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Veteran Advisor

Say a 25%

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To 35% negative GDP for the 2nd quarter. 

Quite a contraction. 

Farm market's could actually rise Substantially. 

Agri tends to be inverse to the Dow economy. 

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Senior Advisor

Re: One might think that a 35% decline in GDP would ....

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Recall that earnings were crappy before this- you just had the low bar WS beat game going, a flood of Fed funny money and a potus who was winking with 3 eyes that he’d say anything to make it go up.

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Senior Advisor

Re: One might think that a 35% decline in GDP would ....

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One might think that a 35% decline in GDP would put more of a damper on the stock market but it was up 7.7% again today.  I was taught that the stock price was a measure of future earnings but I can't really see how future earnings will be all that great over the next couple of quarters to justify all the "irrational exuberance." 

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Veteran Advisor

Re: One might think that a 35% decline in GDP would ....

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Realistic Dow is still headed to 14k to 15.5k.

Say 6k to 7k cheaper than today. 

Employment /  unemployment  is going to dictate the rest of 2020.

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Honored Advisor

Re: One might think that a 35% decline in GDP would ....

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I`m a Republican so I love God, guns, babies and dogs and I want Trump re elected.  However I`m not blowing sunshine simply to get my political wishes, I really don`t know how this is going to turn out economically.  Like a commentator said the other day "when things settle down I`m going to get a haircut..but I`m not going to get 2 haircuts"  Of course what he means is in this service based economy, a lot of GDP growth has been lost forever and some hair cuttin` places and eateries won`t come back, the "YouBetCha" cafe in Alden closed up for good, Godfathers Pizza in Albert Lea closed for good.  Kohls was on the ropes before Covid, will they go the way of K-Mart after this additional hit? If you want a good $300 suit for a funeral on short notice, Kohls was about the last option left and may not be here by fall. 

Ethanol may not come back.  The post Covid-19 world could look very different, perhaps double digit unemployment, people`s retirement plans upside down.  Spending money and full employment kept things going, the farmer could sell corn to E-plants and feedlots and employed people were addicted to meat protein in their diet.  Long lines and hour waits at good restaurants, how long post Covid-19 will the survivors take before they venture out for a steak again? 

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Senior Advisor

Re: One might think that a 35% decline in GDP would ....

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Remember, all of the biggest up days in stocks in history have been relief rallies in bear markets.

But also we are engaged in the biggest socialist experiment in our history, so be careful. It is just that it is socialism for the wealthy.

Farmers should be proud to have been among the pioneers of that concept.

When phonies who talk about loving guns and babies decry socialism you have to be able to understand the code.

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Senior Advisor

Re: One might think that a 35% decline in GDP would ....

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I think the under appreciated part is to understand how the game now works.

Corps are now scams to enrich insiders (and corrupt government to that end).

The incentive will now be to overboard as much crap as possible in the next few quarters because whocouldsthunkit? Then get boards to reset the bar on incentive packages lower and get to work on getting that personal private jet and beachfront mansion.

That means that sell side “analysts” have an immense job ahead to spin the idea that there’s a pot of gold beyond the horizon. Because earnings will stink so bad that even setting expectations ridiculously low and crowing about a beat will be tough.

 

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Senior Advisor

Re: One might think that a 35% decline in GDP would ....

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Recall that earnings were crappy before this- you just had the low bar WS beat game going, a flood of Fed funny money and a potus who was winking with 3 eyes that he’d say anything to make it go up.

View solution in original post

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Senior Advisor

Re: One might think that a 35% decline in GDP would ....

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I sure wish Milton Friedman could return from the dead to see how “shareholder capitalism” turned out.

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Senior Advisor

Re: One might think that a 35% decline in GDP would ....

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That assumes that he was actually sincere.

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Senior Advisor

Re: One might think that a 35% decline in GDP would ....

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Perhaps Miltie naively assumes that governmental oversight would not become so degraded.

Even complicit.

Although I’m sure that folks who saw their 401Ks tank will be pleased by any and all efforts.

Couldnt be that they just shoulda exercised some personal responsibility and sold.

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