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Post by the Scribe on May 5, 2020 7:18:30 GMT
This began before the coronavirus. The virus exposed and broke the bubble. This has been predicted since Trump found his way into office thanks to the GOP, their money hoarding handlers (the 1%) and their election theft machinery.
A day that will live in infamy! Federal Reserve Building in Washington
Wall Street On Parade’s
Ongoing Series on the Federal Reserve’s
2019/2020 Bailout of Wall Street
wallstreetonparade.com/9426-2/
The Fed Intervened in Overnight Lending for First Time Since the Crash. Why It Matters to You.By Pam Martens and Russ Martens: September 18, 2019 ~
Federal Reserve Chairman Jerome Powell Gives Testimony Before the House Financial Services Committee on February 27, 2018
Yesterday felt a little like that scene from the 1946 movie “It’s a Wonderful Life” starring Jimmy Stewart. There’s a run on Stewart’s bank because his absent-minded Uncle Billy loses the cash he was sent off to deposit on behalf of the bank. The bank examiners discover there’s money missing and rumors spread.
The rumors that spread yesterday were not that money was missing at a Wall Street bank but that liquidity was missing. It had dried up to the point that the major Wall Street banks could not, or would not, handle the demand for loans called overnight repurchase agreements (repos) that were coming their way. (Repos are a short-term form of borrowing where corporations, banks, brokerage firms and hedge funds secure loans by providing safe forms of collateral such as Treasury notes.)
The oversized demand for the repos and the lack of available funds drove the overnight repo rate to an unprecedented high of 10 percent at one point. Typically, the overnight repo rate trades in line with the Federal Funds rate, which is currently targeted at 2 to 2.25 percent by the Fed.
The Federal Reserve Bank of New York (always there to rescue Wall Street from its hubris; see “Related Articles” below) had to jump in and infuse $53 billion into the repo market. It has promised to make another $75 billion available this morning.
Here’s what should concern every engaged American: As of June 30 of this year, the four largest banks on Wall Street (which are allowed to own Federally insured commercial banks as well as stock, bond and derivative gambling casinos known as investment banks) held more than $5.45 trillion in deposits. The breakdown is as follows: JPMorgan Chase holds $1.6 trillion; Bank of America has $1.44 trillion; Wells Fargo has $1.35 trillion; and Citibank is home to just over $1 trillion.
A number of excuses have been offered by the business press to explain why the New York Fed had to ride to the rescue yesterday but the very simple question is this: how can four banks with $5.45 trillion in deposits not be able to cough up $53 billion in overnight loans.
The excuses go like this: corporations had to pay their corporate taxes and drew down large amounts from the banks. But corporations paying their taxes is not some new problem that just fell out of the sky. These are very old banks that should certainly know how to anticipate a drawdown for corporate taxes. The next excuse is that liquidity at the banks was drained as a result of paying for Treasury securities purchased in last week’s Treasury auction. The major Wall Street banks are all “primary dealers,” which are contractually bound to make purchases in the regular Treasury auctions. But again, this has been going on for decades and sophisticated banks should be able to figure out how to make bids in the Treasury auctions while still leaving themselves with adequate liquidity for their customers.
One of the more reasonable theories is that the backup in interest rates that caused bond prices to tank last week drove an investor stampede out of bonds, forcing the Wall Street banks to buy back large amounts of unwanted bonds from customers, thus further draining their liquidity.
Then there is the problem that these same four banks, together with Goldman Sachs and Morgan Stanley, own 90 percent of the $272.5 trillion in derivatives at U.S. bank holding companies. (See Table 2 in the Appendix of the most recent report from the Office of the Comptroller of the Currency.)
Given the fact that the last time the Fed was intervening in this fashion in the overnight lending market there was a major crisis on Wall Street with century-old iconic names vying for which one would go belly up first, one would have expected to see a serious percentage decline in the share prices of these banks during stock market trading hours yesterday. That didn’t happen. The worst of the bunch was Morgan Stanley, which closed down 1.21 percent.
Unfortunately for taxpayers, who will inevitably be on the hook again if things so south on Wall Street, everything is always fine on Wall Street – until it isn’t. And when Wall Street really begins to unravel, it does it at lightning speed.
This Fed intervention means that all eyes will be on the Federal Reserve’s announcement at 2 p.m. today as to whether it is cutting its Fed Funds target rate further – which President Donald Trump has been demanding in Tweets for months. The Chairman of the Federal Reserve, Jerome (Jay) Powell is slated to hold a press conference at 2:30 p.m. today, where he is certain to be grilled over what’s going on with repo rates.
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Post by the Scribe on May 5, 2020 7:28:18 GMT
for reference:
Nightly Business Report – September 17, 2019
Nightly Business Report
34.2K subscribers
Tonight on Nightly Business Report, FedEx warns that trade uncertainty and a weakening global economy are hurting its business.
Plus, Amazon hangs out the help wanted sign.
Nightly Business Report – September 18, 2019
Nightly Business Report
34.2K subscribers
Tonight on Nightly Business Report, the Fed cuts interest rates but policy makers are divided on the outlook.
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Post by the Scribe on May 5, 2020 8:20:58 GMT
Here is the OTHER date to remember: Dec.22, 2017 One of the biggest transfers of wealth from the middle class to the 1% in world history.
REMEMBER THE LAUGHS, SMIRKS AND SALIVATION ON THE FACES OF THESE CONSERVATIVES AS THEY ROBBED OUR COUNTRY BLIND. TIME HAS PROVEN THIS STATEMENT TO BE CORRECT.
conservatism.freeforums.net/thread/138/trumpublican-budget-taxes-reform-scam?page=1
Republicans Celebrate Tax Bill With Trump at WH
Republican-led Congress passes sweeping tax bill
Senate Majority Leader Mitch McConnell, center, and other Senate Republicans discuss passage of the GOP's $1.5 trillion tax plan after the vote.Michael Reynolds / EPA
Dec. 19, 2017, 12:29 PM MST / Updated Dec. 20, 2017, 12:54 PM MST
By Benjy Sarlin
WASHINGTON — Congress approved a sweeping $1.5 trillion tax bill on Wednesday that slashes rates for corporations, provides new breaks for private businesses and reorganizes the individual tax code.
The Senate passed the GOP bill early Wednesday morning and the House then voted on it for a second time to fix technical problems with the legislation, the final step before it's sent to President Donald Trump for his signature. No Democrats in either the House or Senate backed the measure.
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Post by the Scribe on May 5, 2020 8:35:17 GMT
Trump's latest crime spree: With pandemic as cover, he's going for epic corruptionwww.salon.com/2020/04/08/trumps-latest-crime-spree-with-pandemic-as-cover-hes-going-for-epic-corruption/
Trump knows he's in trouble, and wants to fire everybody who might stop him looting the place before November
AMANDA MARCOTTE
APRIL 8, 2020 5:20PM (UTC)
Donald Trump is on a search-and-destroy mission to remove anyone who might get in the way of him committing more crimes or using the federal government as a personal piggybank for himself and his friends. And he's using the coronavirus pandemic as a cover, knowing that both the media and Congress are too busy dealing with the crisis to prioritize Trump's obsession with maximizing his level of criminality and corruption.
Last week, with the media preoccupied with rising death tolls and exploding unemployment figures, Trump fired Michael Atkinson, the inspector general for intelligence services, as a clear cut act of revenge against Atkinson for reporting the original Ukraine whistleblower complaint to Congress last summer. That complaint, of course, exposed Trump's criminal conspiracy to blackmail Ukrainian President Volodymyr Zelensky into a phony investigation of former Vice President Joe Biden, who is now certain to be Trump's Democratic opponent in the 2020 election. (Bernie Sanders officially suspended his campaign on Wednesday.) The result was Trump's impeachment by the House of Representatives, which should have led to his removal from office — if Senate Republicans weren't willing to sign off on any crime he wishes to commit.
Trump described Atkinson as "not a big Trump fan, I can tell you," as if that justified firing an inspector general who fulfilled his legal responsibility to report a president's potentially criminal actions to Congress.
On Tuesday, Trump removed another inspector general, Glenn Fine, who oversees the Defense Department. Fine was originally set to chair the committee that oversees how the $2 trillion in coronavirus relief funds will be disbursed. Trump would like to replace him with Jason Abend, a Customs and Border Protection official. This move, coupled with reports that Trump is appointing Brian Miller, one of his personal lawyers — who has publicly sneered at the idea that Congress should have the power to hold the executive branch accountable— as the special inspector general overseeing stimulus spending should make the president's intentions clear.
As Democrats have warned, Trump clearly wants to treat the stimulus fund, which is supposed to mitigate the nation's economic collapse, as a slush fund for his rich supporters. One by one, he's eliminating anyone he perceives as an obstacle to that goal.
During Monday's propaganda rally and/or press briefing, Trump lashed out angrily when ABC News reporter Jon Karl asked him about a report from the Health and Human Services inspector general that detailed Trump's massive failures to help the medical community deal with the onslaught of COVID-19 patients.
"Did I hear the word 'inspector general?" Trump ranted. "Could politics be entered into that?"
Translating Trump's incoherent ramblings isn't fun for anyone, but his implication was clear — any inspector general who wasn't hand-picked by him is motivated by "politics" and therefore can't be trusted. What HHS inspector general Christi Grimm had in fact concluded was that Trump's handling of the coronavirus crisis has been incompetent, which is about as controversial as observing that cats have whiskers.
Trump's attack on Grimm sends the same message as the other two firings: Anyone who tries to criticize Trump, much less stop him from committing crimes or treating government money as a slush fund, is in danger of losing their job.
Indeed, it's starting to look like the purge of inspectors general — and their replacement with Trump cronies who will look the other way while he wets his beak or nourishes his allies — has just begun. Late on Tuesday, Real Clear Politics White House correspondent Susan Crabtree tweeted that "Trump is firing 7 IGs" in one fell swoop, and "wants his own people in those positions now."
Crabtree tried to put a positive spin on this, in the spirit of RCP's obvious Republican tilt. But Trump — who would face any number of criminal indictments if he weren't protected by his office — deserves no benefit of the doubt.
On Tuesday, Trump appeared to confirm the rumor during yet another of his tedious camera-hogging sessions disguised as public health briefings. He claimed there are "reports of bias" involving inspectors general and his team would be "putting in seven names. I think it was seven."
"President Trump is abusing the coronavirus pandemic to eliminate honest and independent public servants because they are willing to speak truth to power and because he is so clearly afraid of strong oversight," Senate Minority Leader Chuck Schumer said in a statement.
That's all true, but could be considered a massive understatement, considering what we've seen of Trump's behavior over the past three and a half years. There's no telling what kind of criminal and corrupt behavior he plans to get up to between now and the presidential election, and what he fears that honest inspectors general might tell Congress if they aren't driven out and replaced with Trump flunkeys.
Trump has had only three goals as president: 1) Do as much racist crap as possible; 2) work as many angles as possible to enrich himself and his corrupt allies; and 3) Get re-elected, even if it means massive cheating or illegal interference on a previously unimaginable scale.
Having honest inspectors general embedded in government agencies poses a threat to all three goals, but especially to Nos. 2 and 3. (Sadly, entirely too much of Trump's racist agenda is legal, or has been rendered so by a Supreme Court controlled by Republican hacks.)
That Trump is making his big move now isn't a surprise.
For one thing, the coronavirus and the resulting economic collapse are obviously threatening his chances of winning in November. That's only going to escalate his interest in finding ways to use the powers of his office to cheat in the election, which is what he was impeached for doing in the first place.
But even if Trump loses the election, he will want to grab as much cash for himself and his friends as he can on his way out the door. (Even assuming he accepts the results and will leave office voluntarily.) That $2 trillion stimulus package is clearly quite the temptation for Trump, and there can be no doubt that looting it is a major goal. There are provisions in the bill meant to prevent Trump and his close allies from siphoning off stimulus funding, but making sure those provisions are observed requires vigorous oversight — which is obviously and blatantly what Trump doesn't want.
That means Congress and the media are going to have to step up and do more — which is a big ask, in the middle of a pandemic. The coronavirus is interrupting the ability of Congress to do its work, and removing the inspectors general who are supposed to inform Congress of presidential wrongdoing only makes the problem worse.
The media is already getting hit by reduced advertising revenue — even though readership and viewership are up with so many people stuck at home — and is mainly focused on getting out accurate information about the pandemic, rather than digging deep into Trump's corruption. Even reporters who do that work can expect fewer people to read it or elevate it on cable news or social media, because other stories will seem more pressing.
In a statement released after his firing, Atkinson urged government contractors and employees to report "unethical, wasteful, or illegal behavior in the federal government," because the "American people deserve an honest and effective government."
"Please do not allow recent events to silence your voices," he concluded.
But of course that's exactly what Trump, an opportunistic weasel to the core of his being, hopes will happen during what could be his last year in office. People are dying and losing their jobs, but our president's principal focus is on grabbing as much silverware as possible before he's evicted from the White House.
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Post by the Scribe on May 5, 2020 8:49:51 GMT
Wait until ALL STATE AND FEDERAL RETIREMENT PROGRAMS GO BUST AND THE CHECKS STOP. Wait until the coronavirus slashes property prices by 30 percent or more. Stagflation, hyperinflation
Just remember what party (once again) was in charge when the economy and our lives failed.
We Are Facing Economic Collapse on Top of a Pandemic. What We Do Now Matters.truthout.org/articles/we-are-facing-economic-collapse-on-top-of-a-pandemic-what-we-do-now-matters/ A view of an empty seating area in Times Square during the coronavirus outbreak on March 17, 2020, in New York City.
JOHN LAMPARSKI / GETTY IMAGES
s the COVID-19 virus spreads, the U.S. economy has begun to crumble like a house of cards.
The sudden collapse of the economy is revealing how the “great economy” that Donald Trump has been boasting about on Twitter for the past three years was in fact a mirage caused by wild Wall Street rallies, and boosted by Trump’s massive tax cuts and deregulatory efforts, which rolled back all kinds of environmental standards with total disregard for the impact on public health and the climate crisis.
As the shutdowns orchestrated to stop the spread of the novel coronavirus create financial ruin for individuals and businesses across the country, the economy is “teetering on collapse,” points out Robert Pollin, distinguished professor of economics and co-director of the Political Economy Research Institute at the University of Massachusetts at Amherst, in this exclusive interview for Truthout.
But Pollin also argues that — with the right decisions — we have the means not only to rescue the complete collapse of the economy, but also to move in the direction of a just, equitable and sustainable socioeconomic order. The following transcript has been lightly edited for length and clarity.
C.J. Polychroniou: Can you give a succinct summary of the myths and realities of Trump’s economy from the day he took office and up until the outbreak of COVID-19?
Robert Pollin: Throughout his presidency, until basically last week, Trump’s mantra on the economy is that conditions have never, ever been better. This was always a ludicrous assertion. But as distinct from many other of Trump’s assertions, this one was based on at least some slivers of evidence, with the two critical slivers being the stock market and the unemployment rate. It is true, first of all that, as of last July, the U.S. stock market had reached an historic high, with the S&P 500 index exceeding 3,000 for the first time. It is also true that the official unemployment rate had hit a record low of 3.5 percent as of February. According to the Bureau of Labor Statistics, the last time the official U.S. unemployment rate was below 3.5 percent was 1953.
But the stock market rise reflected, more than anything, a combination of (1) companies deliberately inflating their own stock prices through buying back their shares on the open market; and (2) the reinforcement, with Trump, of the upward distribution of income and wealth that has proceeded now for 40 years under neoliberalism. For example, with Trump’s signature across-the-board tax cuts in 2017, the benefits for the poorest 20 percent of the population amounted to an average of $100 while the richest 1 percent received $55,000. Over the next decade, the poorest 20 percent would then see their taxes go up while the richest 1 percent would benefit from further cuts.
Maybe this time we can successfully make a case that at least a significant share of the financial markets need to be nationalized, not just bailed out.
With the historically low official unemployment rate, if we add up the people who were working part-time but wanted full-time jobs as well as those who have temporarily given up looking for work, plus we account for the share of people who have dropped out of the labor force following the 2007-09 Great Recession, we are now at a more realistic unemployment rate of nearly 10 percent. This is about 16 million people, roughly equal to the entire populations of New York City, Los Angeles and Chicago. On top of this, wages had only begun to start inching up with the unemployment rate at its historically low level. This is after 40 years of most working people experiencing falling or stagnating real wages.
In short, our current economy was never anything close to the halcyon image projected by Trump until this week. In any case, all of those rosy descriptions are now a thing of the past.
How has the novel coronavirus affected the U.S. economy? Do you think there are both short-term and long-term impacts?
The coronavirus is devastating the U.S. economy as I write. I am certainly not focused here on the stock market having fallen by roughly 20 percent since its peak on February 14. More to the point: If we add up current employment in the hospitality and leisure industries — including restaurants, bars and hotels — plus retail trade, plus transportation, we are talking about 38 million jobs. That is roughly 25 percent of all employment in the U.S. economy. Now let’s assume, conservatively, that half of these people are facing layoffs or at least extended furloughs. That’s close to 20 million people. Unless the government does something dramatic, this, by itself, could easily raise the official unemployment rate above 10 percent in a matter of weeks, i.e. to a point higher than the worst phase of the Great Recession. The effective percentage of people experiencing serious employment stresses — i.e. lost paychecks from furloughs or reductions in hours — could easily be at least double that figure, i.e. 20 percent or above. These back-of-the-envelope calculations do not even take account of the fact that government tax revenues are plunging with people losing income and cutting back on spending. As governments lose tax revenues, how are they then going to find the funds to pay teachers, firefighters, police officers and even health care workers?
The market volatility that is occurring now is reflecting the expectation that the real economy is teetering on collapse.
All of these are not merely “short-term” events. They are immediate effects, happening right now, at a breakneck pace. There will also be deep longer-term effects. But what exactly these will be will depend on how we intervene politically now in handling the crisis. For example, the Federal Reserve has already announced that it is prepared to bail out Wall Street yet again, under the same type of interventions that they conducted during the 2007–09 crisis. But maybe this time we can successfully make a case that at least a significant share of the financial markets need to be nationalized, not just bailed out. A wholesale financial market bailout means that Wall Street continues to operate under a perverted variant of socialism that has emerged under neoliberalism — i.e., Wall Street’s risks are borne by society as a whole while their profits remain all for themselves.
The stock market rallied big time last week after Trump’s announcement of a national emergency on account of COVID-19. But then the market plunged again last Monday, experiencing its worst day since the 1987 crash. How significant are such stock market swings from a macroeconomic standpoint?
Whatever happens with the stock market does not, by itself, cause the economy to perform better or worse. The fact is, as I noted above, the stratospheric level that the stock market had reached before the coronavirus took hold resulted from both market manipulations by corporations buying back their own shares, plus the upward redistribution of income. So an orderly, long-term decline in the stock market would be a good thing if it meant a reduction in market manipulation and a reversal of the long-term rise of inequality. But the market volatility that is occurring now is reflecting the expectation that the real economy — which includes people’s incomes, jobs, pensions and health care coverage, not just stock prices — is teetering on collapse. If, for example, the official unemployment rate were to rise to 10 percent or above, there is no amount of fancy stock-buyback schemes, or further tax cuts for the rich, that can compensate for an overall decline in economic activity of this magnitude. An economy with an official unemployment rate of 10 percent will produce huge falls in real productive investments in the economy by private businesses — i.e., people opening new businesses or purchasing equipment and hiring people to expand their existing business operations. When this happens, stock market prices will continue falling, as one indicator of what is happening in the real economy.
Given that we are clearly in the midst of a public health and economic crisis alike, what realistic measures are there available to policymakers in order not simply to stave off an economic collapse, but also to put the U.S. economy on a truly sustainable and equitable track?
Step one must entail doing everything possible to deal with the public health emergency. That means, effectively, that Medicare for All must be put into operation right away.
Step one must entail doing everything possible to deal with the public health emergency. That means, effectively, that Medicare for All must be put into operation right away, at least until the crisis conditions have lifted. That is, everyone needs to be able to get tested and treated for the novel coronavirus, without facing any kinds of financial concerns whatsoever. That is the only way in which the spread of the virus has a chance of being controlled. Once the crisis has past, it should then have become obvious that Medicare for All needs to be in place all the time. We will have to make that case forcefully after the crisis conditions lift.
Concurrent with ensuring that people get the treatment they need, we must expand our capacity to treat people dramatically and right away. This means creating temporary hospital facilities as needed, for example, in the college dormitories and hotels that are empty now anyway. It means expanding health care staffing by creating jobs for health care workers at all levels who have been unemployed or underemployed, as well as bringing retired health care workers back into the labor force. This won’t happen unless these workers — along with all other health care workers — are offered good pay to take on the enormous challenges they will face.
We then have to make sure that people experiencing income losses have money in their pockets. All workers first, therefore, need to be certain that they will be receiving paid sick leave. Right now, 24 percent of all workers do not have paid sick leave coverage. But this benefit is skewed toward higher-paid workers. Roughly 70 percent of the lowest-paid workers (those in the bottom 10 percent in terms of income) do not have paid sick leave benefits. Yet these workers, are the ones who will be most badly hurt by the coming job losses and furloughs.
Right now, we need to use all available policy tools to the extent necessary to stave off an economic collapse on top of the health care pandemic.
Beyond extending paid sick leave to everyone, the federal government needs to send out checks to everyone, just as George W. Bush did in 2001, after the Wall Street crash that year (which occurred before 9/11). The Bush program included $300-$600 checks for two-thirds of U.S. families. Something in the range of double those amounts — something like $1,500 to $2,000 per family is warranted now, for starters. More is likely to be needed depending on the course of the crisis.
Directly supporting people with money is a far more effective intervention now than the payroll tax cuts being advanced by Trump. For one thing, the payroll tax cuts will dribble out slowly, when we are facing a collapse of people’s incomes through mass furloughs and layoffs that are immediate. With the payroll tax cuts, higher–income people will, again, get more money coming back to them, when what we need are benefits flowing disproportionately to lower–income people, who are facing the most severe income losses. The payroll tax cuts will also not help at all people who are unemployed. We therefore also need to greatly expand unemployment benefits across the board. Businesses should be given tax credits to match their extension of paid sick leave to their workers. They should also receive some form of tax cut or credit to help keep them afloat during the crisis. But using the payroll tax cut as the stimulus tool is dangerous in any case, since payroll taxes are the way we finance Social Security.
All of these measures will, of course, require lots of money, right away. This is at a moment when the federal government’s fiscal deficit, at 4.6 percent of the gross domestic product (GDP), is at a historic high for an economic expansion period as opposed to a recession. Our big federal deficit today is the direct result of the Trump tax cuts for the rich. But we cannot worry right now about how much the deficit increases, at least as a first-order problem. In 1943, in the middle of World War II, the federal deficit rose to nearly 27 percent of GDP. We still have a long way to go to hit that level.
Moreover, if the federal deficit were to rise to anything close to that level, the Federal Reserve can simply buy up the excess supply of U.S. government bonds, what is called “debt monetization” in technical parlance. This enables the government to effectively print money to finance the government interventions necessary to effectively counteract the crisis. I do not favor this approach to government financing under most circumstances, unlike some other progressive economists. But right now, we need to use all available policy tools to the extent necessary to stave off an economic collapse on top of the health care pandemic.
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Post by the Scribe on Jun 12, 2020 1:08:24 GMT
Buy stocks at the close especially on Friday. That is when the day traders and mutual funds are liquidating their holdings. Sooner or later though things will catch up to you when the you know what hits the you know what.Stock market news: Dow plunges 1,861 points, or 7%, for worst day since mid-Marchfinance.yahoo.com/news/stock-market-news-live-june-11-2020-222011316.html?.tsrc=notification-brknews
Emily McCormickYahoo FinanceJune 11, 2020
Stocks dropped by the most since mid-March on Thursday following the Federal Reserve’s monetary policy decision, in which policymakers highlighted the ongoing economic concerns spurred by the coronavirus pandemic and measures taken to contain it.
The Dow dropped 6.9%, or 1,861 points, for its worst day since March 16. The decline marked the fourth biggest point-drop for the Dow on record. The VIX Volatility Index (^VIX), or so-called fear gauge, spiked more than 50%.
“What we’re seeing here is the market taking a breather,” Alex Piré, Seeyond Head of Client Portfolio Management, told Yahoo Finance on Thursday. He cited relatively bearish remarks from Fed Chairman Jerome Powell as partly responsible for telling investors “what the market wouldn’t like to hear. But the economic news that we’re getting has stayed fairly consistent.”
[Click here to read what’s moving markets heading into Friday, June 12] finance.yahoo.com/news/stock-market-news-live-june-12-2020-221717481.html
Additionally, market participants eyed a rise in new coronavirus cases in key states including Arizona, Florida, North Carolina and Texas. Meanwhile, the Labor Department’s weekly report showed another 1.542 million individuals filed new unemployment insurance claims for the week ended June 6, coming down slightly from the prior week’s 1.897 million.
Shares of companies viewed as some of the most set to benefit from easing social distancing measures posted another session of steep declines. Airlines American Airlines (AAL), United Airlines (UAL) and Delta (DAL) each dropped by more than 14% Thursday. Cruise companies Carnival (CCL), Royal Caribbean (RCL) and Norwegian Cruise Line Holdings (NCLH), along with lodging firms Wynn (WYNN) and Hilton (HLT), posted their third consecutive down days.
Zoom Video Communications (ZM) was one of the few gainers, rising by about half a percent. Grubhub (GRUB) shares rose 4.7% after European food delivery platform Just Eat Takeaway announced it was set to acquire the company.
A day earlier, the Federal Open Market Committee’s (FOMC) Summary of Economic Projections indicated the Fed expects a steep 6.5% contraction in real GDP in 2020, with an unemployment rate at 9.3%. However, policymakers expect real GDP to rebound by 5.0% in 2021, with the unemployment rate dropping to 6.5%.
In its monetary policy decision, the Fed projected interest rates would remain near zero through 2022 and telegraphed that its pace of asset purchases would remain at minimum at the current rate.
The decision to keep rates on hold for the foreseeable future given the virus-induced economic damage was widely expected by market participants. And while the Fed stopped short of unveiling yield curve control strategies, as some had speculated would be the case for the central bank to put a cap on longer-term rates, Powell did suggest the FOMC would continue discussing the mechanism going forward.
“Even though [yesterday’s] FOMC meeting was somewhat of a placeholder until more meaningful choices are made in the next few meetings, the outcome was dovish nonetheless,” JPMorgan economist Michael Feroli said in a note. “The Fed kept interest rates steady and the accompanying interest rate forecast ‘dots’ indicate that rates are likely to remain pinned near zero for at least the next two-and-a-half years.
“Moreover, there was unusual unanimity in this expectation as only two participants expect any rate hikes by that time,” he added. “While the dots are individual forecasts, and not a Committee statement, the unusual lack of dispersion in those dots means it should be easier for the Committee to agree to more forceful forward guidance at upcoming meetings.”
—
4:05 p.m. ET: Dow drops 1,861 points in fourth biggest point loss ever
Here were the main moves in markets as of 4:05 p.m. ET:
S&P 500 (^GSPC): -188.04 (-5.89%) to 3,002.10
Dow (^DJI): -1,861.82 (-6.90%) to 25,128.17
Nasdaq (^IXIC): -527.62 (-5.27%) to 9,492.73
Crude (CL=F): -$3.42 (-8.64%) to $36.18 a barrel
Gold (GC=F): +$13.40 (+0.78%) to $1,734.10 per ounce
10-year Treasury (^TNX): -9.5 bps to yield 0.6530%
more: finance.yahoo.com/news/stock-market-news-live-june-11-2020-222011316.html?.tsrc=notification-brknewscommentsIf it Looks Like a 🐻...13 hours ago
Due to massive fed money credit and debt creation, The stock market rose at a 12% to 16% rate for 12 years since the financial crisis. No financial companies were allowed to fail or recessions to occur.. meanwhile GDP output has been increasing at about 2% fir those same 12 years making the stock market ridiculously overvalued by any historical measures. Look 👀 at the pe ratios of stocks on the dow like pg msft ko etc..
Now last September trouble emerged in the markets with banks unwilling to lend to many businesses forcing the fed to enter the REPO market with a vengeance creating tens of BILLIONS in new money each week to support the short term cash needs of corporations. (This is well documented )The highest debt levels in recorded history existed at the government, corporate and individual level (before this pandemic ) which are a drag on future profits for companies and demand for individuals..
The fed thru its zero interest rate policies had inflated the values of the stock, bond and real estate markets enriching the 1%, wall st banks and the well connected and created the conditions for a long lasting depression by it distortions of financial markets. At the same time thru a combination of tax cuts to corporations and individuals and overspending, the us government was running 1 trillion dollar per year deficits..
Now this virus comes into the picture and this gives the fed the reasons to inject 9 trilion more into the economy, about 8 triliion to bail out the toxic debt of wall st banks and hedge funds investors and to keep zombie companies who are walking dead afloat for more time ( by giving them the ability to add more debt to their books ensuring they eventually go bankrupt in the near future )and a paltry 1 trillion for small business and 350 million of us “Common” individuals.
All of this new stimulus money 💰 has been levitating the markets and its rebound is,being reinforced by an increasing number of investors who have never seen a bear 🐻 market and firmly believe stocks always recover losses and go higher.. meanwhile the virus has triggered an end to the massive credit creation bubble created by the fed. Millions of small and medium sized businesses will go bankrupt and hundreds of millions of employees in the us and in China and other countries will permanently lose their jobs and the economy will lose those potential customers for many years..
I see this time period for astute investors to transfer all or most stocks and stock mutual funds to the safety of money 💰 market funds as i see a very long and protracted depression due to the end of credit expansion that was triggered by the virus but caused primarily by the fed along with irresposible tax cuts that have further increased the federal debt..
I see the euphoria of the past few weeks followed by a massive crash of bubble market stock, bond and real estate markets into a very long 1929 like depression with companies loaded with debt cutting dividends and stock buybacks and shocked investors losing 75% or more of their retirement savings because they were brainwashed and conditioned by 12 years of the feds distortions to firmly believe stocks always rise...
In fact i believe that the fed has levitated this market to enable the big money and those in the know to get out of this bubble market virtually unscathed leaving naive newbies and brainwashed conditioned investors holding the bag.. see what starbucks said about the new reality and how much they lost you will realize how precarious a position you are in with stocks in the ionosphere and everyone in denial about the future..
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