employment will be maintained with only a portion of employees being re-hired.

2) Low oil prices have a dramatic effect on the economy. In almost all historical cases prolonged oil prices has led the way to very strong bull markets. Low prices save on employees commuting to work, shipping costs in all types of freight. It simply saves money to everyone in the middle class.

3) This has been bizarre in that almost everyone has stopped spending money at the same time. With only online shopping, those that have been able to work at home, have been making savings. How much of this will be injected into the market when items do open up? This could be enough to jump start the economy.

4) Interest rates are extremely low again. This will help provide cash flow to some individuals/businesses that may need it now.

5) Since rent/mortgage had the ability to be deferred, it is difficult to tell how many are set to default? Currently I have not seen major warning signs of defaults financially that has not already been considered in the market.
 
C

Ceiling Cat

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Feb 25, 2009
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Goodoer said:
Also remember the ol' adage: "Sell in May and go away!"
Click to expand...
"Sell in May and go away!" .....................and do not come back until September of 2021.

Stocks have slid off a cliff and landed on a ledge, it has climbed back a few feet for now. I suspect things are so shaky that it will slide sown to a lower ledge before it climbs back up to previous levels.
 
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waynec

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Nov 23, 2008
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Ceiling Cat said:
"Sell in May and go away!" .....................and do not come back until September of 2021.

Stocks have slid off a cliff and landed on a ledge, it has climbed back a few feet for now. I suspect things are so shaky that it will slide sown to a lower ledge before it climbs back up to previous levels.
Click to expand...
The US is talking of another injection of over a trillion dollars. What is you take on the short and long term impact?
 
B

Butler1000

Well-known member
Oct 31, 2011
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moemoron said:
Before my statement below, I do agree that this last 'mini bull' is historically flimsy at best. Just from looking at history, every single crash of this magnitude, had a bounce up that was ultimately unsustainable. In the short term I suspect the numbers seen today will be challenged.

Now, for the arguements:
1) CERB payments are only 2000 a month. I am not sure how much of an impact this will have when it gets cut. The bigger thing to keep our eyes on is the employment rate within the coming months. Some companies are holding onto employees hoping the economy recovers, while others have already let employees go with the expectation to re-hire them if the market bounces. If the market doesn't recover fast enough, then more and more will be laid off, and the nuclear winter you are suggesting will become a reality. If the market does recover, then I suspect the current level of employment will be maintained with only a portion of employees being re-hired.

2) Low oil prices have a dramatic effect on the economy. In almost all historical cases prolonged oil prices has led the way to very strong bull markets. Low prices save on employees commuting to work, shipping costs in all types of freight. It simply saves money to everyone in the middle class.

3) This has been bizarre in that almost everyone has stopped spending money at the same time. With only online shopping, those that have been able to work at home, have been making savings. How much of this will be injected into the market when items do open up? This could be enough to jump start the economy.

4) Interest rates are extremely low again. This will help provide cash flow to some individuals/businesses that may need it now.

5) Since rent/mortgage had the ability to be deferred, it is difficult to tell how many are set to default? Currently I have not seen major warning signs of defaults financially that has not already been considered in the market.
Click to expand...
I can tell you as someone who has continued to work as well my SO we are not planning large purchasing. We have given up on international travel for the foreseeable future and are looking at local travel only.

As we we aren't looking at any major purchases for a minimum 18 months unless it's an emergency.

I'm planning to keep my CC debt at zero, finish my mortgage in about three years. Then three more to clear a credit line for Renos.

Betting alot of people are rethinking their spending habits.
 
A

Anbarandy

Bitter House****
Apr 27, 2006
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Butler1000 said:
I can tell you as someone who has continued to work as well my SO we are not planning large purchasing. We have given up on international travel for the foreseeable future and are looking at local travel only.

As we we aren't looking at any major purchases for a minimum 18 months unless it's an emergency.

I'm planning to keep my CC debt at zero, finish my mortgage in about three years. Then three more to clear a credit line for Renos.

Betting alot of people are rethinking their spending habits.
Click to expand...
Yeah but, are you rethinking your candidate endorsing and "unlimited free passes" habits for Trump's chronic incompetence and corruption?

Now that will significantly improve both your financial and cognitive reasoning outlook.
 
C

Ceiling Cat

Well-known member
Feb 25, 2009
28,242
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waynec said:
The US is talking of another injection of over a trillion dollars. What is you take on the short and long term impact?
Click to expand...
Congress has not yet approved the second round of stimulus, IMHO it is too early to do so. If you give hand outs the American public will expect more and more. How much stimulus ands CERB can the U.S. and Canada give when there has been massive pay out and during the shut down there was loss taxes that was not collected.

The whole world is in deep doodoo. This is just the beginning, the markets have just price in the covid-19 shut down. What is coming is the news of unemployment ( expected to be near the 18% range ) The news of business closures and downsizing. The economy will slow to a crawl, some businesses like theatres, gyms, restaurants, bars will be near empty. The downward slide will be about 12-18 months before we start to rise slowly back to previous levels. That can take 3-5 years. I am expecting a second slide in stock prices of 15-20%.

There is also the possibility of a second wave of covid-19, then the economy and markets will really lose confidence as it could mean even a third and forth occurrence.
 
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