
Stocks sharply rebound as markets rally on expectations of government bailout - baybal2
https://techcrunch.com/2020/03/13/stocks-sharply-rebound-as-markets-rally-on-expectations-of-government-bailout-testing/
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cletus
Have you ever seen a child whose parents make nothing but empty threats?
Shock, horror, the cold figures it out pretty quickly and those threats lose
any value. So there are no consequences.

I feel like this is the situation financial markets are in now. Bailout after
bailout. So markets have learned that they can take big risks (the bigger the
better) because they can enjoy the rewards without any of the risk.

Now there are special circumstances here but there are always special
circumstances. Post-1989 Japan should’ve taught people you have to let banks
fail when they’re insolvent.

Some companies made what turned out to be bad decisions would otherwise fail.
This argument that not bailing them out will make the recession worse gets pet
tired after you hear it for the 100th time.

Whatever the case, I’d bet money on the stock market dropping significantly
over the next two weeks irrespective of these prop ups s as the reality sets
in that you just can’t contain a disease where the contagious routinely are
asymptomatic and the number of cases continues to climb.

Some will point to China’s ability to flatten the curve in Wuhan and but they
do this by essentially combining everyone to their homes in a way that’s
simply not possible in the US.

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anthony_r
_Stuff 's so bad that bailouts are needed, so it's actually good._

And historic bailouts at that: the Fed announced a $1.5T cash injection over
three days. Up to that point their entire balance sheet after QE1, QE2, QE3
and the not-QE is was around $4T. All of TARP in 2008 was $400B.

Also, the VIX at 65 implies a ~4% daily change: 65% / sqrt(252 trading days in
a year = 4.1%.

~~~
busterarm
Apples and oranges.

This has been entirely focused on the repo market, which the fed has been
intervening and providing liquidity on an ongoing basis since like September.
That's a major problem but it's not "here free money" but short term loans.

It's an entirely different kind of QE but it has been ongoing for 6 months now
-- they just raised the limits.

~~~
chasd00
The reaction here over the last couple days to the Fed's move has been
disappointing to say the least. No one seems to care about educating
themselves why the move was made and instead proclaim a "wall street
bailout!", "we have 1.5T for the market but not for single payer
healthcare!?".

Half seem to not even be aware of the Federal Reserve's job in the economy or
even that it's not run by the government.

The level of expertise and knowledge on Hackernews for some subjects is
incredible but for sure not on this topic

~~~
busterarm
Turns out that even extremely intelligent people believe obviously stupid
things. Believing that we're immune to it is a trap that many in this industry
fall into.

The number of times I've heard colleagues argue for things that are ignorant,
illegal or unethical in my career is too many to count at this point.

~~~
anthony_r
I think nobody thinks this particular thing is unfair. It's a move of
desperation. It's much more ridiculous than unfair, shows you bad things
really are.

The borrow-buyback scheme that has been going on for years now is highly
unethical and will probably blow up, though. I'm short on corporate credit for
this reason.

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chasd00
it's going to swing wildly over the next 90 days. There's no point in
publishing articles on market moves during trading hours because they're
inaccurate 5 minutes after you press "publish".

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almost_usual
There are too many unknowns regarding the economy and virus to really
understand what’s going on.

I think we’re going to enter a period of “virus time”. When we’ll have enough
understanding of both the virus and economy to see the economy reduced but
stable.

Earnings for Q1 and Q2 should be telling.

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aazaa
Bear market rallies can be explosive. It's part of the capital-destruction
process.

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cs702
baybal2: I flagged your post because it seems way off-topic to me. Does a
short update about day-to-day stock-market swings really belong on HN? Or
would it be more at home at say, a Yahoo! Finance chatroom or a subreddit
about stock market conditions? Please consider deleting the post.

PS. FWIW, if you had linked, say, to a meatier discussion of central bank
interventions and their motivations, or about the potential impact of Covid-19
on the global economy, I would not have flagged your post.

~~~
jjgreen
Nice for people to give their reasoning for flagging an article.

~~~
cs702
Thank you. I do _not_ enjoy flagging.

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PenguinCoder
Can't come up with 1.5T for healthcare or student loans, but business start
actually losing money and all of a sudden we find money to help them out !
Think of the investors!

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ceejayoz
[https://en.wikipedia.org/wiki/Dead_cat_bounce](https://en.wikipedia.org/wiki/Dead_cat_bounce)

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mgh2
Sounds like the 2008 crisis (700 billion). But the virus and fear is ongoing
and real...

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chasd00
You're thinking of TARP which was a federal government thing and didn't even
involve the Federal Reserve. Further, TARP was used to purchase toxic assets
and not over night lending. So, no, it sounds nothing like 2008.

[https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program)

edit: don't mean to be a jerk, i'm taking a 3 day break from hacker news
starting now.

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peteradio
This should be marked 1 hour old, not really relevant anymore.

~~~
hw
TC ran out of articles to publish?

