Let's say that two months from now, there are no places on Earth that have their hospitals overwhelmed by this virus. There will still be lingering cases but it will not be such a drastic pandemic that it is today. What do you think the state of the economy will be? Do you think we will go back to Good Times like just before the pandemic? What do you think the effect of the new lower interest rates will be?
What do you think the state of the economy will be after the worst of the pandemic is over?
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Ok I say earliest to expect is Autumn to see more clear in this term. BUT. There is always the chance, that the virus comes back and the quarantine game begins from a new. That said, it is very difficult to make any predictions regarding "the real economy" or when the "risk off game" will end. What we can say however, is that stocks will see gains in a long term horizon, simply because
a) there is no alternative
b) fomo
c) there is more money then investing possibilities, world wide. The Fed money just even adds more ammunition to c).
Come back is going to be monumental. Since we are on the very bottom right now, the only way we can go, is UP.
Might go lower as cases in USA continue to rise and as poor economic data gets released.
But I think Italy's daily infection rate will begin to slow down any day now. I believe today was better than yesterday.
USA was at all-time high of ~9300 yesterday
This kind of question I think entirely misses the point. Any economy is a positive feedback loop. As long as it's going good, people spend more money into the economy, so it starts going better, giving them more money to spend into the economy....
And the same thing in reverse on the way down. Economy is bad, people have less money to spend into it, so it gets worse, leading to less money available to spend into it...
Which means we could cure everyone of COVID tomorrow instantly with Trump's magic cure.....and the economy is still in that downward feedback loop. There was no COVID continuing to push the economy down after 1999 or 2008 or any of the other recessions. There was a bubble, the bubble burst, and the economy went through a cycle of feedback on the downside. We had a bubble. It's burst. Doesn't matter if the thing that burst it is still around or not, people who didn't work for the last month don't have money to spend which means the restaurants they ate at and the stores they shopped at and the salons they got their nails done at can't hire back as many folks as they had before this, and those unemployed folks can't spend as much money, leading to fewer jobs.....and so on.
A slowdown in COVID is a necessary but certainly not sufficient factor for any recovery. You can't ignore fundamental economics, it still works the same COVID or no COVID.
And the same thing in reverse on the way down. Economy is bad, people have less money to spend into it, so it gets worse, leading to less money available to spend into it...
Which means we could cure everyone of COVID tomorrow instantly with Trump's magic cure.....and the economy is still in that downward feedback loop. There was no COVID continuing to push the economy down after 1999 or 2008 or any of the other recessions. There was a bubble, the bubble burst, and the economy went through a cycle of feedback on the downside. We had a bubble. It's burst. Doesn't matter if the thing that burst it is still around or not, people who didn't work for the last month don't have money to spend which means the restaurants they ate at and the stores they shopped at and the salons they got their nails done at can't hire back as many folks as they had before this, and those unemployed folks can't spend as much money, leading to fewer jobs.....and so on.
A slowdown in COVID is a necessary but certainly not sufficient factor for any recovery. You can't ignore fundamental economics, it still works the same COVID or no COVID.
You should order a Gulfstream G700 instead.I will buy another farm and this supercar:
A few things...
First, there was no technical recession when the .com bubble burst. Stock market doesn't measure economy.
Also, economic cycles have to do with extending credit more than it should be. Perhaps loss of personal incomes will cause loan defaults and things will spiral downward. Who knows? But I don't think it will last as long as the 2007 recession because it's not based on purely economic factors like that was.
I personally think the worst of the COVID infections will be over in one month or less.
You may be right on personal debt, but corporate debt is at an all-time high due to low interest rates maintained by the Fed for far too long. Many companies are BBB...one level above junk. Impaired cash flow will likely be enough to push them over the edge, into junk status. If they have payments due or planned to refinance, but their cash position has deteriorated...beware.
The Covid infection rate could conceivably decline in the next month, if people continue practicing social distancing. But now you have the President saying he wants people back at work within 14 days. So, how do you keep the rate from just increasing again when the one thing that did the most to reduce it is no longer in effect? Unfortunately, due to slapdash efforts from this administration and general lack of preparedness, this contagion has no end in sight. This entire situation is a massive fiasco that was largely avoidable had appropriate measures been in place to test, quarantine, and minimize contact.