
'Fear Factor' Is Running High as Currency Markets Resume Trading - Reedx
https://www.bloomberg.com/news/articles/2020-03-01/no-place-to-hide-for-markets-looking-for-central-bank-salvation
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brettproctor
To me, I think the most critical thing to make note of is the extreme focus on
what the fed and other central banks are going to do.

The fact that most people (rightly) assume that fed action is the most
significant factor for the market should really give people pause.

Lastly, people should really consider what happens when fed action is no
longer enough, and what happens then.

~~~
pbourke
Yeah. Fed was able to intervene in 2008 because it was a financial crisis.
This is a physical event that will affect the real economy. You can print all
the money in the world, it won't make people go to the restaurant or buy a
car.

~~~
webninja
In 2008+ when they “printed money” via “Quantitative Easing”, they would buy
bonds off the market. This puts printed money in the hands of bond holders.
Presumably bond holders are very rich. Presumably very rich people already
have a good enough car and already frequent restaurants. Now if the Fed
printed money and put it in the hands of the middle class, not just the hands
of the upper class, I’d bet you new cars would be bought and restaurants would
be dined.

~~~
gentleman11
Years ago in Canada, one province decided to mail $500 cheques to every adult
in the province as an economic stimulus after they had an oil and gas surplus.
Apparently it helped a lot

And it wasn’t just middle class, but lower too...

~~~
flukus
Australia did this in 2008, part of the reason we avoided a recession. Parts
of China have started doing the same for coronavirus.

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KaiserPro
None of this is going to be resolved this week or month.

THe next big thing to watch out for is the virus spread in the USA.

Now, unless something changes, I am not overly hopeful in containment for the
USA. The rumours of poor/non standard testing, and the limited access to
healthcare is going to make one hell of a mess.

Could a US person explain who pays for the test/on going healthcare if an
uninsured person rocks up to the ER with relevant history and flu like
symptoms?

Does the government step in to fund care? or is it left to the hospital to
foot the bill?

~~~
vondur
Hospitals in the US with emergency rooms are not allowed to turn away patients
who are sick. Ultimately it's the taxpayers who foot the bill. (Federal, State
and Local Governments pay for it I believe.) This also explains why so many
private hospitals have shut down their emergency rooms. I also believe that
many private hospitals will transfer patients who cant pay to public
hospitals.

~~~
paublyrne
Is it likely that many people without insurance will be reticent to go,
fearing they'll end up with a huge bill they can't afford?

~~~
webninja
Many people with money but without insurance do go and get b*tch slapped later
by their ~$10k-$200k medical bill. It’s a reason why medical debt is the
LEADING cause of bankruptcy in the US.

Many people without money or insurance also go but since they don’t have
assets, they just don’t pay and the hospitals can’t collect on them. So the
hospitals have to raise costs on people with money to pay for people without
money.

The second scenario actually caused a hospital I knew of in Dallas Texas to
close down because it had (according to the locals) “too many illegal
immigrants taking advantage of free healthcare”. Dallas Texas is somewhat
close to the Mexico border.

I personally knew of a vagrant woman with a prior medical issue that bragged
about happily racking up the hospital over a million dollars in expenses after
staying in a hospital bed for a few months. She didn’t express concern about
having to pay for any of it since she doesn’t work. I wasn’t sure how to feel
about that.

I once paid $8k while my health insurance paid $43k when I spent just half a
day in a hospital bed in Colorado after I fell and broke a bone.

~~~
TMWNN
>Many people with money but without insurance do go and get b*tch slapped
later by their ~$10k-$200k medical bill. It’s a reason why medical debt is the
LEADING cause of bankruptcy in the US.

Only 4% of US bankruptcies are because of medical bills
[https://www.washingtonpost.com/blogs/post-
partisan/wp/2018/0...](https://www.washingtonpost.com/blogs/post-
partisan/wp/2018/03/26/the-truth-about-medical-bankruptcies/) . A tipoff that
[insert large percentage here] of bankruptcies aren't actually because of
medical costs is that only 6% of bankruptcies by those without health
insurance are because of that cause. The biggest cause of bankruptcies is lack
of income, which health insurance doesn't affect.

~~~
webninja
My citation says 66% of US Bankruptcies are tied to medical issues. Which of
our citations is right?

[https://www.google.com/amp/s/www.cnbc.com/amp/2019/02/11/thi...](https://www.google.com/amp/s/www.cnbc.com/amp/2019/02/11/this-
is-the-real-reason-most-americans-file-for-bankruptcy.html)

You’re quite clever in saying that bankruptcies are caused by lack of income.
I suppose more income would solve 100% of bankruptcies lol

~~~
TMWNN
>My citation says 66% of US Bankruptcies are tied to medical issues.

Your citation says

>A new study from academic researchers found that 66.5 percent of all
bankruptcies were tied to medical issues —either because of high costs for
care _or time out of work_.

(My emphasis.) In other words, people going bankrupt because health problems =
lack of work = lack of income. That does not contradict my citation which
states that 4% of US bankruptcies are because of medical bills; that is, bills
for health care treatment exceeding available income.

Your article goes on to quote a study author who carefully elides the
difference between the two. Oh, by the way, he is a prominent proponent of
Medicare for All! Imagine that.

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Zaskoda
It's interesting that all of the current activity is speculation and the
actual impact of supply chain disruption really hasn't started to hit yet.
Given that we're at record levels of corporate debt, I would think we are
likely to see a lot of ripples.

~~~
nugget
Isn't this one utility of free markets, to be a source of predictive consensus
about what is likely to happen in the future?

~~~
K0SM0S
Yes, the prevailing assumption is that "everything is factored in price",
including all the irrational (like some aggregate of our prediction of the
future, which includes investors thinking like OP).

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gdubs
With interest rates already so low, people are sure putting their hopes into
monetary policy and another round of quantitative easing.

This would usually be a good time to talk about fiscal stimulus options.

~~~
to11mtm
Ehhhhh You have to be careful with that.

The market is a fickle beast; there's a chance that a stimulus too early may
make future stimulus less effective, since "it didn't work earlier".

~~~
pbourke
I think they should be planning for a substantial fiscal stimulus. Something
like a temporary expansion in medicare, guaranteed free testing, etc. A
temporary expansion in funds for paid sick time. Expansion of unemployment
benefits.

Or just say fuck it and cut people checks every month for a while.

Plan to have these ready in case they're needed. Health-related ones can
probably be activated soon (esp testing).

Chance of any of this happening: 0%.

~~~
brettproctor
Hong kong already giving out $1,200 to each resident:
[https://fortune.com/2020/02/26/hong-kong-economy-stimulus-
ca...](https://fortune.com/2020/02/26/hong-kong-economy-stimulus-cash-
handout/)

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jdkee
FTA:

“ We also expect some institutional investors to start buying the dip on
expectation of fiscal and monetary stimulus, virus spread being more contained
in the West versus China due to the timely response from the respective health
authorities . . .”

That seems overly optimistic as the U.S. has tested about 500 persons as of
03/01 per the CDC.

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tempsy
I ended up saving my investment portfolio buying put options on the S&P and
getting my portfolio to a yearly high even though my stock holdings dropped in
value.

In times like this hedging is an extremely useful tool.

~~~
nostromo
Maybe. Or this will be another V event like Christmas 2018 and you'll have
lost money buying an unnecessary hedge.

If you need the money in 2020, hedging makes sense. If you don't, don't.

~~~
tempsy
I took profits already so left with a smaller hedge.

Definitely will not lose more than I would’ve if I had done nothing, even if
it goes to 0, which is unlikely given the high volatility.

~~~
benmanns
Implied volatility on one week puts is around 60% right now. Downside
protection is very, very expensive, even if it does work sometimes.

~~~
AznHisoka
Hedging is only effective when you don't need it. Sort of like home insurance
- you don't buy it when you house is already burnt down - the premiums will
skyrocket and it doesn't do you any good.

Last week, and Monday afternoon was probably the last opportunity to buy hedge
at a decent value.

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baby
fear is indeed spreading faster than any disease here.

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rwmj
Can anyone explain why the Japanese Yen is seen as a "safe haven currency"?

~~~
webninja
Because the Japanese Yen is one of the 5 reserve currencies that make up the
Special Drawing Rights (SDRs) of the International Monetary Fund (IMF). It
makes up 8% of an IMF SDR.

IMF SDRs are important because all of the central banks hold a bunch of them.

The Yen is not weighted higher because Japan’s debt is quite high compared to
it’s GDP and Japan could try to print it’s way out of it’s debt. The Yen is
not weighted lower because they’re fortune enough to be able to print their
way out of their debt if need-be compared to many other countries that hold
debt in non-domestically denominated currencies.

That’s the best answer I can come up with.

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hogFeast
We will either melt up tomorrow (which is basically inevitable at some point
given historical performance) or we will start recovering.

Just based on the data I am seeing, last week was a turning point. If things
get worse this week, then we will move lower again, but...right now, it
doesn't look like likely.

~~~
jameslevy
What is the functional difference between a melt up and recovering? Don't they
both imply an increase in asset prices with different reasonings? What would
indicate one versus the other?

~~~
nostromo
Christmas 2018 was a melt up.

You had a case where the market felt like it was in freefall. People piled
into puts and some panicked longs sold their portfolios and sat on cash.

Then, when it was clear the market had stopped falling and was moving up
quickly, cash hoarders suddenly piled back into the market in a panicked
attempt of buying the dip. Two weeks or so and the market was in an identical
place.

People that sold paid taxes on their gains, a huge hit to any portfolio.
Everyone that held was better off.

~~~
cycrutchfield
This time feels quite a bit different from Christmas 2018. We have not yet hit
rock bottom.

~~~
hogFeast
lul

