OT - Dow plunges 1,175 - worst point decline in history

[Ozz]

Originally Posted by Elefantino

I think we force them to take loans, as we did with TARP in 2008. And the loans can only be used as working capital, not for buybacks or bonuses.

Yes, it's nationalization.

+1

Plus, put all shares purchased as buy-backs into trust, along with shares of executive mgmt and board into trust to secure the loans.....sell the shares to pay back the loan once market rebounds....

[azrider]

Here is the text on the $500B portion of the bill:

Direct Lending Limitations: executive total compensation may not exceed $425,000; prohibition of stock buybacks during the duration of the loan; borrowers must maintain existing payroll as of March 13.

There are provisions in the bailout that talk directly to executive compensation and buybacks.

But yeah......lets give the money to the PEOPLE instead of the big bad companies. Companies that could possibly go bankrupt and not have the ability to provide as many jobs or any jobs at all when it's all said and done but HEY.......we got our $1500 stimulus checks.

[echappist]

Originally Posted by goonster

It depends, but in Boeing's case, intervene if necessary. Anyone who understands the supply chain impact and advocates against would be a sociopath. I felt the same way about GM.

Acquire equity, limit lobbying, etc.

(I don't like the term 'bailout,' too pejorative, often inaccurate)

Originally Posted by Elefantino

I think we force them to take loans, as we did with TARP in 2008. And the loans can only be used as working capital, not for buybacks or bonuses.

Yes, it's nationalization.

Yes to both of these
————————————

Originally Posted by azrider

There are provisions in the bailout that talk directly to executive compensation and buybacks.

But yeah......lets give the money to the PEOPLE instead of the big bad companies. Companies that could possibly go bankrupt and not have the ability to provide as many jobs or any jobs at all when it's all said and done but HEY.......we got our $1500 stimulus checks.

There were more than one sticking points that led to the stalemate

Also, there are numerous large companies (as epitomized by ATT) that laid off people after receiving the 2018 taxcut (or is it hand-out).

Money could either be applied in a Keynesian approach (for a change) or the supply-side stuff that even G H W Bush derided as voodoo. About time the former be tried, especially as the funds for social safety nets havent been replenished.

Or one can keep on handing money to the corporation, with the pipe dream that such an effort has an effect on an economy largely driven by consumer spending


As for “bankruptcy”, if it is chapter 11 (restructuring), it’s not too different from accepting money from the Fed. Only difference being, one negotiates with private lenders in the former (and accept concessions in return) vs negotiating with the Gov’t (and accept concessions in return).

Those with strategic importances (GE, Boeing, etc) can go to the front of the line, but the act of “give us money or the little guys suffer” is quite rich and unbecoming.

[jimcav]

Originally Posted by verticaldoug

It's a bit complicated, but a very simplified way to look at it is:

If you buy a stock, the cash goes who sold the stock, but the price is used to calculated the market cap of the company. So if you did not buy, the price would be lower. Lower Market cap.

Now some bonds, loans, revolvers which are the debt of the company have covenants in the prospectus. Some of these may be triggered if debt / equity ratios get below a threshold. This is particularly true in banking.

That's the simple reason.

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You should get a confirm from the broker. Everything should be disclosed in the confirm. I trade bonds as principal, so everything is in the price. The broker's spread is whatever price they could pay that was better.. It is at risk. You need to see the tape to see where the bond was trading in price to see what sort of spread the broker took.

if the broker takes a commission, then its riskless and he cannot add a principal spread. You are either Agent on commission or Principal on Risk. You can't be both.

saved me lots of google-time

[Tony T]

Originally Posted by Tony T

"On the day Trump was elected the Dow closed at 18,333"

DOW Intraday low of 18,214 today (closed at 18,592).

[Tony T]

Democrats and Treasury say they are close to a compromise on $2 trillion economic package.

“We expect to have an agreement in the morning,” Senator Chuck Schumer, Democrat of New York and the minority leader, told reporters just before midnight, as he wrapped up a final meeting with Steven Mnuchin, the treasury secretary. “There are still a few little differences,” he said.

[verticaldoug]

Originally Posted by jimcav

saved me lots of google-time

One problem retail has in the bond market is your small size. A lot of brokers will only fill you out of inventory.

So if the broker doesn't already own it, you are sol. Some of the best opportunities are in the off the run bonds. Doubtful brokers have that.

[oldpotatoe]

Had the 'back-boning' call to my FA yesterday...the 'proverbial', what do we do?

We don't rely on our investments for anything, we are VERY lucky in that regard. We changed our 'mix' in November to much lower risk tolerance blend..just because of the volatility..no crystal ball. BUT, as I mentioned that our 'stuff' was down about 14%, we 'lost' 14% of the money..no, he says, you lost 14% of the value, no money lost unless you sell...good point.

But we are changing nothing. He predicts a positive GDP for this quarter(ends in 7 days)...'maybe' 1%...he predicts negative 8-10% for next quarter, then another positive in the quarter after that...InMy and his HumbleOpinion....

[MattTuck]

Originally Posted by echappist

Money could either be applied in a Keynesian approach (for a change) or the supply-side stuff that even G H W Bush derided as voodoo. About time the former be tried, especially as the funds for social safety nets havent been replenished.

Or one can keep on handing money to the corporation, with the pipe dream that such an effort has an effect on an economy largely driven by consumer spending


As for “bankruptcy”, if it is chapter 11 (restructuring), it’s not too different from accepting money from the Fed. Only difference being, one negotiates with private lenders in the former (and accept concessions in return) vs negotiating with the Gov’t (and accept concessions in return).

Those with strategic importances (GE, Boeing, etc) can go to the front of the line, but the act of “give us money or the little guys suffer” is quite rich and unbecoming.

There is no free lunch. We will either pay for it in taxes or inflation (ie. loss of purchasing power). Agree though, that corporations have done little to be deserving of our (the tax payers) money. And direct to individual handouts is probably better -- though I still have some questions about propensity to spend on new demand (as opposed to paying of debt from previous economic activity).

We need to quickly divorce ourselves from the idea that the government has money. We give it the money. Governments don't support citizens, citizens support the government.

So called strategic companies should be helped, but not until their equity is nearly wiped out, previous executive bonuses are clawed back, and new independent board of directors are elected. If there is no pain felt by owners and management, there is no incentive to run the company differently.

Originally Posted by oldpotatoe

We don't rely on our investments for anything, we are VERY lucky in that regard. We changed our 'mix' in November to much lower risk tolerance blend..just because of the volatility..no crystal ball. BUT, as I mentioned that our 'stuff' was down about 14%, we 'lost' 14% of the money..no, he says, you lost 14% of the value, no money lost unless you sell...good point.

That is a bit of semantics. Not saying it is wrong, but it is probably on page 1 of the "financial advisor playbook" to keep people invested. I guess when you're up 50% and call him and say, "I've noticed the VALUE of our portfolio is up 50%. I'd like to sell it all to lock in my gains.", you'll see how he really feels about the distinction between value and money.

PS. Saw your post the other day, but didn't get a chance to respond. Hope you and the family are doing well. Sounds like you are in a rough spot. I'm thinking of you.

[jimcav]

Originally Posted by verticaldoug

One problem retail has in the bond market is your small size. A lot of brokers will only fill you out of inventory.

So if the broker doesn't already own it, you are sol. Some of the best opportunities are in the off the run bonds. Doubtful brokers have that.

I was just hoping to put my money into a company directly if I could. I suppose you mean that most aren't going to sell the off the run treasuries, as they'd be giving up yields?, obviously I know nothing on buying corp. bonds. I need to learn more on the various terms on my etrade bond screen as there are some companies I don't think will disappear that show >10% yield.

[verticaldoug]

Originally Posted by jimcav

I was just hoping to put my money into a company directly if I could. I suppose you mean that most aren't going to sell the off the run treasuries, as they'd be giving up yields?, obviously I know nothing on buying corp. bonds. I need to learn more on the various terms on my etrade bond screen as there are some companies I don't think will disappear that show >10% yield.

There are a lot of new issues in the bond space. Lowes, Humana and Mastercard all coming today. If you want to help cash up companies see if you can buy the new issuance.

[echappist]

Originally Posted by MattTuck

There is no free lunch. We will either pay for it in taxes or inflation (ie. loss of purchasing power). Agree though, that corporations have done little to be deserving of our (the tax payers) money. And direct to individual handouts is probably better -- though I still have some questions about propensity to spend on new demand (as opposed to paying of debt from previous economic activity).

We need to quickly divorce ourselves from the idea that the government has money. We give it the money. Governments don't support citizens, citizens support the government.

So called strategic companies should be helped, but not until their equity is nearly wiped out, previous executive bonuses are clawed back, and new independent board of directors are elected. If there is no pain felt by owners and management, there is no incentive to run the company differently.

Agreed on most of this

One thing that is actionable from all this is that I'm rethinking how I should fund my "company"-sponsored retirement plan. Originally, it's due to RMD concerns, as I have a pension, but given the general trends, I think there's now a greater urgency to do so.

[oldpotatoe]

[QUOTE=MattTuck;2680924

PS. Saw your post the other day, but didn't get a chance to respond. Hope you and the family are doing well. Sounds like you are in a rough spot. I'm thinking of you.[/QUOTE]

Doin better today, thanks for the kind words.

[MattTuck]

What happens when the rescue package gets signed?

Buy the rumor, sell the news.?

Jerome Powell: Cue up the Wagner.

[mcteague]

Made a quick meme after logging off Fidelity and T Rowe Price websites.

Tim