I stopped doing this a while back. I had a couple reasons. One was that it was pretty much the same report every time - the market would zoom up or notch back on the what seemed to be the weakest of reasons, and had little enough connections with the functioning of main street, much less Wall Street. We would hit another milestone, the confetti and balloons would drop from the ceiling, some supposed sage heads would tut-tut about a coming "correction" and thing would just go on.
Another reason was the swings have become much more dramatic over time. When I started this, a market surge or drop of 500 points was worth noting. In the past few years, it has become common, and the market extremely volatile, even though it has continued to maintain the upward trend of the past twelve years.
In the past two weeks, that has changed dramatically, and with the arrival of COVID-19, we have gone into a tailspin. Part of it is that at the federal level, we have had a horrible response to the disease, engendering panic in a market that sustains itself on continual growth and good news. But also, at the federal level, we have a pretty empty quiver when it comes to how to handle such an economic situation. We have already given out huge tax cuts (which a lot of firms used to buy back their own stock, a tactic that will someday be taught as being as stupid as buying on margin in 1929). We have already bailed out parts of the economy affected by our bone-headed trade wars. And reducing the lending rate to practically zero only bought us a one-day reprieve before panic has taken hold again and sent us to the present state. For an administration that has used the success of the stock market to offset its own nepotism, incompetency, maliciousness, and authoritarianism, to suddenly have that single aspect of slightly-warped good economic news tank puts them behind the proverbial eight-ball.
The good news (such as it is) is that in the face of the abrogation of federal responsibility, the states and the very corporations that make up the DOW have been stepping up. Washington State has been working to cushion the medical and economic effects of this virus, and has pushed hard for preventive measures to avoid overloading our health care system. Its leaders have been leading, not denying. The state government has put aside funds in a "rainy day" account, and now we are looking a deluge.
Large corporations have sent their people home to work where they can, and in addition many have seen to help out those small businesses that rely on them and their workers to make their own rent. Small ones have been struggling to keep its workforce paid as their industries are idled.Yes, this is in part enlightened self-interest, in that if everyone gets sick, no one will show up for work, but also in reacting to a this developing threat with positive answers. And lesy you think I have a soft spot for corporations now, there are more than enough mutton-heads in the business community to balance this out.
I have no idea where this goes next. Do we continue the plunge that has wiped out all of the gains since the last inauguration? Do we suddenly see a rally as the ever-spooked market sees actual improvements in fighting the disease? Will the COVID-19 novel corona virus fizzle out, like SARS did? Will it return in waves, like the Spanish Influenza did a hundred years ago? Is this the newest normal? Regardless, look to the markets as reactive as opposed to determinate, as permanent as a spring breeze, and as reliable as a Facebook meme.
I don't know if I will return to tracking the market. Maybe if it hits 30k again.
More later,