stock market crash

[DealorNoDeal]

At the moment some folks seem convinced they are buying the dip, which I think is madness... Here Mr Buffet's indicator showing the past two recessions with stock valuation to GDP. The market bottom is always below GDP, which makes sense, otherwise it wound't be a recession. If we assume the previous market highs will act as support, then this sell off in the markets isn't over until 70-80% correction. In other words the correction has barely begun.

Something else to consider if buying into stocks at the minute (whilst assuming the above becomes true), your average return (not considering dividends) will be 1.25% per year for the next 10 years.

It's more obvious if you look at the ratio of total stock market to GDP (2nd chart in first url). A decline to 75%, or lower, could be on the cards. Also, with falling GDP, stock markets would need to fall even further to even reach the 75% level.

Buffett Indicator: The percent of total market cap relative to Gross National Product?

If we get single-digit Shiller P/E then the market would be cheap.

Shiller P/E Ratio: Where Are We with Market Valuations?

[LondonManc]

Just because it seems unfathomable should not be a reason of can't. If it does happen I'm certain you'll see the US & UK governments confiscate personal holding of gold.


Fitch Revises HSBC's Outlook to Negative on Coronavirus Outbreak



HSBC to cut 35,000 jobs worldwide as profits plunge


HSBC warns of restructuring pain ahead as outlook darkens - It's like everyone forgot about the troubles in Hong Kong since the virus business. Trouble is still brewing in little China, growing by the day. Nothing to see here. Everything is fine. Oh look cherry blossom.


Kyle Bass Says Hong Kong Headed for ‘Full-Fledged’ Bank Crisis

Firstly I do my own research - always.

Try doing up to date research or understanding what you've researched.

Fitch revising the outlook to negative has not changed the rating of HSBC; it remains at A+; indeed parts of the bank have been upgraded to AA-.

Job cuts aren't happening until after Coronavirus pandemic is over, if at all.

Their profits are down - to an eye-watering £3.8 billion pounds - yet people aren't happy. This says more about the horrid global greed that is crippling the world than HSBC. Yes, they probably run bloated and unnecessary teams, but I haven't worked in a bank that hasn't. One thinks VBA macros are an acceptable ETL tool, another picks systems based on who picked it rather than which is best and another one doesn't know how to allocate budgets to the correct GL code so have to let contractors go early because they can't figure out how to change it!

All banks go through series of growth and reduction of staff - often a CEO will come in tasked to increase profits. He can't suddenly magic revenue from thin air so to get his bonus, stuff the staff and future ability to execute, he goes on a dramatic cost-cutting exercise. Profits are up, he buggers off with his bonus bag and leaves the bank unable to deliver because they've got a vastly reduced, demoralised workforce. Next CEO is tasked with getting the bank functional again and ramps up staff. Rather than doing this steadily and proving that the teams can deliver, there is a mass onboarding, sod the quality, and the bank is bloated and costs compared to productivity are spiralling. Rinse and repeat.

Hong Kong heading for a banking crisis? Oh right. Good job HSBC is headquartered in London then!

Research does not equal knowledge.

[scooterscot]

Hong Kong heading for a banking crisis? Oh right. Good job HSBC is headquartered in London then!

Research does not equal knowledge.

Yeah.. The bank left Hong Kong after the Island was handed back to China but someone forgot to move its mortgage business

Does that mean when the HK economy collapses London HQ gets burnt? Twisted.

[ChimpMaster]

At the moment some folks seem convinced they are buying the dip, which I think is madness... Here Mr Buffet's indicator showing the past two recessions with stock valuation to GDP. The market bottom is always below GDP, which makes sense, otherwise it wouldn't be a recession. If we assume the previous market highs will act as support, then this sell off in the markets isn't over until 70-80% correction. In other words the correction has barely begun.

Something else to consider if buying into stocks at the minute (whilst assuming the above becomes true), your average return (not considering dividends) will be 1.25% per year for the next 10 years.

There has only ever been one occurrence of an 80% fall in stock markets, over a period of years, during the Great Depression. They didn't have the same financial weaponry back then to put a floor under the economy. To expect the same magnitude of fall now is simply stupid and uneducated, and tantamount to scaremongering and self-serving greed.

The bottom may not be in yet, but as I said in a prior post just before the Fed announced "unlimited QE", we aren't far off the bottom now.

[AtW]

In 2 months unemployment rate in US will be more than ever recorded

[Whorty]

There has only ever been one occurrence of an 80% fall in stock markets, over a period of years, during the Great Depression. They didn't have the same financial weaponry back then to put a floor under the economy. To expect the same magnitude of fall now is simply stupid and uneducated, and tantamount to scaremongering and self-serving greed.

The bottom may not be in yet, but as I said in a prior post just before the Fed announced "unlimited QE", we aren't far off the bottom now.

Scoot is one of these ...... I'll let others decide which one

[eek]

There has only ever been one occurrence of an 80% fall in stock markets, over a period of years, during the Great Depression. They didn't have the same financial weaponry back then to put a floor under the economy. To expect the same magnitude of fall now is simply stupid and uneducated, and tantamount to scaremongering and self-serving greed.

The bottom may not be in yet, but as I said in a prior post just before the Fed announced "unlimited QE", we aren't far off the bottom now.

You hope, I wouldn't be so sure - large parts of the economy will have to be if not rebuilt then very carefully restarted.

Unless Tarbara is right and this disease is going to kill more than 1% in which case all bets are off.

[MrMarkyMark]

Scoot is one of these ...... I'll let others decide which one

He's just trying to move the markets

[scooterscot]

There has only ever been one occurrence of an 80% fall in stock markets, over a period of years, during the Great Depression. They didn't have the same financial weaponry back then to put a floor under the economy. To expect the same magnitude of fall now is simply stupid and uneducated, and tantamount to scaremongering and self-serving greed.

The bottom may not be in yet, but as I said in a prior post just before the Fed announced "unlimited QE", we aren't far off the bottom now.

And that means it cannot happen again?


Coronavirus: UK among economies risking record slump

The coronavirus pandemic could trigger a global slump bigger than the Great Depression of the 1930s, a closely watched international survey suggests.


Manufacturing and services sectors in key geographical areas, including the UK, US and the eurozone, saw record falls in activity during March, according to Purchasing Managers’ Index data.


The UK figure, dropped from 53.0 in February to 36.0 in March.


Readings below 50 indicate contraction.


The data is published by IHS Markit and the Chartered Institute of Procurement and Supply (CIPS).


'Devastation'
Andrew Wishart, an economist at Capital Economics, said the PMIs were probably underestimating the scale of the economic fallout.


"We are forecasting a 15% fall" in economic output in the period from April to June, he said, "a larger fall in output than in the financial crisis or the Great Depression," he said.

But we have financial tools!!!


"It’s increasingly difficult to find the words to describe the devastation as every region in the world fights to save human life as the first priority,” said Duncan Brock, CIPS group director.


“The likelihood of a global recession is now a given, though its duration and severity has yet to reveal itself.”

Samuel Tombs at Pantheon Macroeconomics said the Italian and Spanish figures showed the slump might worsen in April, when the level of infections is expected to peak in those countries.


As for the UK figures, he said: "In one line: horrendous, and probably not reflecting the full devastation."


The comparable figure for the US hit a new low of 40.9 in March, down from 49.6 in February.

[LondonManc]

Yeah.. The bank left Hong Kong after the Island was handed back to China but someone forgot to move its mortgage business

Does that mean when the HK economy collapses London HQ gets burnt? Twisted.

If you knew who the largest shareholder in HSBC was, you'd be able to answer that. As you don't, because your research is up there with Chris Kamara's, I'll tell you. It's Ping An Insurance, biggest insurance company in China who also own the Lloyds of London building among many other global assets.
Throw in that London has by far its largest balance sheet and, no, don't worry, HSBC will be well-placed. They've also got a very strong mortgage book and have always been more cautious lenders than the likes of HBOS.