main street versus wall street

[LivingAlmostLarge]

Every political cycle we talk about main street and wall street. We also talk about it during recession. Well today they reported another 6.6M unemployment claims. Economists were predicting 4-5 millions jobs lost this week and claims filed. They suggested that it would only be 20 million people unemployed in april 2 weeks. in and we're at 13 Million and they say that's underestimated because state systems are overwhelmed and a lot of people haven't been able to get through. Also now the gig employees are able to get something. And we know how many people now are "gig" self employed workers who didn't pay any unemployment insurance.

I want to understand how economists and wall street can be so far off for job losses (predicted 100k for March, it was 700k jobs lost), and 3M jobs lost last week and it was 6.9M, this week 4-5 million instead it was 6.6M. And the stock market went UP! Because bernie sanders quit and because they said that the feds are injecting liquidity. Really?

Or is it that wall street doesn't really get how bad it's getting for main street? That they are severly underestimating this recession? In fact I read articles that only now people are calling it a recession. Really? it felt that way a month ago. Where do you think we are headed? I mean the S & P went up for it's best week since 1974? how is this possible?

[Scallywag]

Wall Street and the economy have an on-again, off-again relationship, with Wall Street often divorcing the economy to post gains / highs when the economical picture is dark and the outlook is dire.

For example, as of last week, a minimum of 15 million Americans are unemployed but Wall Street has posted record gains. This tells me that the bulls either don't understand that America is technically already in a recession or that they are riding on hope that "this" is all just temporary. In the late 20s, as farms and businesses were failing all across America, the Dow Jones was "climbing to heaven".

All this is to say to never use Wall Street as a gauge of how the country (or - in this day & age - even how the world) is really doing. If you want to know how where the country is headed, look at the GDP, look at jobs & look at the PMI (Purchasing Managers' Index). These give the real picture. Wall Street is just a glorified casino, sometimes.

[Singuy]

Job loss are worst than expected, but the main event, which is Covid, ended up declining BETTER than expected. Wallstreet is forward looking. With lots of money sitting in cash right now earning a negative return vs inflation, huge fund managers are looking for an entry point(because there will be one unless they can get a 5-10% return elsewhere). NY hospitalization rate is dropping like a rock. This is beyond the governor's expectations which means huge light at the end of the tunnel with no other NYC numbers of flair ups anywhere else that is highly populated in the U.S(FL and CA has this under control).

So yes, people are finding all these unemployment claims to be temporary.

[Scallywag]

Job loss are worst than expected, but the main event, which is Covid, ended up declining BETTER than expected. Wallstreet is forward looking. With lots of money sitting in cash right now earning a negative return vs inflation, huge fund managers are looking for an entry point(because there will be one unless they can get a 5-10% return elsewhere). NY hospitalization rate is dropping like a rock. This is beyond the governor's expectations which means huge light at the end of the tunnel with no other NYC numbers of flair ups anywhere else that is highly populated in the U.S(FL and CA has this under control).

So yes, people are finding all these unemployment claims to be temporary.

Well, traders should be careful because the disruption of global supply chains means that it won't be "business as usual" (as many are anticipating, post-lockdown). The GDP of many countries (including the US) had been contracting even before COVID 19 was a thing, with liquidity crunches showing up in the repo market as early as Sept 2019. As earnings are reported beginning next week, we may see the Dow plummet. Wall Street can be divorced from reality only for so long.

[kork13]

Wall Street and the economy have an on-again, off-again relationship

This, 400% accurate. The stock market IS NOT the economy. The stock market often flies high when the economy is soaring, and often crashes when the economy is in the pits... But the market is a poor representation (especially from a day-to-day perspective) of the shape of our economy. The economy is focused around employment, production, consumption, import/export trade, and so on. The stock market is focused on profitability, outlook, profit margins, etc. The things driving the economy will influence the things driving the stock market, but it's not a direct correlation.

For example... A big company like Boeing furloughs 5K employees. From the economy's perspective, this is a net loss because it causes a reduction in the productivity of the company, the size of its employee force, and the 'trickle up/out' effects from those employees' lost wages. However from the market's perspective, axing 5K means that the company can remain profitable (at least for this quarter & the next few), so Boeing's stock price goes up.

[kork13]

Well, traders should be careful because the disruption of global supply chains means that it won't be "business as usual" (as many are anticipating, post-lockdown).

Supply chains have actually survived relatively intact -- from the beginning, logistics were deemed "essential" around the world -- trucks kept trucking, cargo ships kept sailing & freight planes kept flying. Individual companies within various supply chains may be shut down, but movement as a whole has been uninterrupted.

[disneysteve]

The stock market IS NOT the economy.

This!

As TexasHusker is fond of pointing out, a recession and a bear market are two different things. The stock market can be down during a recession or it can be up during a recession. The two are not directly connected. We may be in the beginning of one of those recessions where the market does okay. Time will tell.

I think a lot of investors also feel the recent sell off was over done. It was based on panic not fundamentals in many cases. A lot of stocks lost as much as 90% of their value, some trading well below the book value of the liquidation value of their assets.

[bjl584]

The markets are looking to the future to what they anticipate will happen.
They represent the economy but they aren't synchronized with it.

[LivingAlmostLarge]

Job loss are worst than expected, but the main event, which is Covid, ended up declining BETTER than expected. Wallstreet is forward looking. With lots of money sitting in cash right now earning a negative return vs inflation, huge fund managers are looking for an entry point(because there will be one unless they can get a 5-10% return elsewhere). NY hospitalization rate is dropping like a rock. This is beyond the governor's expectations which means huge light at the end of the tunnel with no other NYC numbers of flair ups anywhere else that is highly populated in the U.S(FL and CA has this under control).

So yes, people are finding all these unemployment claims to be temporary.

Does florida really have it under control? Or are they not testing and so it looks like it's under control? And how do you know that there is light at end of tunnel?

[Singuy]

Does florida really have it under control? Or are they not testing and so it looks like it's under control? And how do you know that there is light at end of tunnel?

Look at deaths. If our positives are low but deaths are high, then there's a huge discrepancy in actual numbers vs reported numbers. The death numbers are also signal to you if our hospital is at capacity or not. Overwhelmed hospitals will post high death numbers. So far our death numbers are among the lowest per 1 million people, which is 20/million. Texas, another highly populated state only has 9/million. California, 15/million. High death/population ratio are the real trouble spots.

Also our state has the oldest population so if there are any death spikes we would have noticed.

Our director announced a few days ago that we are not expecting to use our overflow beds for Covid as positive cases are lower than projected. I am in Central FL. There's a light at the end of the tunnel because hospitalization rates are down while highly populated states did not flair up like NY which was all expected. Dr Fauci revised death to be around 60k in the U.S vs 100-200k just a week prior. This is why stocks are going up.

[~bs]

Trillions of dollars pumped into the stock market is A LOT of money. It's folly to bet against the stock market long term, rigged game.

[~bs]

Look at deaths. If our positives are low but deaths are high, then there's a huge discrepancy in actual numbers vs reported numbers. The death numbers are also signal to you if our hospital is at capacity or not. Overwhelmed hospitals will post high death numbers. So far our death numbers are among the lowest per 1 million people, which is 20/million. Texas, another highly populated state only has 9/million. California, 15/million. High death/population ratio are the real trouble spots.

Also our state has the oldest population so if there are any death spikes we would have noticed.

Our director announced a few days ago that we are not expecting to use our overflow beds for Covid as positive cases are lower than projected. I am in Central FL. There's a light at the end of the tunnel because hospitalization rates are down while highly populated states did not flair up like NY which was all expected. Dr Fauci revised death to be around 60k in the U.S vs 100-200k just a week prior. This is why stocks are going up.

Deaths trailing indicator for cases weeks ago. Need to look at immediate new cases and hospitalizations.

[Singuy]

Deaths trailing indicator for cases weeks ago. Need to look at immediate new cases and hospitalizations.

There is very little reason to think FL, being the highest tourist state in the world, is a month behind everywhere else in the nation. Having the oldest population is the US having this huge lag in deaths. I don't think having 500-600 deaths a day is coming as others have predicted.

[disneysteve]

There is very little reason to think FL, being the highest tourist state in the world, is a month behind everywhere else in the nation. Having the oldest population is the US having this huge lag in deaths. I don't think having 500-600 deaths a day is coming as others have predicted.

Florida is mostly rural and sparsely populated. That's what you want when it comes to communicable diseases.

Florida's population is 2.5 times that of New Jersey but it's spread over 7.5 times the area. Less contact with others in general and much easier to maintain social distancing.

[Singuy]

Florida is mostly rural and sparsely populated. That's what you want when it comes to communicable diseases.

Florida's population is 2.5 times that of New Jersey but it's spread over 7.5 times the area. Less contact with others in general and much easier to maintain social distancing.

Having terrible public transportation helps a lot. All gathering venues(except churchs..make me so mad) have been banned or closed and our weather being super high UV index all contribute for a much slower spread than expected.