7 ms·

When people ask why the stock market isn't in the dumps when it feels like the whole economy is stopped, this is why. Small business isn't on the S&P, and out o

by vasco 7y ago

When people ask why the stock market isn't in the dumps when it feels like the whole economy is stopped, this is why. Small business isn't on the S&P, and out of the businesses in it, a large percentage of the market value is concentrated on the tech giants who aren't getting nearly as affected by the current crisis as everyone else. If they don't actually benefit from it. Still super impressive results.

xkjkls 7y ago
Also, the S&P 500 about 20% just the five largest tech companies by weight: https://www.slickcharts.com/sp500 https://www.slickcharts.com/sp500
qwerty2020 7y ago
Effects were also only included in ~2-3 weeks of Q1 earnings.
- jonknee 7y ago
  Keep in mind they have a significant presence in Asia, they felt this for nearly the entire quarter. Plus like Facebook, it's not all straight down. Tim Cook: > “We’ve seen a further change in the last part of March and first part of April were very depressed and then we’ve seen a pick up relative to that period of time in the second half of April" They also announced $50b more in buybacks. Apple is confident in a way that most businesses are not.
  - qwerty2020 7y ago
    Good point re: Asia presence and agree they seem confident + have the balance sheet to back it up. Overall would just be nice to see weekly splits of revenue from all these companies instead of the vague descriptors we're getting. Would be much easier to project worst case/Q2 that way.
kgwgk 7y ago
The current crisis doesn’t overlap much with the first quarter.
- jonknee 7y ago
  It sure does when you build almost all your products in China.
  - kgwgk 7y ago
    Did they have a shortage of products to sell? I think the impact of not selling in China may have been more important than the impact of not producing in China last quarter. And in any case the second quarter will probably be worse.
    - jedberg 7y ago
      > Did they have a shortage of products to sell? Very much so. I ordered a new watch and it took three weeks to arrive, when usually they are just a few days. My friend who works at Apple said in March people weren't getting laptops when they joined the company because they didn't have any to give, as all the new ones were being sent to customers.
      - grogenaut 7y ago
        You still bought this laptop and this watch, they just didn't get it to you. Seems like apple was still selling plenty.
        defap 7y ago
        I’d be interested to know from someone knowledgeable whether Apple can recognize the revenue from a sale before the product has been delivered to the customer. It’s not clear to me that they can/do.
        jonknee 7y ago
heimatau 7y ago
This is not true. The mega-wealthy aren't needing to sell their assets because the Fed is doing unlimited QE. Since the mega-wealthy own most stocks, they don't need the liquidity when their "stable" investments are backed by the Federal Reserve's unlimited free money program. This is crony capitalism.
- jonknee 7y ago
  ... The Fed hasn't bought a single share of stock.
  - mrscottson 7y ago
    The Fed is artificially keeping interest rates low allowing idiotic stock buybacks to continue for almost no cost, keeps the cost of investor speculation cheap and they are bailing out companies that have bad non-performing loans (banks included)... The Fed's "Rube Goldberg activity" holds up the stock market...uuuuntil it doesn't. Source: My black swan farm
  - heimatau 7y ago
    > ... The Fed hasn't bought a single share of stock. 1. This is actually currently being debated within the Fed. 2. I didn't say the Fed is buying stocks. They are buying the stable assets that the mega-wealthy have in their portfolio. Mega-wealthy don't have all their eggs in one basket. The Fed in solidifying a portion of their basket which allows mega-wealthy to retain the added risk in the markets.
  - legolas2412 7y ago
    When you throw extra demand in a market, prices go up all across the board, not equally though. As for this particular situation, Fed buys corporate bonds, making companies less risky for stockowners. They also push those yields down, so capital goes to stocks to seek better returns. Tell me how Federal reserve's actions don't prop up the stock market?
  - heimatau 7y ago
    >> ... The Fed hasn't bought a single share of stock. This is not aging well. https://www.newyorkfed.org/markets/primary-and-secondary-market-faq/corporate-credit-facility-faq#.XrAcZCt1SK8.twitter https://www.newyorkfed.org/markets/primary-and-secondary-mar...
Engineer2Throw 7y ago
Companies that live off marketing don't deal with the same economic physics that other companies do. Take the backlash Blizzard faced for their pro China stances where Apple banned an app and received no significant backlash. Heck, there were apologists (or marketers) to defend Apple. There's not much to learn from an economic or operations standpoint from this. At best we should mimick their marketing strategies.
ogre_codes 7y ago
Apple is doing... OK. They are still down 13% from their highs. Boeing is trashed and announced layoffs. GM is as well and are suspending their dividend, Ford isn't exactly happy either, and plenty of other S&P giants. Disney has taken a huge hit due to sports/ ESPN revenue, theme parks, and cruise lines. Small businesses aren't on the S&P 500, but unemployed people and small businesses all buy from companies in the S&P 500. Apple also happens to have a massive cash pillow to soften their fall. Nobody else has reserves like Apple and a lot of companies have substantial debt. The stock market hasn't quite priced in damage yet.
- siruncledrew 7y ago
  That’s for next episode in June/July for Q2.
  - ogre_codes 7y ago
    > That’s for next episode in June/July for Q2. The stock market is supposed to be a forward looking machine. Supposed to be
- jaredklewis 7y ago
  > The stock market hasn't quite priced in damage yet. Quite the claim. Anyone with confidence in this theory should take a short position now and pick up their million bucks after the market “prices in the damage.”
  - nscalf 7y ago
    That's assuming you can time it right. I've been holding puts for ~2 months, and I went from very right to very wrong very quickly. I also fully anticipate to be very right again as soon as the fed stops pumping trillions of dollars into companies that were ill prepared for risk.
    - epistasis 7y ago
      This is totally the hard part to know: how much will Trump prop up the stock market? I recently heard the expression "the stock market is just a graph of rich people's emotions" and find it to be the most pithy truth of economics that I've encountered. A lot goes go into those emotions that we can not anticipate.
MR4D 7y ago
Macy’s, Boeing, United, Carnival, GE, Ford, and so on. The tech companies are important, but the overall stock market is a lot bigger than them. The companies listed above are in bad shape, but their stock should be in worse shape. Why they aren’t is the same reason the market is up. My guess? Wait for the second drop to be bigger and more brutal than the first (although it may take longer to drop).
freepor 7y ago
The thing is that the restaurant has waiters. Those waiters don’t take a vacation because they can’t afford it so Boeing doesn’t sell planes. Boeing isn’t growing so they lay off engineers who now don’t upgrade their iPhones. And Apple will suffer, just awhile from now.
- tonyedgecombe 7y ago
  On the other hand a lot of people think we are going to start buying like there is no tomorrow when the immediate crisis is over.
  - freepor 7y ago
    I know I have been, entertaining myself by buying things online that I didn't really need like vintage film cameras and things.

by vasco 7y ago

xkjkls 7y ago

Also, the S&P 500 about 20% just the five largest tech companies by weight: https://www.slickcharts.com/sp500 https://www.slickcharts.com/sp500

qwerty2020 7y ago

Effects were also only included in ~2-3 weeks of Q1 earnings.

jonknee 7y ago
Keep in mind they have a significant presence in Asia, they felt this for nearly the entire quarter. Plus like Facebook, it's not all straight down. Tim Cook: > “We’ve seen a further change in the last part of March and first part of April were very depressed and then we’ve seen a pick up relative to that period of time in the second half of April" They also announced $50b more in buybacks. Apple is confident in a way that most businesses are not.
- qwerty2020 7y ago
  Good point re: Asia presence and agree they seem confident + have the balance sheet to back it up. Overall would just be nice to see weekly splits of revenue from all these companies instead of the vague descriptors we're getting. Would be much easier to project worst case/Q2 that way.

kgwgk 7y ago

The current crisis doesn’t overlap much with the first quarter.

jonknee 7y ago
It sure does when you build almost all your products in China.
- kgwgk 7y ago
  Did they have a shortage of products to sell? I think the impact of not selling in China may have been more important than the impact of not producing in China last quarter. And in any case the second quarter will probably be worse.
  - jedberg 7y ago
    > Did they have a shortage of products to sell? Very much so. I ordered a new watch and it took three weeks to arrive, when usually they are just a few days. My friend who works at Apple said in March people weren't getting laptops when they joined the company because they didn't have any to give, as all the new ones were being sent to customers.
    - grogenaut 7y ago
      You still bought this laptop and this watch, they just didn't get it to you. Seems like apple was still selling plenty.
      - defap 7y ago
        I’d be interested to know from someone knowledgeable whether Apple can recognize the revenue from a sale before the product has been delivered to the customer. It’s not clear to me that they can/do.
        jonknee 7y ago

heimatau 7y ago

This is not true. The mega-wealthy aren't needing to sell their assets because the Fed is doing unlimited QE. Since the mega-wealthy own most stocks, they don't need the liquidity when their "stable" investments are backed by the Federal Reserve's unlimited free money program. This is crony capitalism.

jonknee 7y ago
... The Fed hasn't bought a single share of stock.
- mrscottson 7y ago
  The Fed is artificially keeping interest rates low allowing idiotic stock buybacks to continue for almost no cost, keeps the cost of investor speculation cheap and they are bailing out companies that have bad non-performing loans (banks included)... The Fed's "Rube Goldberg activity" holds up the stock market...uuuuntil it doesn't. Source: My black swan farm
- heimatau 7y ago
  > ... The Fed hasn't bought a single share of stock. 1. This is actually currently being debated within the Fed. 2. I didn't say the Fed is buying stocks. They are buying the stable assets that the mega-wealthy have in their portfolio. Mega-wealthy don't have all their eggs in one basket. The Fed in solidifying a portion of their basket which allows mega-wealthy to retain the added risk in the markets.
- legolas2412 7y ago
  When you throw extra demand in a market, prices go up all across the board, not equally though. As for this particular situation, Fed buys corporate bonds, making companies less risky for stockowners. They also push those yields down, so capital goes to stocks to seek better returns. Tell me how Federal reserve's actions don't prop up the stock market?
- heimatau 7y ago
  >> ... The Fed hasn't bought a single share of stock. This is not aging well. https://www.newyorkfed.org/markets/primary-and-secondary-market-faq/corporate-credit-facility-faq#.XrAcZCt1SK8.twitter https://www.newyorkfed.org/markets/primary-and-secondary-mar...

Engineer2Throw 7y ago

Companies that live off marketing don't deal with the same economic physics that other companies do. Take the backlash Blizzard faced for their pro China stances where Apple banned an app and received no significant backlash. Heck, there were apologists (or marketers) to defend Apple. There's not much to learn from an economic or operations standpoint from this. At best we should mimick their marketing strategies.

ogre_codes 7y ago

Apple is doing... OK. They are still down 13% from their highs. Boeing is trashed and announced layoffs. GM is as well and are suspending their dividend, Ford isn't exactly happy either, and plenty of other S&P giants. Disney has taken a huge hit due to sports/ ESPN revenue, theme parks, and cruise lines. Small businesses aren't on the S&P 500, but unemployed people and small businesses all buy from companies in the S&P 500. Apple also happens to have a massive cash pillow to soften their fall. Nobody else has reserves like Apple and a lot of companies have substantial debt. The stock market hasn't quite priced in damage yet.

siruncledrew 7y ago
That’s for next episode in June/July for Q2.
- ogre_codes 7y ago
  > That’s for next episode in June/July for Q2. The stock market is supposed to be a forward looking machine. Supposed to be
jaredklewis 7y ago
> The stock market hasn't quite priced in damage yet. Quite the claim. Anyone with confidence in this theory should take a short position now and pick up their million bucks after the market “prices in the damage.”
- nscalf 7y ago
  That's assuming you can time it right. I've been holding puts for ~2 months, and I went from very right to very wrong very quickly. I also fully anticipate to be very right again as soon as the fed stops pumping trillions of dollars into companies that were ill prepared for risk.
  - epistasis 7y ago
    This is totally the hard part to know: how much will Trump prop up the stock market? I recently heard the expression "the stock market is just a graph of rich people's emotions" and find it to be the most pithy truth of economics that I've encountered. A lot goes go into those emotions that we can not anticipate.

MR4D 7y ago

Macy’s, Boeing, United, Carnival, GE, Ford, and so on. The tech companies are important, but the overall stock market is a lot bigger than them. The companies listed above are in bad shape, but their stock should be in worse shape. Why they aren’t is the same reason the market is up. My guess? Wait for the second drop to be bigger and more brutal than the first (although it may take longer to drop).

freepor 7y ago

The thing is that the restaurant has waiters. Those waiters don’t take a vacation because they can’t afford it so Boeing doesn’t sell planes. Boeing isn’t growing so they lay off engineers who now don’t upgrade their iPhones. And Apple will suffer, just awhile from now.

tonyedgecombe 7y ago
On the other hand a lot of people think we are going to start buying like there is no tomorrow when the immediate crisis is over.
- freepor 7y ago
  I know I have been, entertaining myself by buying things online that I didn't really need like vintage film cameras and things.