Soooooo far OT - FTSE100 (and other World markets) and recession

[David]

OK, well off topic (apart from DIY investors) but there are some sensible and informed people here.

Our last really big recession was in 2008 with the Great Financial Crash. Looking back, around January 2009 the FTSE100 was nearly down to 3,000. It took until January 2013 to get back up to 6,000. Noting that it had been bobbling around the 6,000 to 6,500 mark for most of 2007.

Now we are in (some places just exiting) lock down with unemployment rocketing and a load of businesses going to the wall.

Yet the FTSE100 is back up from just below 5,000 to over 6,000 already before any indication of possible business recoveries, and with oil prices way down. It seems to be some kind of exit lock down euphoria with no obvious financial sense.

Does anyone know what the f*ck is going on?

Cheers

Dave R

[Brian Gaff (Sofa)]

Yes they are going to put a tax on the F word and the word unprecedented as well. fifty quid a time. Brian

[Jeff Layman]

They'd make a lot more taxing any posts in uk.d-i-y beginning with "OT", and any which don't, but are OT.

[soup]

Nope or they would be multi-millionaires with their grasp of the market(s).

How many people that earn (say) £hundred a minute do their own repairs?

>

[Andrew]

The stock market is a LEADING indicator. It crashes before unemployment starts to rise, and then starts recovering (when the brave people start re-investing) long before the real economy recovers.

The problem this time is the way dividend payments are collapsing or just being cancelled. The main beneficiaries of dividends are pension funds who have been using them to compensate for ultra low interest rates.

The government (via the FCA) have even told the banks and financial outfits like Aviva that they cannot pay any dividends. Lots of private companies who could make dividend payments are simply using the fall in their stock price (so artificially boosting the yield that the shares give) to cut their dividends too, which is double whammy for a lot of people with pension funds in drawdown.

No public servant has lost any pay or any of their guaranteed pensions though.

We are in for an interesting year.

[Andrew]

In mid march, plenty of people with SIPPs and share ISAs were watching hundreds of pounds evaporating from their investments every minute.

[soup]

Very true. I was more thinking of people knowing WHY it was happening than them knowing WHAT was happening.

[Jake56]

Not necessarily with policy changes like a lockdown.

It didn?t with the unemployment rise due to the lockdown.

Not necessarily with the lockdown relaxation, because there hasn?t been any brave people starting re-investing yet.

So doesn?t explain why the FTSE is doing fine.

So doesn?t explain why the FTSE is doing fine.

[GB]

My 5p worth is that the governments worldwide are dishing out money like there really is a money tree. The index going down to 5000 reflected uncertainty about how generous the government would be. Up to 6000 reflects that they are being very generous.

There's also the point that we may start to take the stoical view that we cannot be safe. So, we may just go back to work and accept some of the increased death toll as a result. PHE think that around 20% of Londonders were infected. There weren't riots or bodies in the streets.

[Vir Campestris]

I hope you are right. And it's only a year.

Andy