4 ms·

Hopefully the collapse in lobster sales is just an isolated example in a relatively small sector of the economy, and not a portend of things to come. If more c

by cs702 7y ago

Hopefully the collapse in lobster sales is just an isolated example in a relatively small sector of the economy, and not a portend of things to come. If more companies are forced to shut down or cut/postpone spending in response to sharp drops in revenues, their suppliers and employees will react by cutting or postponing their own spending, leading yet others to do the same, in the worst case fueling a sudden and self-reinforcing feedback loop of global contraction in economic activity. It's possible that stock markets worldwide are now pricing such a scenario. Let's hope it doesn't get that bad. But hope is not a plan. Please make sure you're well positioned to survive a sharp economic downturn, just in case! See also: https://medium.com/sequoia-capital/coronavirus-the-black-swan-of-2020-7c72bdeb9753 https://medium.com/sequoia-capital/coronavirus-the-black-swa...

toomuchtodo 7y ago
The US Fed's actions recently (emergency meeting, 50 bps rate cut [1], futures markets anticipating a 89% chance of a 75 bps cut in March and a 59% chance of a cut to 0% in April [2]) seem to indicate that these events are "canaries in the coal mine"; policymakers and central banks are already seeing current and forward looking data ahead of what is publicly available indicating an economic contraction is in progress. I know the Fed has access to electronic payment data (credit card transactions) in the US through an agreement with those networks, and uses that info for decisioning (among other data sources not publicly available). Also, 10 year treasuries are at a record low today below 0.7% [3]. This is unheard of, and an indicator that capital markets are seeing an unprecedented flight to safety [4]. Not intended to be alarmist, these are simply observations (although I heard someone say very recently, "the bond market is basically signaling that all hell is going to break loose."). It appears macro econ policy folks are trying to engineer a soft economic landing, but monetary policy only goes so far. Be prepared, make good personal finance choices in the near term. [1] https://www.reuters.com/article/us-usa-fed/in-an-emergency-move-u-s-federal-reserve-cuts-interest-rates-to-battle-coronavirus-idUSKBN20Q22F https://www.reuters.com/article/us-usa-fed/in-an-emergency-m... [2] https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html https://www.cmegroup.com/trading/interest-rates/countdown-to... [3] https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx https://www.marketwatch.com/investing/bond/tmubmusd10y?count... [4] https://en.wikipedia.org/wiki/Flight-to-quality https://en.wikipedia.org/wiki/Flight-to-quality
- joering2 7y ago
  Thank you. Whats your opinion re personal prepardness in terms of your financials? Leave cash in bank? Withdraw some? Withdraw plenty? Keep it in USD or convert to something like Euro. Or buy large quantities of bullion? If so - “less better” like palladium bars or “more better” like silver coins at low value per coin.
  - toomuchtodo 7y ago
    Don't lose your job. Strengthen your professional network, ensure you can land somewhere else rapidly if your role evaporates. Keep at least 6 months expenses in an FDIC insured savings account (although if you haven't done this already, it's too late to liquidate investments to have those cash reserves on hand without locking in losses assuming you've been invested during recent high volatility). Keep cashflow positive as much as possible, don't incur debt needlessly. Converting to other currencies is going to incur a currency risk that is unlikely worth hedging at such a small scale. I wouldn't go so far as to keeping cash on hand beyond what you'd normally have; if things get that bad, cash will be your least concern. ATM card access is sufficient. Disclaimer: I am not your certified financial planner/manager, but I do manage the finances and assets of others gratis. This advice is the same advice I practice myself.
- joe_the_user 7y ago
  It's not that common shocks to an economy to have a permanent effect. Businesses and investors understand that the event will be temporary, some businesses may shut down during the event but once the event ends, the pent-up demand it generates and allow spending on recovery, tends to more than compensate. That said, the economy was an extremely fragile condition before all this began so this might be an exception.
  - deleted 7y ago
    [deleted]
  - semi-extrinsic 7y ago
    For many of the things affected by the coronavirus (events, going to restaurants, going on holiday etc), you basically don't aggregate any pent-up demand. People won't take twice as much holidays next year. It's tricky to argue for the recovery on that.
cmurf 7y ago
Flybe has collapsed, saying coronavirus was the last straw. And at least one analyst says there will be more in 2020. https://www.bbc.com/news/business-51748139 https://www.bbc.com/news/business-51748139
- thinkingemote 7y ago
  Almost all airlines are operating on the line. I think we will see many more go out of business. Budget airlines because no vacations and scheduled airlines because no business travel. Only the larger ones would survive based on bank relationships.
- mprev 7y ago
  To be fair, Flybe was on borrowed time. It feels like Coronavirus was a fig leaf for poor management and the owners wanting the UK government to give a loan rather than them investing in their own business. That’s not to say this virus isn’t affecting the economy but the government’s decision not to offer a loan is what pushed Flybe over.
mmcgaha 7y ago
On the island where live, the local fishermen had a below normal haul and the co-op was not paying well per pound, so 2019 was already a bad year. I also understand that many of the fishermen have extended themselves for larger boats and more traps. With the decreased demand, these things will add up to lost boats/homes/livelihoods. Without a doubt, this will have an impact beyond the immediate fishing industry.
abraxas 7y ago
Or the panic could be a great boost to the ocean ecosystems. Just like WWII was because fishing boats were afraid to leave ports lest they get caught in cross fire.
- chrisseaton 7y ago
  > Just like WWII was because fishing boats were afraid to leave ports lest they get caught in cross fire. Just the cross-fire? Weren't they also being directly targeted themselves?
  - kortilla 7y ago
    Probably meant cross-fire in the colloquial sense more than the literal one. The ocean is indeed pretty big and it would be hard to get accidentally caught in crossfire.
allovernow 7y ago
Long term T-notes are looking really pessimistic right now. https://www.cnbc.com/2020/03/06/10-year-treasury-yield-falls-below-0point83percent-as-coronavirus-rocks-markets.html https://www.cnbc.com/2020/03/06/10-year-treasury-yield-falls...
pvaldes 7y ago
We in Spain would gladly buy all your surpluss lobsters at reduced price, but there is a small problem with a certain US ban to our spanish olive oil also, because some issue about airplane companies figthing, so... All is like orange agent poured over the economy wherever you look.
- staticautomatic 7y ago
  Is the olive thing a so-called "cabotage" issue?
  - pvaldes 7y ago
    Yep
avgDev 7y ago
I am extremely worried about the global economy. The air travel and cruise industries are getting hit really bad. WP had an article today that for travel industry it is becoming the worst crisis since 2001, when the towers went down. There is a talk of tax breaks, and other nations have already enacted tax relief. The prices of air travel in the US are laughable at the moment. I can fly roundtrip from Chicago to LA for $140.

by cs702 7y ago

toomuchtodo 7y ago

The US Fed's actions recently (emergency meeting, 50 bps rate cut [1], futures markets anticipating a 89% chance of a 75 bps cut in March and a 59% chance of a cut to 0% in April [2]) seem to indicate that these events are "canaries in the coal mine"; policymakers and central banks are already seeing current and forward looking data ahead of what is publicly available indicating an economic contraction is in progress. I know the Fed has access to electronic payment data (credit card transactions) in the US through an agreement with those networks, and uses that info for decisioning (among other data sources not publicly available). Also, 10 year treasuries are at a record low today below 0.7% [3]. This is unheard of, and an indicator that capital markets are seeing an unprecedented flight to safety [4]. Not intended to be alarmist, these are simply observations (although I heard someone say very recently, "the bond market is basically signaling that all hell is going to break loose."). It appears macro econ policy folks are trying to engineer a soft economic landing, but monetary policy only goes so far. Be prepared, make good personal finance choices in the near term. [1] https://www.reuters.com/article/us-usa-fed/in-an-emergency-move-u-s-federal-reserve-cuts-interest-rates-to-battle-coronavirus-idUSKBN20Q22F https://www.reuters.com/article/us-usa-fed/in-an-emergency-m... [2] https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html https://www.cmegroup.com/trading/interest-rates/countdown-to... [3] https://www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx https://www.marketwatch.com/investing/bond/tmubmusd10y?count... [4] https://en.wikipedia.org/wiki/Flight-to-quality https://en.wikipedia.org/wiki/Flight-to-quality

joering2 7y ago
Thank you. Whats your opinion re personal prepardness in terms of your financials? Leave cash in bank? Withdraw some? Withdraw plenty? Keep it in USD or convert to something like Euro. Or buy large quantities of bullion? If so - “less better” like palladium bars or “more better” like silver coins at low value per coin.
- toomuchtodo 7y ago
  Don't lose your job. Strengthen your professional network, ensure you can land somewhere else rapidly if your role evaporates. Keep at least 6 months expenses in an FDIC insured savings account (although if you haven't done this already, it's too late to liquidate investments to have those cash reserves on hand without locking in losses assuming you've been invested during recent high volatility). Keep cashflow positive as much as possible, don't incur debt needlessly. Converting to other currencies is going to incur a currency risk that is unlikely worth hedging at such a small scale. I wouldn't go so far as to keeping cash on hand beyond what you'd normally have; if things get that bad, cash will be your least concern. ATM card access is sufficient. Disclaimer: I am not your certified financial planner/manager, but I do manage the finances and assets of others gratis. This advice is the same advice I practice myself.
joe_the_user 7y ago
It's not that common shocks to an economy to have a permanent effect. Businesses and investors understand that the event will be temporary, some businesses may shut down during the event but once the event ends, the pent-up demand it generates and allow spending on recovery, tends to more than compensate. That said, the economy was an extremely fragile condition before all this began so this might be an exception.
- deleted 7y ago
  [deleted]
- semi-extrinsic 7y ago
  For many of the things affected by the coronavirus (events, going to restaurants, going on holiday etc), you basically don't aggregate any pent-up demand. People won't take twice as much holidays next year. It's tricky to argue for the recovery on that.

cmurf 7y ago

Flybe has collapsed, saying coronavirus was the last straw. And at least one analyst says there will be more in 2020. https://www.bbc.com/news/business-51748139 https://www.bbc.com/news/business-51748139

thinkingemote 7y ago
Almost all airlines are operating on the line. I think we will see many more go out of business. Budget airlines because no vacations and scheduled airlines because no business travel. Only the larger ones would survive based on bank relationships.
mprev 7y ago
To be fair, Flybe was on borrowed time. It feels like Coronavirus was a fig leaf for poor management and the owners wanting the UK government to give a loan rather than them investing in their own business. That’s not to say this virus isn’t affecting the economy but the government’s decision not to offer a loan is what pushed Flybe over.

mmcgaha 7y ago

On the island where live, the local fishermen had a below normal haul and the co-op was not paying well per pound, so 2019 was already a bad year. I also understand that many of the fishermen have extended themselves for larger boats and more traps. With the decreased demand, these things will add up to lost boats/homes/livelihoods. Without a doubt, this will have an impact beyond the immediate fishing industry.

abraxas 7y ago

Or the panic could be a great boost to the ocean ecosystems. Just like WWII was because fishing boats were afraid to leave ports lest they get caught in cross fire.

chrisseaton 7y ago
> Just like WWII was because fishing boats were afraid to leave ports lest they get caught in cross fire. Just the cross-fire? Weren't they also being directly targeted themselves?
- kortilla 7y ago
  Probably meant cross-fire in the colloquial sense more than the literal one. The ocean is indeed pretty big and it would be hard to get accidentally caught in crossfire.

allovernow 7y ago

Long term T-notes are looking really pessimistic right now. https://www.cnbc.com/2020/03/06/10-year-treasury-yield-falls-below-0point83percent-as-coronavirus-rocks-markets.html https://www.cnbc.com/2020/03/06/10-year-treasury-yield-falls...

pvaldes 7y ago

We in Spain would gladly buy all your surpluss lobsters at reduced price, but there is a small problem with a certain US ban to our spanish olive oil also, because some issue about airplane companies figthing, so... All is like orange agent poured over the economy wherever you look.

staticautomatic 7y ago
Is the olive thing a so-called "cabotage" issue?
- pvaldes 7y ago
  Yep

avgDev 7y ago

I am extremely worried about the global economy. The air travel and cruise industries are getting hit really bad. WP had an article today that for travel industry it is becoming the worst crisis since 2001, when the towers went down. There is a talk of tax breaks, and other nations have already enacted tax relief. The prices of air travel in the US are laughable at the moment. I can fly roundtrip from Chicago to LA for $140.