5 ms·

To be honest , the market was in dire need for correction, BUT wonder where we will be when companies starts reporting their quarterly results and impact of th

To be honest , the market was in dire need for correction, BUT wonder where we will be when companies starts reporting their quarterly results and impact of that. So far this looked more like a correction than a precursor to the recession. To make things worse, OPEC dropped bombs which spread the wildfire further..

3fe9a03ccd14ca5 7y ago
Oil dropping because an opec monopoly explodes is good news for most of the economy (outside of oil industries obviously). But a drop in crude because of demand is bad for everybody.
- TeMPOraL 7y ago
  It's not good for our emissions budgets either, but I guess we can worry about it after the coronavirus mess is behind us.
- huac 7y ago
  no - oil dependent companies bought oil futures to hedge their price risk, so you shouldn't expect much benefit there. additionally, the high yield bond sector has a ton of energy company exposure, and those are falling through the floor. an extended price war could really obliterate those bonds, and their lenders. see eg https://twitter.com/TheStalwart/status/1237022304510660608 https://twitter.com/TheStalwart/status/1237022304510660608
- kibwen 7y ago
  >good news for most of the economy (outside of oil industries Not quite, it's bad news for renewables as well to see fossil prices fall.
sjg007 7y ago
Why was or is the market in need of a correction? What is your evidence for that statement?
- fny 7y ago
  Valuations were continuing to rise parabolically despite slowing earnings and growing debt.
- aaomidi 7y ago
  At this point every time something positive happens in the market: "It needs a correction" Everytime something negative happens: "It's just a cycle" Maybe we don't have the best economic system where instability is built into its core & foundation?
  - jyrkesh 7y ago
    I'm having trouble seeing how those two positions/statements contradict each other. If markets need a correction, and then they get it, that is part of the business cycle. Also, "at this point" is at the point of one of the most runaway bull markets of all time. IMO, the correction has been needed for a couple years now. I didn't have nor did I see that sentiment on HN 5+ years back.
- mrgordon 7y ago
  I am not the original poster but I think they are expressing that we were ready for some reversion to the mean after many years of gains including a spectacular 2019.
- thedance 7y ago
  The market has just been unhinged lately, because there are a lot of huge positions that would love to sell but just can't unwind. Consequently there has not been an effective downward pressure on asset prices, and a lot of garbage is overpriced. I still don't expect a major correction here because there's so much underused capital flying around out there and it will pour into anything that looks even remotely like a bargain. We have entered a regime where the world's economies have more capital than they are willing to use, which is novel and weird. Expect markets to act in novel and weird ways. One thing I can easily predict is American governments large and small will take the wrong actions. They will cut taxes and slash spending when the bond markets are begging them to spend more. States and cities should be out there right now selling as many bonds as they can.
adrr 7y ago
Market was all screwed up because the interest rate was so low. If bonds pay nothing, where else do you put your money?
- trillic 7y ago
  Gold?
  - proverbialbunny 7y ago
    Gold goes down during a recession.
    - generalpass 7y ago
      > Gold goes down during a recession. Everything goes down during a recession. The goal is to find things going down less.
- gvhst 7y ago
  Bonds have both an income return and price return component. If interest rates go down, Treasuries go up in price. TLT (20+ Year Treasury ETF) has been up nearly 20% since this bout of panic set in.

3fe9a03ccd14ca5 7y ago

Oil dropping because an opec monopoly explodes is good news for most of the economy (outside of oil industries obviously). But a drop in crude because of demand is bad for everybody.

TeMPOraL 7y ago
It's not good for our emissions budgets either, but I guess we can worry about it after the coronavirus mess is behind us.
huac 7y ago
no - oil dependent companies bought oil futures to hedge their price risk, so you shouldn't expect much benefit there. additionally, the high yield bond sector has a ton of energy company exposure, and those are falling through the floor. an extended price war could really obliterate those bonds, and their lenders. see eg https://twitter.com/TheStalwart/status/1237022304510660608 https://twitter.com/TheStalwart/status/1237022304510660608
kibwen 7y ago
>good news for most of the economy (outside of oil industries Not quite, it's bad news for renewables as well to see fossil prices fall.

sjg007 7y ago

Why was or is the market in need of a correction? What is your evidence for that statement?

fny 7y ago
Valuations were continuing to rise parabolically despite slowing earnings and growing debt.
aaomidi 7y ago
At this point every time something positive happens in the market: "It needs a correction" Everytime something negative happens: "It's just a cycle" Maybe we don't have the best economic system where instability is built into its core & foundation?
- jyrkesh 7y ago
  I'm having trouble seeing how those two positions/statements contradict each other. If markets need a correction, and then they get it, that is part of the business cycle. Also, "at this point" is at the point of one of the most runaway bull markets of all time. IMO, the correction has been needed for a couple years now. I didn't have nor did I see that sentiment on HN 5+ years back.
mrgordon 7y ago
I am not the original poster but I think they are expressing that we were ready for some reversion to the mean after many years of gains including a spectacular 2019.
thedance 7y ago
The market has just been unhinged lately, because there are a lot of huge positions that would love to sell but just can't unwind. Consequently there has not been an effective downward pressure on asset prices, and a lot of garbage is overpriced. I still don't expect a major correction here because there's so much underused capital flying around out there and it will pour into anything that looks even remotely like a bargain. We have entered a regime where the world's economies have more capital than they are willing to use, which is novel and weird. Expect markets to act in novel and weird ways. One thing I can easily predict is American governments large and small will take the wrong actions. They will cut taxes and slash spending when the bond markets are begging them to spend more. States and cities should be out there right now selling as many bonds as they can.

adrr 7y ago

Market was all screwed up because the interest rate was so low. If bonds pay nothing, where else do you put your money?

trillic 7y ago
Gold?
- proverbialbunny 7y ago
  Gold goes down during a recession.
  - generalpass 7y ago
    > Gold goes down during a recession. Everything goes down during a recession. The goal is to find things going down less.
gvhst 7y ago
Bonds have both an income return and price return component. If interest rates go down, Treasuries go up in price. TLT (20+ Year Treasury ETF) has been up nearly 20% since this bout of panic set in.