Fed to pump more than $1 trillion in dramatic ramping up of market intervention

[Leftie]

Much of what has been said here will age very badly. I believe this is the “reset” some of us have been anticipating. Nothing I’ve seen out there has been effective or positive or promising.

We have seen three "dead cat" bounces in the past two weeks, and trading has been halted via circuit breaker three times during this downturn. The market,if it breaks 19,000 tomorrow (I don't necessarily expect it to, pending any crazy news that comes out tomorrow, as futures are trading up), would confirm that we aren't out of this yet. I bet that we see another downward market trend starting on either Thursday or Friday, after a slight (well, by comparison in this amount of volatility it could mean 2500-3,000 point) rally.

I still believe that Q2 and Q3 of this year will be brutal for many publicly traded companies, and the markets will follow a downward trend. That being said, there will be a number of very solid securities which will be at bargain prices, and are currently trading at a major discount. If you are a patient investor, there is a significant potential upside long-term.

That being said, I don't think that it's fair to say that nothing has been effective or positive or promising. We just don't know yet. The Fed intervention won't necessarily produce a direct, positive, market reaction, but it will have an eventual effect. What the Fed did do, and Sundance435 made a really good point earlier in this thread, was to soften the blow to the market by adding liquidity to the market. Is it the solution? No (at least in my opinion it's not), but is it something that may potentially soften the blow down the road? Yes, I believe so, although it's too early to tell exactly to what extent, and, due to the nearly infinite number of variables involved, how precisely it helped.

[Mozart]

In many respects, the Fed, the financial systems, and the real economy, are all in uncharted waters. That’s what concerns me the most. Nobody can look to other times in history when this happened. What is happening now is new, and the solutions are theoretical. Nobody knows for certain what is going to work. Just about every industry/ sector is going to request bailouts. Think about the tens of trillions of dollars it will take to make vast swaths of the economy functional again, because everyone has been heavily debt-leveraged. They’re going to have to bail everyone out, inject trillions into the system, destroy the dollar in the process of monetizing said bailouts, and replace it with some new currency.

[Mauser KAR98K]

I'm working up here in North Dakota in the Bakken. I haul crude oil from the wells to the pipeline. We have gotten busy all of a sudden with Trump wanting to fill the strategic reserves. I heard his request is 77million bbls. U.S. output is about 12million a day. Will be interesting to see how this plays out for us.

Our saving grace is that Asia is getting better, and if they come back on line, oil will be in demand.

But that also factors in with the oil war with OPEC and Rusdia, which I suspect Russia is keeping their output high to kill American fracking.

[Leftie]

Mauser KAR98K, I think that it's going to be an interesting ride for oil, to say the least. I'm also curious as to what will happen to the Russian economy in the coming months. In a bizarre way, their relative market isolation to the global economy may present a relative strategic advantage in the short term, although this strategy will likely present as a Phyrric victory for Russia, and be further compounded should COVID-19 become an issue for them (although the official numbers so far coming out of Russia are low - which is to be expected). Add in any relative global market exposure for Russian commercial entities and affiliates, and that will likely spell greater economic problems for Russia, and perhaps encourage more aggressive/belligerent behavior vis-a-vis global markets and the "West".

So, what will this mean for the average American? If they're living paycheck to paycheck, it's going to be a difficult and very expensive existence in the near future. If they have some savings, they will probably exhaust at least a portion of them as the economy contracts if their job situation changes. The economy is going to rebalance (probably a euphemism, to say the least), and I think that we are going to see what a modern market contraction (and subsequent adaptation sector-by-sector) looks like in the coming weeks. It's not a rosy picture, because it's extremely change-ridden, and most people don't deal with change well at all... Not going to say that we should do this as a nation, but there was a time when the United States Government became the single largest employer of Americans - from 1933 to 1939 - underneath FDR's New Deal and, as controversial as parts of the New Deal were, it was an extremely effective program for keeping Americans employed and focused on the big picture of country unity and perseverance.

We have more than enough infrastructure that we can repair and upgrade with such a program (if instituted correctly), while also propping up our economy, and laying an incredible foundation for the next half-century at least. Just a thought...

[Whiskey_Bravo]

Not going to say that we should do this as a nation, but there was a time when the United States Government became the single largest employer of Americans - from 1933 to 1939 - underneath FDR's New Deal and, as controversial as parts of the New Deal were, it was an extremely effective program for keeping Americans employed and focused on the big picture of country unity and perseverance.

We have more than enough infrastructure that we can repair and upgrade with such a program (if instituted correctly), while also propping up our economy, and laying an incredible foundation for the next half-century at least. Just a thought...

I would much rather us spend money through large public works projects and repairing infrastructure than handing out money. At least have something to show for it in the end.

[Leftie]

I would much rather us spend money through large public works projects and repairing infrastructure than handing out money. At least have something to show for it in the end.

I don't think that it's an either/or at this point. A "best case" scenario requires both to be used. I'm not a fan of a blanket stimulus (handing out money) either, but private industry is the single largest driving economic force in the United States, and letting market Darwinism eat flawed-but economically important- companies alive now will have greater ramifications in the long term for our economic success than bailing them out. In context, we have already spent around 2.5 trillion in the past two weeks as a government to create market stability, so what's another trillion or two USD in the grand scheme of things if the upside on the further investment is keeping people employed (people paying taxes to USG), keeping companies profitable (companies paying taxes to USG), and increasing the potential for greater revenue, growth, and profit (all good things equalling more money to USG, and to the average American) across the board. The other side of the coin is a massively complex economic slowdown and loss of momentum for American firms, which would be far more detrimental at this point than more debt. Still, I am sure that there is a place for USG to hire Americans and create public works projects, which would have an undeniably positive effect on the economy and probably head off some of the compounding effects of this slowdown by nature of keeping more Americans employed, and thereby keeping more individuals and families solvent (in theory).

I think that it's really important to note that I've changed my outlook on capital injection into the market from even a week ago on this thread, because many people may judge what I'm saying right now as hypocritical. Given the context of prior posts and the context around how the market was reacting, I felt that what the Fed did was premature. If anything, by witnessing the lackluster market response of the Fed's intervention, we just received a "gut check" on overall market health (a very, very expensive one.) Now, within the context of the market and the greater economic effect on all Americans, I think that it's of paramount importance to avoid a private-sector slowdown, and that initially requires aggressive market momentum in the private sector to keep Americans employed, followed shortly by USG offering/enacting public works projects as we see unemployment numbers increase substantially over the next few weeks.

[Mauser KAR98K]

I don't think that it's an either/or at this point. A "best case" scenario requires both to be used. I'm not a fan of a blanket stimulus (handing out money) either, but private industry is the single largest driving economic force in the United States, and letting market Darwinism eat flawed-but economically important- companies alive now will have greater ramifications in the long term for our economic success than bailing them out. In context, we have already spent around 2.5 trillion in the past two weeks as a government to create market stability, so what's another trillion or two USD in the grand scheme of things if the upside on the further investment is keeping people employed (people paying taxes to USG), keeping companies profitable (companies paying taxes to USG), and increasing the potential for greater revenue, growth, and profit (all good things equalling more money to USG, and to the average American) across the board. The other side of the coin is a massively complex economic slowdown and loss of momentum for American firms, which would be far more detrimental at this point than more debt. Still, I am sure that there is a place for USG to hire Americans and create public works projects, which would have an undeniably positive effect on the economy and probably head off some of the compounding effects of this slowdown by nature of keeping more Americans employed, and thereby keeping more individuals and families solvent (in theory).

I think that it's really important to note that I've changed my outlook on capital injection into the market from even a week ago on this thread, because many people may judge what I'm saying right now as hypocritical. Given the context of prior posts and the context around how the market was reacting, I felt that what the Fed did was premature. If anything, by witnessing the lackluster market response of the Fed's intervention, we just received a "gut check" on overall market health (a very, very expensive one.) Now, within the context of the market and the greater economic effect on all Americans, I think that it's of paramount importance to avoid a private-sector slowdown, and that initially requires aggressive market momentum in the private sector to keep Americans employed, followed shortly by USG offering/enacting public works projects as we see unemployment numbers increase substantially over the next few weeks.

The unfortunate fact is that we've done these "stimulus" dumps for so long that the time we really need to do it (like right f***ing now), we are too broke to do it. I had questioned this back in 2008 and 2009 with Bush and Obama. What are we going to do when we really need it because of large disaster/emergency/war?

Here we are. Instead of paying down the debt, politicians used our "break glass in case of panic" to buy votes instead of using for a health insurance for the country. We all that the "great recession" would have sorted itself out with markets adjusting, and businesses filing restructuring bankruptcy to save them. Yet. Obama needed to buy the unions.

Public work projects at this time will not happen. Those efforts take team work...which includes gathering of 10 or more people. Could governments give concessions to that. Yes. But without a reliable treatment or vaccine, its risky.

What's got everyone spooked is the unknowns with this situation. How long will this last? How worse will it get? Will we be like Italy or Spain? Will we be better than them?

As for oil:

MBI is shutting down their whole operations here on May 15th. That's a lot of drivers and hands out of a job here in North Dakota.

There is news that some are blaming the Saudis for doing this, and trigger the recession (face it, we are in it). And Russia has reported they have lost $40 billion since their dick measuring contest started.

The good thing is is that Trump has bought a lot our oil to keep us going. But at some point, we will run out of storage.