« The Weeds

What is the economy, stupid?

2020-08-11

Vox's Emily Stewart joins Dara and Jane to discuss the relationship between "the market" and the "real economy."

Resources:

"The Stock Market Is an Engine of Civic Destruction" by Libby Watson, New Republic

"Who gets to be reckless on Wall Street?" by Emily Stewart, Vox

Hosts:

Dara Lind (@DLind), Immigration reporter, ProPublica

Jane Coaston (@cjane87), Senior politics correspondent, Vox

Emily Stewart (@EmilyStewartM), Reporter, Vox

Credits:

Jeff Geld, (@jeff_geld), Editor and Producer

The Weeds is a Vox Media Podcast Network production

Want to support The Weeds? Please consider making a contribution to Vox: bit.ly/givepodcasts

About Vox

Vox is a news network that helps you cut through the noise and understand what's really driving the events in the headlines.

Follow Us: Vox.com

Facebook group: The Weeds

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This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
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So apply now wobbly, dot, com, Slash box and see if you qualify for a ppp alone that W O m p. L, why dot com slash veo Ex wildly is not a lender, firms and programme rules apply. hello, and welcome to another episode of the weeds on the VOX media podcast network. I'm pro public as Darilyn Atlases, is currently recording an audio book of his forthcoming one billion Americans, which you should pre order, not only so that Matt doesn't have to the troll all of us relentlessly over buying his book, but also because, apparently, if you send me a screen of your pre order, you how you
who will be entered in a competition to get you select an upcoming weeds white paper jane- and I have taken advantage of this It matters not in this week to do two things. One we are not having a white paper because were guarding the loins or whatever referred the upcoming, whatever you guys are going to impose on us, I'm emotional I prepared for an onslaught of swedish administrative data. No, I mean Swedish administrative data would violate comfortable for us. I feel You wanna get us really out of our comfort zones right all that the Another thing that we have done is taken advantage of this opportunity to have a conversation about economics in the economy. Leave it Matt might find horrendously basic, but because we are a couple of dumb dumps seems to us to be pretty important. We have got gotten boxes. Emily Stewart
to come. Join us. Emily is, Inter Alia, and economics writer for vocs and has been doing some of the clearest explanation of lake. The relationship between what kind of the investor lass thinks is going on in the economy and what everybody else is hearing and the extent to which these are an art. The same thing right this is ban. This has been a question that, our and I have been talking about a lot no question I've been having is that at the moment, the economy for Normie is is bad, but the economy for the stock market as exhibited by anyone has gotten into Robin Hood over the last couple of months. It's pretty awesome and the stock market. It's interesting because it seems to me and to Dara and to perhaps you listening at home to be completely disconnected from what the economy is doing, and I don't understand it. So we thought we should talk to Emily, who does on
Did it yes star as vigorously shaking her head because, right again, the airy visual medium, so we wanted to start out anyway, if you can walk us through. This might seem like a little bit of a basic ocean, but why is the economy so bad in the stock market? So good? I mean honestly like this is the thing that I think about of the time, and I think, even when you ask people who work in this way, part of them, they will just say. I honestly, I'm not exactly sure like this. It's wild so today before we.
The signing of the above, the ok. What do you think is going on? There are a couple of things that have happened are really remember as it back in March stock market thanks a bunch and it really been rallying, since nobody has one exact explanation ever for what's happening in the market, because it's not a single person. It's not pressure, you don't know a couple things have happened. One is the Federal Reserve has dumped a ton of liquidity into the market, so their buying their thing that they're going to buy a corporate diet and corporate bond. So that really is put some confidence back and you also have a lot of retail investors that Jane alluded to. Basically, people were sitting at home Super board playing on the stock market and then today was hurrying to someone and looking up within and specifically with the ESA ninety five hundred, which is that big benchmark in nice, and what you see is that it's really five text stocks that are driving this.
Facebook, Amazon, Apple Microsoft in Google account for a huge amount of the ESA ninety five hundred, and they are up a time if you take them Abbe S MP, at least in Lage alive. The rest of this dogs are on average down. So if there is this giant tech rally, so basically that is sort of What's going on, I think pretty now. Obviously, the issue is that the stock market is not really reflecting what's happening in the real economy today. So please talk to us a little bit more about why that is because, like you know the understanding of the stock market that I have as someone as you know, I do who is aware of it. Only vaguely at a distance is that most of the action is supposed to be happening on the part of professionals like people who aren't just like Robin Hood at best investors in our fooling around at home as their board, but who
actually study economic trends for a living and are supposed to be able to reasonably well approach to me what is actually happening in the economy and where it is best for them to invest their funds? Are they as clueless as everybody else is right now? Do they actually believe that things are going to get better eminently or they could have deliberately trying to pump up an economy that their worried might be flagging? Were I think, then, retail investors aren't big enough, really moved the market. This is bigger people and their couple things and there's not worthy and wealth of park. Your money right now that super lucrative interest rates are super. Allow those that Mauritania, where it is actually yes, these texts got socks, maybe overvalue, but for now
in a tech bubble. These are companies that have high valuations, but they have a lot of money. It's not a company. That's gonna! Go under tomorrow. You talk about the price of stocks is supposed to be the expectations of future earnings. So this is the market basically saying they think that the economy will be fine. Now some of that might be wishful it seems like the market is assuming that Congress is going to pass a stimulus, though it seems like the market is kind of assuming there will be a vaccine that everything, we'll be fine, and when you talk to be war experts in this those how you like listen. This may all be super duper wrong and we might all be screwed in six months and have no idea. There is no guarantee that this couldn't come crashing down. Lilies renounced inflate the market is assuming things are going to be. Ok,
So, while adsense concerning, so I have a lot of all of you, I have many follow up questions, but I think just to back up a second for folks who are perhaps like me and our coming at this from the angle of thinking about the real economy, and and I'm putting real economy and quotes here. What does that relationship? Look like on the ground and more directly, because I think clearly, we see over and over that politicians are thinking about the stock market as being in some way related to the economy, which is why there are a couple
But there is a new republic peace from a couple of months ago that essentially argued that if these stock market didn't crash, we would never get the krona viruses that assistance that many Americans need, because so many Republicans basically interpret the stock market as being a means by which the economy is clearly working and that now you're starting to see people who are essentially and Donald Trump, constantly uses the stock market as an indication of how well the economy is going. So How true is that relationship? How closely tied is this relationship? Are they parallel journeys? Are that what what's happening there over the south market? There is a thing called, basically the wealth. The fact where people feel like the economy is better is this stuff monkey is better and might spend the little bit more, especially the more affluent people Even if they don't have all of their money, they're not making money off of it. You kind of make you feel better about the economy, so that is one
thing and then also is suppose the leaf was to be a leading indicate our rights of them use. It starts to move for the economy, certain move. If you look at the great recession, the stock markets are to recover love it before the economy did so right now this does seem to be saying: things are going to be awesome sometime in the future, which again I don't know it's important to emphasise that the sophomore year can be wrong by software. Get doing while kind of does make people feel better, and I think also when it comes to this is likely to politicians and republican politicians. We are stuck in a little bit of a conundrum here, because the stock market is doing well, and so they will point to that and say was sound work. It is fine in a sort of certain is an excuse not to do more stimulus. So it's a little bit
How far, especially if you think that investors are assuming that there will be more stimulus and that, while someone gets doing while so this is something that I think is really come to a head. As we ve seen the star market, decoupled from job numbers, certainly and arguably sea, like the broader real economy as well, but it gets at something that lake I personally have been fascinated by, at least since the inauguration of Donald Trump and possibly earlier than that, which is that for all of the rhetoric about how the private sector is Nessus verily, more efficient, more flexible and more forward. Thinking than government is in is going to you know, because their incentivize to get things right, they're not going to screw up, is often it seems that people who invest money for a living, don't necessarily understand how Washington works and when they're trying to make assessments about how to spend their money. Based on that they're doing things
assuming that Congress will reach another stimulus deal, even as all indications out of Congress are that it will not, and I'm wondering in your reporting, how do the people, who you talk to what's the relationship between like their their assumptions, about how Washington works and who's going to be good? them and who you know when politicians will be able to act to save them like how did those play out in situations like this, where it seems like if you were actually up, in your prior based on the news coming out of Congress. You would be saying: okay, it's now looking a lot less likely than it did two weeks ago that something's going to come up. I think there are a couple of things here. Obviously, policy is the only thing that moves,
so it can be a random headline. I mean even look now in the last few months. Every time some random Pharma company has good news on a vaccine. The stock goes wild so that it's not always just policy. I think that the conventional wisdom is what you would think is that Republicans are supposed to be better for the stock market and ahead of this, I was kind of looking this up to see what happened, and it's not super clear, but the market has actually done a little bit under under democratic president than it has republican President's with not necessarily republicans in charge. No regulations is what's best for markets, but we That really is just circumstantial. We don't have a huge amount history here. I ve only had forty five presidents. I think that there is the markets are efficient to a certain extent that no one can predict the future. Nobody knows is going to happen in. There also has been the sense in recent years that council Something has to get right. We've been in a pretty huge rally since the recession, and obviously that has turned
A little way now, but again were back in the rally. So but it really knows exactly what is going on, but it just seems like new. There is the saying they, among came the retail investors, that stocks can only go up, which is not really truly suffer, that a kind of is that individual stars were always go up, but over time the stock market will improve generally. So, but that's kind of what's going on here, they're, not wrong. So let's take a blade. Does I think that it might be useful to get in to how we should be thinking about the stock market in an election year in the first place, because, again there's that idea that, like how politics plays into this? But as DORA put it, politicians don't really seem to understand the stock market and people who work in the stock market? Dont understand Washington, Support for this episode comes from visa, helping you rethink how you drink
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wondering whether the people on the trading floor, new things, the rest of us didn't or whether they were just kind of not reacting to the things the rest of us knew, and then there was a period in March when all of us in this off market got super duper freaked out very suddenly, and it wasn't that a whole lot changed in that time, but the stock market freaking out, did itself lead to a lot of other people taking the front more seriously. Certainly the president taking different more seriously and it seemed to be a pretty decent example of something It seems from again from a distance to be the stock market, assuming that the federal government is taking care of whatever needs taken care of, and then usually realising that Donald Trump isn't, particularly that that doesn't mesh with Donald Trump particular agenda as president and like panicking about that, we saw that the cage on a couple of rounds with
tariffs we saw that on, I think, one occasion with North Korea, where, like once things, start getting really real the stock market goes from. We should assume that everything is fine in Washington, because we have a president who talks a good game about too many regulations to oh, my gosh. Everything is terrible, then that market the stock market was kind of right back in March. Think pathetic again, so, if you think about again the stock market leading indicator and tell you what's gonna happen: the stock market back in March, Bingley Holy Shit things around get bad in the economy. Night. Incorrect millions of people have lost their jobs. Dv has fallen. And now that I think the confusing thing is level. What is it they now because I don't feel like things are being better like? If you asked me what I think my life looks like in december- it's not particularly fine, I'm not going outside this is by, and maybe I'm wrong by this market feeds the thing my December life is really awesome of any
the way things have gone through the same thing where the market be like bowling. This could give very bad, but you also have to think back to link so before down from his thoughts did way back in twenty. Sixteen everybody was going to tell you. I reported on this as the submarines, good tank of dollars from winds, everything's, going to help a black, alas, deny Donald Trump Winds, and there was maybe in our I'm, not sure the time where the futures markets that really took a dive and then everything I'm sorry to come back and by than exporting everything was fine. So you don't sometimes the stock markets sometimes it's rights, knows investors really freak out, and now I mean honestly truly everybody before that- everybody, but a lot. In summary, I would tell you there is no
away that adults from when stocks will do well and then kind of look at. But what happened with means, as the submarine doesn't always know what the future is going to be, but we also don't always know why the stock market is going to do what it does. How would you describe the kind of conventional with outside of like any particular news event among the kind of stock watching world of what kinds of politics and politicians are good for them and when they should be when things in Washington are important enough to kind of deleting the market right. So I think the conventional wisdom is that divided government is best because what one investors want most. Certainty and when I don't worry, I'm right there with Tom, I one hundred percent get it I long for stasis uncertainty, I get it right. Then you know, even if the situation is in
awesome for me like. I can figure out my way around it. What they wanted to know what the policy is going to be six months from now and that it's going to be the same, not that nobody knows, and so generally the conventional wisdom is that gridlock is good, because you figure nothing's going to change, and even if you don't love the regulation, and as such, if you have enough money, you're, a big company, you figure out your way around that so that sort of the convention wisdom here? Only ass Jane said at this point I would very much like is all my life, but who knows so something? that happens in our end and in may given where poles are right, now there isn't go. You know it's possible that the election won't look close enough going into the home stretch. For this to be a thing but like off, in every two or four years, as you approach election day, start seeing a wave of stories about the past the days changes in the stock market as stocks reacting to the prom
fact of one party here and not the other party doing better in the material area are doing better in the mid term, doing better in the presidential election kind as news consumers, is it ever a good idea to trust in that kind of thing and what should people be looking for as we go into the kind of home stretch of the presidential election in terms of how to read the market? Well, my first line on this is always most. People should not be trying to play dots and guessing where they're going and and her quick unless they are playing with money that they are willing to lose even the best investors screw up. So I don't know I'm tryin to every I understand it's fun to play on Robin Hood. When I was rapporteur for a story I downloaded- and I was like- I can see how this can be very fine. I have you dig did by most, people should put their money, firstly, the money that they really care about long term index file.
But if you really want to look for interviews, I may I would say right now, given that Joe Biden is doing pretty decent in the polls, it's pretty likely that the market is already. Racing, in the possibility of a Joe Biden when I dont know how that my first it a little bit more in the future. But right now I can imagine that even in the boardroom of vague hedge funds, there not talking about what a job I'm presidency looks like. I think there are, we have jovian research, you announce who certain regulators would be or really for him pay place big policy proposals that would make a big difference for investors and companies that might make some movement on the right now. Joe kind of has always been a moderate middle of the road politician. I don't think the banks are terrifying
of it at least right now and now, if he put Elizabeth Warren in charge of Treasury, that may change, but I think the banks are probably okay It was at least for now with a bite and presidency. So can you talk a little bit? You mentioned that people should basically not be playing with the stocks, but actually really think that this with the rise of Robin Hood and kind of the rise of citizens, investment is really interesting. There ve been a couple of this is in the New York Times about people who put fifty thousand dollars on a credit card, decide to invest in Robin Hood, which seems very stupid, but there are lots of people who are getting into this, and I would actually be curious as to your thoughts on like if you are going to do this. If you are going to kind of get into this, how are you should be thinking about what the stock market does and how relates you made the point that essentially the stock markets? Being,
held up by five tech firms, but are there way is a means by which you should be thinking about the stock market. If you are trying to ask you, if you have downloaded Robin Hood as I have, I have one stack have with you: what do you have that? The one that they gave you? Maybe it's the one that they gave me because, that same Theseus. I believe I have made six dollars has been very exciting, but I'm interested in. How should we be thinking about this? Because I think that for a lot of people, they ve got a you how we ve talked about how the stock market is tied to politics and the economy, but for a lot of everyday people. The stock market seems both very close and very far away, meaning that sometimes you feel as if it's either in not at all affecting your life or something that you can play with with no real consequences, which I dont think
of our listeners are doing, but I'm interested to hear your thoughts on that yeah. It's fine, I kind of thought a lot. I just ran Robin Hood, maybe a month ago tying to different traders and its tricky right, because on the one hand you don't want the stock market to be something that only rich people can be involved in, especially in a world where four people creating and generating wealth is really difficult and it is an opportunity at the same time. You really don't want people to be taken up. That is their credit card to by Robin Hood stuff. That's that's bad! It's not a good idea, especially Robin Hood. Also, it does kind of game, the trading in a way that can make it really enticing in everybody's, the story of a kid in Illinois Hooker confuse on Robin Hood about what he was doing amount of committing suicide witches horrendous by anything. If people want to
into it I mean everything, is fine. Do your research by us and by people who were the sea random stock tickers go by. I read it in and investing in getting like. I think the best way to approaches it is something that you want to do is just make sure is the boy you're not playing with money that you don't want to lose and taking on risk that you really don't think that you can take on. At least for me. That's how I would approach a lot of evolving and options repaid. It is really like. Gambling's would save all over the place, but he won't do your research right. It's a fun place. Look for information, but maybe take out Bloomberg in the Wall Street Journal. There are ways to do this by air, and I don't know you don't want your money in the same basket. Try to diversify like there's ice in pretty good, like pieces of advice that I just alleys for right now and people sitting at home in board. The best thing to do is like
really if you wanna play with a fine but try not to lose all of your savings are putting money that you can't afford to lose. I want a circle back, a little to you. We are talking about kind of their relationship. The market in the end, the quote real economy and like something that that you mention was that people feel a bit better about spending money. If the stock market is doing well, even if they personally are not looking too like make a good enough This amount of money off it, and I wonder if this kind of Robin Hood? You no citizen investor stuff, makes it even more difficult to disentangle. The upmarket is a reflection of the real economy from the stock market. As like this thing that makes people feel good enough to participate in the real economy and keep it running. I know it does. It feel little bit more like you by having a couple of on Robin Hood. Are you know partaking in this thing? That is
meanwhile. Well, even if, in practice, the amount of you're making is so much more. Than the amount of money that the professionals are making. Unlike does that end up having a real an impact that's much bigger than the six dollars that Jane is making on her one stock. I think that's like that's a good question. That's something that we don't Nobody really knows one of the things that touch people. A lot is one of these reason. Investors doing in the market are there enough of them to make a difference in the market, and I have in the economy as well, and I think the answer is that nobody's really sure what they're doing like Robin Hood and all the different trading APS will tell us how many numbers they have. It certainly seems like people are paying a lot of attention the market, but in terms of whether or not their own trading is heavy impact on how I feel about it. I don't know I mean you ask us to remember. I love these. People are losing money as well. Firstly, when they're playing in penny, saxon riskier things, because you, if you have two hundred dollars you Robin Hood account you probably can't afford any care for Amazon, Stockingless, you're right. You Frank
I share some of these. He for me, I'm not really sure that this is having an effect for maybe they're, paying more attention that's a good. Then I guess there learning a hole in the event that they are looking to more traditional sources of financial news it's good to learn about the market and the economy. So I want to go back to what we were talking about at the top of the show, because I am interested, and I know this is what you work on. But when you describe the stock market and how it responds to events, it seems less like a detail of The stocks of individual companies are doing and moral leg and angry spirit. We must definitely strong animal spirits- energy, yes, there like there's. If we must satisfy us and we must observe how it will do. Can you talk to us a little bit about what is the stock market? What is it?
actually telling us, for example, we know that poles are snapshots in time. They art predictions of the future, and you made that point, but the stock market as well, but waters stocks telling us when we see that stocks are go, down, but they started out from really high level. What actual information can we garner about either individual companies or the state of the economy when it appears to stock market, is an angry, vengeful spirit. We must sacrifice for literally it's supposed to be the expectation of feed. Learning, so you talk about any desire of any company words apple forward, whatever its basic I mean it really is just how much investors think that company is worth and how well it's going to do in the future. It's hard to know how,
right. It is a lot of the time the price of the stock is much higher than one is actually Ernie, and five hundred few people recently have tussle over about singled shareholder primacy, were basically publicly trail companies value their shareholders over every other stakeholders, so their workers etc. Their number one priority is to give me today their whole. There is, and what a lot of people have taught me about, who are on a more progressive end is saying: why does shareholder premise exist any more when earnings are really so disconnected from the price of stocks? In some cases, make the reason that a Boeing stock is going up is not be heard in a month from now. We think their earnings are going to be of a time it's because they can really issue as much debt as possible and stay afloat, and investors know that, and I think that there is an expectation that, especially after the recession in the financial crisis, investors have correctly gasped the government model.
Step in to help big business. Her hope there is also something going on here where we know that the federal government is not going to let airlines felt like they didn't. Let the bank sales, though, of course, airline stocks some day, will probably be fine, unless indeed they want to see some of them may be so, but that is there a, but the governments not that big business it fail. It can be very hard to not come away from all of this and feel that the lives of real people are at the mercy of this lake, perpetual magical thinking machine, because it's true that so far, everything indicates that the government will step in when things get really bad for investors except, but we don't know if we can give unemployed people six hundred dollars, I mean there's there. There is certainly that, but there is also the question of lake. If that assumption
leads to. Like me, investor class, not actively lobbying Congress or not withholding campaign donations or like not taking behaviors, that would absolutely guarantee the Congress takes it seriously. Congressional dysfunction isn't like an easy thing to overcome, and so it does seem to me that the assumption that this is always going to end up working out for investors. You know, in addition to, like that, not being a sufficient answer to what's good for the economy is gonna end up being one of those things that is true until it is it right. That is also the Federal Reserve. Really germ powers made every indication that he is prepared to do whatever it can to help the economy and to make sure that, and in part, that does her
late to making sure that big corporations can issue dead aim. We really have kind of shown our priorities here in a lot of ways, but again, investors have really correctly gassed that they're gonna fire unless there is some way there now, maybe I'm wrong, and then maybe we do let him Can airline fail, but I I don't know, maybe yeah, I'm I'm interested in how that looks, because I think that that's been something that I think folks on the left have pointed out, is that the government is laser focused on ensuring that American Airlines can still charge you for baggage for the rest of your natural life and yeah we're in the midst of continuing negotiations. Nations about stimulus payments where you have a host of so called deficit hawks, essentially arguing that there should be no more stimulus payments at all, and yet these are the same people who essentially think that
large corporations that do well on the stock exchange should be bailed out. So what what's your thought on that? Because it does seem that they think that is what is driving a lot of the commentary about this. Disconnect between the stock market in the economy is not just how strange it seems, but also how it really furthers and points out existing inequality I mean it's honestly, a question I have. I know you guys talked about the stimulus recently, but the fact that corporations seem to be at me. Some of them are lobbying to be protected from liability when you, it almost think it would be in their interest. All of you, like, hey we airlines are about to lay off a ton of people. You guys should also maybe give them unemployment insurance meeting. We were again we ve just really shown what we bar at least Congress has shown what they ve Are you here in federal, don't rush on what they value and
I don't I mean I'm crazy, you he'll be lying here I mean this is a big question that I have a ballot. Guess Obviously there is a lot of liquidity by its also true that businesses airspace be making money off their actual bottom lines at some point, and so the apparent lack of interest in lake liquidity for the average consumer and consumer spend- and you know it, making sure that people feel comfortable enough in spending activity does seem the veto it. If the market is supposed to be this, because it has the wisdom of crowds like most efficient mechanism, for talk for thinking about how people are few,
about the future, then Lake, the fact that people are engaging in economic activity and like you know that that it's not exactly like all of the job losses, have happened, because people who really wanted to go places were under shut down orders. I think that's you know that's how it's kind of gotten refracted now that it's become more polarized issue but lake. If people don't want to go outside, that's bad for the economy, which the market recognizes when it, when it Lake gets excited every time, there's vaccine doze so when the snow, in the kind of time before that, how do people who are trying to predict where the economy will go, and especially like people who are trading stocks for a living? What have they think average people think is going on in the economy? Because, as you know, Ellie you mentioned that, like you, don't think, you're live in December is gonna, be awesome in the stock market. Things
Life is gonna, be great lake. Is that a disconnected people are aware of when their trading or do they kind of assume that they have their finger on the pulse of the american public at all times yeah. I mean I do wonder again with retirement beginning how much if the market is really is that there is going to be a semi? I still because part of this is ok If I lose my job and have no It doesn't only suck for me, but it sucks for the businesses that I usually make purchases at. It also sucks for my landlord. This does have a big drag on the economy, so it does feel that there is some sort of just expectation correctly incorrectly, that Simons will happen and the care that really did help Bob people did hours, he forgot more money than they were making their jobs, and I did really help prop up the economy.
Again, there is also the answer that, if you are a big investor, if you are a hedge fund or a buffer, whenever you just have put your money somewhere in the U S, market is really still the best place to do it, and so there s also What is going on, where the girls, even it? Where are you going and that the gave him ass they don't know in Bitcoin, cannot any regular whether you have run your money. Bitcoin is getting. I should so. Basically, we have a massive Robin Hood effect, where, instead of late Americans being stuck at home board and opening and investing app investors are stuck at home with all of this money and have nowhere to put it but the stock market. One, that's true, I think, for a long time, as they are mainly the
stop we're getting really sins. I leave Ivan covering this. I saw a little then really covering this after the financial crisis, and there has, since I started people's unlike ok, but it's about to crash like you, gotta be ready, you gotta be ready and it it just feels like I don't know. If it's ok, I guess the software is gonna, keep going up and even die in March or April. I was writing story. Trying to figure out what will happen. The stock market and, being very careful to say, eventually, will go up. Do you dont know winds of lava. And then all of a sudden, it's back to normal, I think, really own. This has been the question of the last ten year. That will start who really go down again and it did for a while, but we're back. We recovered stupor quickly, since this last drop again you have. This vote were like the stock market is backward,
was I'm like there are lines outside of the pond shop on Fourteenth street, so I was like this. Disconnect is really jarring, so dumb question, one of the things that you have said that sounds correct is that the stock market is supposed to be a prediction of future earnings on the part of the companies whose stocks are represented there. The second thing is that, There is an assumption that is usually borne out that the stock market is always going to go up in the aggregate. How can both of those things beach, four or five? I don't know. I guess my question is like: how can they not be? I mean like I, I don't I mean I think they I'm confused, how you think they can't both be true it just it does seem like it is not
inevitable that the economy in the aggregate will continue to grow true, and so if the stock market is always going to go up in the aggregate, but it's also supposed to be actually it all. It is supposed to you know predicting a real world phenomenon, above and beyond the question of lake, whether they are whether the these market in the real economy are particularly at odds right now, like at a certain point. Is it just no longer the case that stocks should be regarded as a product or a future earnings, because the only truth is that stocks have now gained enough momentum that they can continue to rise on their own red guessing. I would say that so that companies that are in the US and people have hundreds of the big couple utility companies that people were
nothing and maintain trailing. Forty years ago would ever Apple didn't things that people are investing somewhere else. Is companies that we think are the more relevant in the american economy. There are making money illegal accompany, though maybe fifty years ago that was a big money maker, and that was super relevant. Now the product is not relevant. We assume the stock is not super relevant anymore either. Maybe it doesn't exist anymore, but I always want to emphasize at least that the stock market on the area it goes up because otherwise, what happened? it's late. Imagine if, in March
You had all your four hundred and one k money and you freaked out because the stop you went down and you sold you sold and you lost a ton of money and now the market has recovered, and so I think sometimes I talk about that a little bit just to be like you don't want to sell at the bottom. You don't want to kind of base what you're doing in investment on fear, because a lot of what happened. Even during the financial crisis, the average investors sold their money. I'm sorry, I sold their investments and the bigger guys kept in, and so average investors really miss the ride up, and so I think sometimes not every individual stock is going to go up like penny stock. Who knows a bankrupt company hurts is not. I don't know, that's not going to go up eventually at some point bottom out. But overall my point is: don't sell your phone one k at the stock market dips. That's
that's my point: I mean that this is a good financial advice which you we ve always said that the weeds is really wit, issue the podcast. You should go to first for financial advice. No username follow my adviser, Justin done in addition to like Jane you. Having like this Robin Hood thing. Did you mention in passing that you're now in debt peonage to an airline? No, no, no, no they know that heritage through an airline that is not happening wise. I was thinking that it is kind of amusing to me that we absolutely cannot let American Airlines were business because that would be bad as anyone who has ever flown american airlines would say interesting so known- and I read listeners- do not need to be concerned about that not going to become a surf for American airlines, excellent, on that reassuring know. We're gonna wrap up a shorter than average weeds thanks very much too,
For joining us and humoring us being the dominoes, we are thank you to your producer, Jeffrey Gold and the Weeds Whitman will return on Friday.
Transcript generated on 2021-05-18.