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Former fund manager here. A few thoughts: - Trading halts are there to let people catch their breath, supposedly. More likely it's in order to be able to annou

Former fund manager here. A few thoughts: - Trading halts are there to let people catch their breath, supposedly. More likely it's in order to be able to announce news, because without news what's gonna change? - The news everyone wants now is fiscal stimulus. From what I can see, there's a lot of consumers whose personal finances will blow up if the economy shuts for a couple of months. So perhaps what needs to be announced needs to be aimed at those types of people. Certainly people will protest if fiscal stimulus means just handing money to people and companies who aren't in dire straights. How about a rent break or something drastic like that? - The effect of systematic strategies should not be underestimated. By that I'm lumping passive index trading in with various forms of systematic rules based trading (my specialty actually). Things that hop on the momentum bandwagon will make the move more extreme. They will also tend to whipsaw on reversals. There's also risk parity funds, which now need to reposition based on risk being higher. - Also you have to figure on short options players getting blown up on this kind of thing. (Vol trading was my other specialty). Basically what I mean is in recent years it's been quite enticing to simply sell options to pick up premium, which normally is a bit too expensive in relation to the expected volatility (ie it seems smart a lot of the time). Of course nothing is free, and when there's a blowout the short gamma guys are also pushing the market the wrong way. - There's at least one major investment bank that thinks this will end soon, markets to recover in H2, and no systemic risk. (Got that from a friend chain so grain of salt.) Not sure what to think, since this is more a question of how politicians will respond than ordinary day-to-day reading tea leaves. Interesting times.

AnthonyMouse 7y ago
> Certainly people will protest if fiscal stimulus means just handing money to people and companies who aren't in dire straights. How is it not the opposite? Bailing out only the people who have lived beyond their means or made poor decisions is a big moral hazard. Moreover, it doesn't do everything you want -- if you give money to people who are in debt, they use it to make their loan payments and pay rent. Which is better than defaults and evictions, but you also want some of the money to go to people who will actually spend it and stimulate new demand. You also have to worry about some kind of emergency "dire straights" metric being off by a significant amount in one direction or another and as a result you either end up paying most of the money to whoever is most willing to play accounting tricks or lie on forms, or it doesn't go where it's supposed to and you still get the defaults and evictions, or both. As a result it seems like the best option is to distribute money evenly, to everybody.
- cheez 7y ago
  One might call this a universal basic virus income.
- deleted 7y ago
  [deleted]
- ttcbj 7y ago
  I find this situation very different from the bail outs of 2008. In 2008, the economy was too focused on housing and lending, and so real substantive changes needed to occur to refocus. People need to change jobs, etc. I was annoyed by the bailout then, though in the long term I came to see parts of it as wise. In this situation, many many business which are fundamentally viable (great restaurants, cruise lines) are going to be threatened by a temporary dislocation (everyone social distancing). It's not clear to me that we need a fundamental reallocation of resources in the long term (we don't have too many restaurants, or vacation destinations). In addition, I don't think its economically sensible to ask every business (say restaurant) to plan for a 2 year pandemic. It would just be inefficient. I think its right to handle that risk at the gov't level. It's all of our problem. So, in this case, I am hoping for effective gov't action to preserve much of the economy. I don't think I benefit if in 2 years, all my favorite restaurants are gone, and all the big vacation operators are bankrupt.
  - AnthonyMouse 7y ago
    > In this situation, many many business which are fundamentally viable (great restaurants, cruise lines) are going to be threatened by a temporary dislocation (everyone social distancing). The issue is that it isn't just restaurants and cruise lines. How many of the shops in the local mall are in trouble if people stay home and order from Amazon? What happens to gas stations and convenience stores and truck stops if people are temporarily driving less? What happens to charter bus companies? Local community organizations? Conference organizers? Pretending that we can predict what all the effects are going to be on everyone and centrally plan optimal resource allocation is dangerous hubris. > In addition, I don't think its economically sensible to ask every business (say restaurant) to plan for a 2 year pandemic. It would just be inefficient. I think its right to handle that risk at the gov't level. It's all of our problem. That's kind of the point. When times are tough, that's the time for the government to borrow money and use it to help people out. But they're notoriously bad at deciding whether a cruise ship captain deserves it more than a small business owner with a sandwich cart.
throwaway_pdp09 7y ago
> - The news everyone wants now is fiscal stimulus Market-clueless newbie here. How would fiscal stimulus help a market that is seizing up due to reducing supply side (factories close) and reducing demand side (pubs to be closed, airlines crashing because of border closures, & more) and a disease that is likely to stress many countries medical provisions to breaking point, and then beyond. Didn't the US dump 1.5 trillion dollars in a few days ago, and the market bounced but briefly? I mean it was obvious to me that it wouldn't work, why do you (as an expert - and I don't mean that sarcastically) think more stimulus, or indeed any, would help at this point?
- zwily 7y ago
  The 1.5T wasn’t fiscal stimulus, just cheap loans.
- davidw 7y ago
  I think (hope) he means: help the people directly affected, like bartenders, who are going to not be working real soon.
  - cj 7y ago
    Especially painful for anyone relying on tips. They're very often under the table to avoid taxes, which has the downside of not being recognized re: unemployment / paid leave benefits.
- losteric 7y ago
  Bottom-up stimulus money helps us "socially distance" faster and to a greater degree, and bounce back quicker... we don't want to exit this disaster with bankrupt small businesses and unemployed/broke/homeless individuals.
- wbl 7y ago
  Fiscal not monetary. Fiscal stimulus is writing checks to people and companies affected.
- skrtskrt 7y ago
unlinked_dll 7y ago
> How about a rent break or something drastic like that? How is a stimulus going to work if people don't have a place to spend the money?
- kaesar14 7y ago
  By tiding people over who would otherwise lose it all if the national economy shut down for a protracted amount of time, which seems to be happening as we speak.
nck4222 7y ago
>- Trading halts are there to let people catch their breath, supposedly. More likely it's in order to be able to announce news, because without news what's gonna change? Wouldn't the change be, "people have caught their breath?" If the free fall is sustained by emotional panic, then halting the emotional panic can help stop the free fall.
seibelj 7y ago
Just offer 100% unemployment for a year for anyone laid off for corona. All the consumer debts get paid
- bwb 7y ago
  Unemployment is not pegged to what you made, it maxes out at 790 a week. And tips do not count toward it.
  - pickle-wizard 7y ago
    Wow, where are you at that it is 790 a week? Here in Texas it is about $500 a week.
    - bwb 7y ago
      Shit you are right! I think the site I was looking at was looking at MA/MI for highest. https://www.savingtoinvest.com/maximum-weekly-unemployment-benefits-by-state/ https://www.savingtoinvest.com/maximum-weekly-unemployment-b...
tree3 7y ago
> Trading halts are there to let people catch their breath, supposedly You mean let high frequency trading bots catch their breath?
- dralley 7y ago
  The people running the high frequency trading bots.

AnthonyMouse 7y ago

> Certainly people will protest if fiscal stimulus means just handing money to people and companies who aren't in dire straights. How is it not the opposite? Bailing out only the people who have lived beyond their means or made poor decisions is a big moral hazard. Moreover, it doesn't do everything you want -- if you give money to people who are in debt, they use it to make their loan payments and pay rent. Which is better than defaults and evictions, but you also want some of the money to go to people who will actually spend it and stimulate new demand. You also have to worry about some kind of emergency "dire straights" metric being off by a significant amount in one direction or another and as a result you either end up paying most of the money to whoever is most willing to play accounting tricks or lie on forms, or it doesn't go where it's supposed to and you still get the defaults and evictions, or both. As a result it seems like the best option is to distribute money evenly, to everybody.

cheez 7y ago
One might call this a universal basic virus income.
deleted 7y ago
[deleted]
ttcbj 7y ago
I find this situation very different from the bail outs of 2008. In 2008, the economy was too focused on housing and lending, and so real substantive changes needed to occur to refocus. People need to change jobs, etc. I was annoyed by the bailout then, though in the long term I came to see parts of it as wise. In this situation, many many business which are fundamentally viable (great restaurants, cruise lines) are going to be threatened by a temporary dislocation (everyone social distancing). It's not clear to me that we need a fundamental reallocation of resources in the long term (we don't have too many restaurants, or vacation destinations). In addition, I don't think its economically sensible to ask every business (say restaurant) to plan for a 2 year pandemic. It would just be inefficient. I think its right to handle that risk at the gov't level. It's all of our problem. So, in this case, I am hoping for effective gov't action to preserve much of the economy. I don't think I benefit if in 2 years, all my favorite restaurants are gone, and all the big vacation operators are bankrupt.
- AnthonyMouse 7y ago
  > In this situation, many many business which are fundamentally viable (great restaurants, cruise lines) are going to be threatened by a temporary dislocation (everyone social distancing). The issue is that it isn't just restaurants and cruise lines. How many of the shops in the local mall are in trouble if people stay home and order from Amazon? What happens to gas stations and convenience stores and truck stops if people are temporarily driving less? What happens to charter bus companies? Local community organizations? Conference organizers? Pretending that we can predict what all the effects are going to be on everyone and centrally plan optimal resource allocation is dangerous hubris. > In addition, I don't think its economically sensible to ask every business (say restaurant) to plan for a 2 year pandemic. It would just be inefficient. I think its right to handle that risk at the gov't level. It's all of our problem. That's kind of the point. When times are tough, that's the time for the government to borrow money and use it to help people out. But they're notoriously bad at deciding whether a cruise ship captain deserves it more than a small business owner with a sandwich cart.

throwaway_pdp09 7y ago

> - The news everyone wants now is fiscal stimulus Market-clueless newbie here. How would fiscal stimulus help a market that is seizing up due to reducing supply side (factories close) and reducing demand side (pubs to be closed, airlines crashing because of border closures, & more) and a disease that is likely to stress many countries medical provisions to breaking point, and then beyond. Didn't the US dump 1.5 trillion dollars in a few days ago, and the market bounced but briefly? I mean it was obvious to me that it wouldn't work, why do you (as an expert - and I don't mean that sarcastically) think more stimulus, or indeed any, would help at this point?

zwily 7y ago
The 1.5T wasn’t fiscal stimulus, just cheap loans.
davidw 7y ago
I think (hope) he means: help the people directly affected, like bartenders, who are going to not be working real soon.
- cj 7y ago
  Especially painful for anyone relying on tips. They're very often under the table to avoid taxes, which has the downside of not being recognized re: unemployment / paid leave benefits.
losteric 7y ago
Bottom-up stimulus money helps us "socially distance" faster and to a greater degree, and bounce back quicker... we don't want to exit this disaster with bankrupt small businesses and unemployed/broke/homeless individuals.
wbl 7y ago
Fiscal not monetary. Fiscal stimulus is writing checks to people and companies affected.
skrtskrt 7y ago

unlinked_dll 7y ago

> How about a rent break or something drastic like that? How is a stimulus going to work if people don't have a place to spend the money?

kaesar14 7y ago
By tiding people over who would otherwise lose it all if the national economy shut down for a protracted amount of time, which seems to be happening as we speak.

nck4222 7y ago

>- Trading halts are there to let people catch their breath, supposedly. More likely it's in order to be able to announce news, because without news what's gonna change? Wouldn't the change be, "people have caught their breath?" If the free fall is sustained by emotional panic, then halting the emotional panic can help stop the free fall.

seibelj 7y ago

Just offer 100% unemployment for a year for anyone laid off for corona. All the consumer debts get paid

bwb 7y ago
Unemployment is not pegged to what you made, it maxes out at 790 a week. And tips do not count toward it.
- pickle-wizard 7y ago
  Wow, where are you at that it is 790 a week? Here in Texas it is about $500 a week.
  - bwb 7y ago
    Shit you are right! I think the site I was looking at was looking at MA/MI for highest. https://www.savingtoinvest.com/maximum-weekly-unemployment-benefits-by-state/ https://www.savingtoinvest.com/maximum-weekly-unemployment-b...

tree3 7y ago

> Trading halts are there to let people catch their breath, supposedly You mean let high frequency trading bots catch their breath?

dralley 7y ago
The people running the high frequency trading bots.