Yet another recession

Recession

I realize very few people care, but this will be the third recession since I was last able to find a real job. That eviscerates my sympathy for folks taking a bath on the stock market.

Meanwhile, the Dow’s plunge from its all-time high of 29,551 on Feb. 12 has eliminated one of the president’s favorite campaign arguments. As stocks soared since the 2016 election, [Donald] Trump repeatedly took credit at campaign rallies and in White House remarks. He drew attention to the market setting all-time highs and boasted about the effect on voters’ investment accounts.[1]

So I’m guessing it’s a safe bet that Donald Trump will not be able to run on the economy as “the U.S. economy will likely shrink in the second quarter at an annual rate of 14 percent — a staggering decline that exceeds the worst of the global financial crisis, according to economists at JPMorgan Chase.”[2]

Yesterday, even as there was talk of a huge stimulus,[3] the question was:

“There are still a lot of questions in the mind of the market as to what will be enough,” said Robert Haworth, senior investment strategist at U.S. Bank Wealth Management. “It’s a start, but there’s still a lot to be determined.”[4]

It still appears insufficient:

“The thing that has me the most concerned is the speed and severity of what’s playing out here,” said Gibson Smith, a prominent bond fund manager with Denver-based Smith Capital Investors. “There’s just a lot of stress in the system.”[5]

But today, the question is different:

“Global fixed income markets this morning have lost confidence in the ability of the governments of the world to finance the fiscal stimulus they are proposing,” Carl Weinberg, chief international economist for High-Frequency Economics, wrote in a note to clients. “Traders, investors and speculators have looked at the size and cost of the fiscal stimulus proposed by the United States and other governments — especially Italy — and decided to sell sovereign debt of all kinds.”[6]

Note these questions are nearly—not quite, but nearly—opposite to each other. The first asks if the government is doing enough. The second asks if the government can handle what it’s doing.

Even a somewhat smarter man than Trump will have trouble answering a question when the questioner can’t decide what the question is.

David J. Lynch, Thomas Heath, and Taylor Telford, “U.S. markets fall sharply as rampant volatility takes hold,” Washington Post, March 18, 2020, https://www.washingtonpost.com/business/2020/03/18/stocks-markets-today-coronavirus/


  1. [1]David J. Lynch, Thomas Heath, and Taylor Telford, “U.S. markets fall sharply as rampant volatility takes hold,” Washington Post, March 18, 2020, https://www.washingtonpost.com/business/2020/03/18/stocks-markets-today-coronavirus/
  2. [2]David J. Lynch, Thomas Heath, and Taylor Telford, “U.S. markets fall sharply as rampant volatility takes hold,” Washington Post, March 18, 2020, https://www.washingtonpost.com/business/2020/03/18/stocks-markets-today-coronavirus/
  3. [3]Associated Press, “U.S. stocks climb 6% the day after biggest loss since 1987,” Los Angeles Times, March 17, 2020, https://www.latimes.com/business/story/2020-03-17/us-stocks-coronavirus
  4. [4]Associated Press, “U.S. stocks climb 6% the day after biggest loss since 1987,” Los Angeles Times, March 17, 2020, https://www.latimes.com/business/story/2020-03-17/us-stocks-coronavirus
  5. [5]Associated Press, “U.S. stocks climb 6% the day after biggest loss since 1987,” Los Angeles Times, March 17, 2020, https://www.latimes.com/business/story/2020-03-17/us-stocks-coronavirus
  6. [6]David J. Lynch, Thomas Heath, and Taylor Telford, “U.S. markets fall sharply as rampant volatility takes hold,” Washington Post, March 18, 2020, https://www.washingtonpost.com/business/2020/03/18/stocks-markets-today-coronavirus/

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