Wall Street Avoids Main Street
May 8, 2020
“Ideas shape the course of history.”
“If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.”
“Markets can remain irrational longer than you can remain solvent.”
Spencer Platt via Getty Images
Wall Street Avoids Main Street: Unpredictably Irrational
In normal times the stock market and the economy are fairly aligned. In normal times when the economy gets shaky investors shy away from equities and turn to bonds. These are not normal times. “The gap between markets and economic data has never been larger,” Citigroup’s global credit strategist wrote recently.
When the coronavirus crisis first hit, Wall Street had a meltdown; stocks plunged so rapidly trading was halted periodically to stop the chaos. Fast forward a couple of months and the end to the global pandemic is nowhere in sight, 30 million plus Americans are recently unemployed, and the economy has shrunk big time. So why is the stock market still doing pretty good?
Arguably for two reasons. First, the Federal Reserve has been propping up the markets by announcing some sweeping measures meant to stabilize the economy; the maneuvers have injected an enormous amount of liquidity into the market. That, coupled with a gigantic amount of Congressional spending, has seemingly calmed investor’s nerves.
Second, there’s really no lucrative alternative to investing in stocks right now. Bonds continue offering super-low returns, so buying stock in companies still profitable despite the Covid-19 recession looks pretty attractive. As one analyst noted “the motivation in the market right now is driven by the policy intervention and not the economic fundamentals.”
What’s scary is that no one has any idea what the future holds. “The coronavirus outbreak has rendered forecasting impossible,” one economist said. Even if the stock market recovery holds, that may not translate to a comparable economic recovery. JPMorgan’s chief investment officer said the market’s optimism reminds him of the early days of the financial crisis, predicting “There’s a lot of hardship ahead.”
- April employment report is expected to show more than 20 million lost jobs and depth of pain as US economy shut down (CNBC)
- Two views on the future of which country will emerge from the pandemic with the upper hand: Warren Buffett: ‘Never, ever bet against America’ (Yahoo) and World moving to new order with China on top: Bridgewater’s Dalio (Nikkei)
- The Changing Value of Money (Linkedin)
- The Results Are In for the Sharing Economy. They Are Ugly. (NYT, $)
When The Stingers Become The Stingees
- If the coronavirus lockdown has been bad for economies, it’s been good for the environment and ecology. This spring, while people have been confined to their homes, wildlife has faced less human disturbance, traffic and polluting fumes. One animal that could see a much-needed revival is the wild bee, whose populations are rapidly declining around the world due mostly to habitat loss, pollution and pesticide use.
- “These creatures are vital to what we eat and what our countryside looks like,” said the chief executive of the Bumblebee Conservation Trust. “They provide a whole ecosystem service.” A world without bees would look very different and change our lives enormously.
- Bees are the world’s most important pollinators, fertilizing a third of the food we eat and 80 percent of flowering plants. Bees and other pollinating insects have a global economic value of some $150 billion. The world-wide shutdown has meant a significant reduction in air pollution, which has a huge beneficial environmental impact.
- Bee specialists hope that increased awareness could be a boon for conservation. But as with all the other beneficial environmental changes seen at present, any long-term benefits for bees would depend on these changes being carried forward as lockdowns lift. (BBC)
Reopen With Care: Tragedy In India
- At least 11 people died and hundreds were hospitalized after gas leaked at a chemical plant in southern India early Friday. The leak in Visakhapatnam, an industrial port city in Andhra Pradesh state on India’s east coast, was from two 5,000-ton tanks of liquid chemicals. Local police said the leak occurred when restarting the plant after the coronavirus shutdowns imposed in late March were eased.
- This calamity was an immediate reminder of the 1984 Bhopal catastrophe, widely considered the world’s worst industrial disaster. In both cases, the leak occurred at night, releasing gas into the crowded homes of workers and their families living around the factories. And both plants had overseas owners.
- These incidents are only the most high-profile of thousands of industrial accidents occurring annually in India. The exact number is unknown as many accidents go unreported. Government statistics show 54,000 killed or injured in factory accidents between 2014 and 2016, but workers’ rights advocates claim the numbers could be up to 15 times higher.
- And despite the existence of many laws to protect workers in India, few are enforced. Police resources are scarce and officials easily compromised, meaning the investigation of industrial accidents is rare. Owners often escape sanction. (Guardian)
Additional World News
- ‘They’re fearless’: the women battling to free Myanmar from meth (Guardian)
- Forests Are Vanishing More Slowly, But Not Slowly Enough (Bloomberg, $)
- It’s not your imagination. Allergy season gets worse every year. (Vox)
- China’s Military Is Tied to Debilitating New Cyberattack Tool (NYT, $)
- US to delay Hong Kong report to see if China ‘further undermines’ autonomy (Guardian)
- China Says It Contained COVID-19. Now It Fights To Control The Story (NPR)
- Profile of a killer: the complex biology powering the coronavirus pandemic (Nature)
- Hoping Llamas Will Become Coronavirus Heroes (NYT)
- Beware Overblown Claims of Coronavirus Strains (Atlantic)
- The psychology behind why some people won’t wear masks (CNN)
- Opinion | The Virus Is Winning (NYT)
- Trump administration rejects CDC guidance on reopening US amid coronavirus (CNN)
- America begins to reopen but businesses and customers in no rush to get back (Guardian)
- Coronavirus Reopenings: Many Churches Consider Plans to Pray in Person (NYT)
- ‘Stop throwing us bare bones’: US union activism surges amid coronavirus (Guardian)
- Will Americans Lose Their Right to Vote in the Pandemic? (NYT)
- This Doctor Is Suggesting COVID-19 Lockdowns Are A Conspiracy To Take Away Your Freedom (Buzzfeed News)
- Opinion | Don’t Be Fooled by America’s Flattening Curve (NYT)
- How What You Flush Is Helping Track The Coronavirus (NPR)
I Infected The Sheriff, But I Did Not Infect The Deputy
- The coronavirus pandemic has altered the nature of policing at the nation’s 18,000 departments. Chiefs have told their troops to avoid physical contact, resulting in fewer arrests and traffic stops. Officers have been told to focus on enforcing health orders from a safe distance or with technological aids like drones. New schedules have been devised to prevent outbreaks and cover for sick officers.
- Adding to the challenge: crime rates, after dipping in the first weeks of the lockdowns, are rising back up in some places at the same time that drops in local tax revenue are threatening law enforcement budgets. And because they can’t work from home or consistently socially distance, police have been hit hard by Covid-19. Of the 55,000 New York City officers and civilian members, 5,237 — 9.5 percent — have tested positive, including 38 who died.
- In Chicago, 442 of the 13,000 officers tested positive, including three who died. On March 31 in Santa Rosa, a city of 177,000 north of San Francisco, 43-year-old police detective Marylou Armer became the first police officer in California to die from the virus. She was the first Santa Rosa officer to die in the line of duty since 1935. (WSJ)
- Former Georgia Police Officer And His Son Arrested In The Death Of Ahmaud Arbery (NPR)
- Customer shot a McDonald’s employee after being told to leave due to coronavirus restrictions, police say (CNN)
- America in 2020 is the most divisive we have ever seen it: Armed black citizens escort Michigan lawmaker to capitol after volatile rightwing protest (Guardian)
The Law of Politics
- Supreme Court Unanimously Overturns ‘Bridgegate’ Convictions (NYT, $)
- Justice Dept. Drops Case Against Michael Flynn (NYT, $)
- Don’t Forget, Michael Flynn Pleaded Guilty. Twice. (NYT, $)
- Flynn decision cheered by Trump and the right, as critics decry it as an attack on the rule of law (WaPo, $)
- When nature calls it still cannot be ignored by politicians or jurists: Supreme embarrassment: The flush heard around the country (CNN)
March Eternity Brings April Uncertainty
- Dr. Adrian Bardon studies the “philosophy of time,” meaning he studies how the numerous psychological processes that make up our understanding of time affect the way we see the world. Bardon offers insight into why so much of this coronavirus quarantine period feels so endless in the moment, and like it’s flown by in retrospect — or why March felt like it lasted 30 years, and April felt like it lasted 30 minutes.
- Some general factors that have the biggest influence on time perception are getting engaged in this quarantine situation. Subjective time perception mainly has to do with the combination of emotion and attention. The type of emotion we experience affects the type of attention that we have to pay, in combination with our external circumstances.
- When we’re relaxed and engaging in some kind of routine or productive activity, we’re experiencing what psychologists call flow — this relaxed, outward-directed attention which can be pleasant and calming. It results from different activities for different people — knitting or carpentry or playing an instrument or golfing or yoga.
- Being in this quarantine situation involves different kinds of demands on our attention. Everyone’s routine is disrupted, and everyone is to some extent experiencing stress and anxiety. We’re not doing what we normally would do — we’ve been broken out of our routine and broken out of flow. What results is the opposite of flow, or rumination. That’s negative, inward-directed attention, or simply, having a lot of stuff on our minds.
- Rumination is closely associated with subjective reports of time slowing down and dragging by, but also with a sense that time is flying by. Instead of doing tasks we would normally feel productive and good about, it feels more like we’re treading water, or trying to deal with situations we don’t want to deal with. And then in our retrospective judgment of the passage of time, it seems like things went by really quickly because we didn’t really accomplish anything. (Vox)
- I think 100% of kids can all agree that the math doesn’t add up here: Nearly Half of Men Say They Do Most of the Home Schooling. 3 Percent of Women Agree. (NYT, $)
- Søren Kierkegaard’s Struggle with Himself (The New Yorker, $) & Kierkegaard on the Spiritual and Sensual Power of Music, the Essence of Genius, and the Key to a Timeless Work of Art (Brain Pickings)
- How China’s ‘Bat Woman’ Hunted Down Viruses from SARS to the New Coronavirus (Scientific American)
- The Malaysian Job: How Wall Street enabled a global financial scandal (Harper’s)
- Betting it all on 311 (AV Club)
- The Great Barrier Reef’s Great Big Complicated Story (Afar)
- In search of Inigo Philbrick, the disappearing art dealer (GQ)
- We all need a good laugh to start the weekend, here’s a funny video that many of us probably can relate with: Day 1 in quarantine vs Day 50
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