The Stock Market

[ZiprHead]

Kentucky certainly has property taxes. (Probably not as high as the ones in Oregon.)

Amazon has a warehouse about 6 miles from my house. Kentucky taxpayers are (in effect) paying for it.

Because it's in an enterprise zone?

Because Kentucky made a deal with Amazon.

I'm sure we're not the only state to have done so.

Amazon has received over $2 billion in subsidies, $2,287,574,819 from states and localities. I can't find any links to what Jeff Bezos thinks of socialism personally but Amazon spent a shit-ton of money to defeat a socialist candidate in Seattle, WA, in favor of a more "business friendly" candidate. Amazon lost, the socialist won.

https://subsidytracker.goodjobsfirst.org/parent/amazoncom

https://www.theguardian.com/us-news/2019/aug/05/amazon-seattle-councilwoman-kshama-sawant-re-election-bid

 

[Harry Bosch]

Oregon has given $265 million in subsidies to Amazon.

https://subsidytracker.goodjobsfirst.org/parent/amazoncom

Yea, it's been a hell of a good deal for us in Oregon. It lead to more than 3,000 direct jobs here. The salem jobs (my hometown) were warehouse jobs, I can tell you that thousands of workers applied. The corporate jobs located in Hillsboro. They are all high paying family wage jobs with great benefits. But even the non direct jobs, construction jobs, have been huge. There are hundreds of local companies working on those buildings. Yea, I'd say that most Oregonians are very happy with this investment.

Really? What's the rate of return on this "investment"?

I don't know. I used to sit on a local economic development board that would vote on approving incentives to companies (the governor was the final approval person). I was on the board that awarded the largest incentives in Oregon history to Intel. Here's how it's done: the total benefit (taxes paid, new worker jobs, their salaries, their taxes paid over the next three years and etc. / total cost of the incentives). The benefit always must be greater than the cost. However, there are many other factors that aren't captured: diversifying the economy, boosting the local economy, increased infrastructure for everyone else, growth of support companies, and etc. In the 1980's and before, Oregon was primarily a resource economy. When logging went away, we had to diversify. If it weren't for several large companies (Intel, Nike, Boeing support companies, and a couple others) the state would be too concentrated in tourism that it would be screwed during down times.

 

[TV and credit cards]

Why does any state need to make a deal with Amazon? Amazon is going to build out their distribution network regardless. It’s been no secret they want to handle distribution down to the last mile. Is this thanks for all those twelve dollar an hour fulfillment center jobs? Excuse me. I forgot about the matching 401k. I wonder what percentage of twelve dollars a person can manage to contribute?

 

[Harry Bosch]

Why does any state need to make a deal with Amazon? Amazon is going to build out their distribution network regardless. It’s been no secret they want to handle distribution down to the last mile. Is this thanks for all those twelve dollar an hour fulfillment center jobs? Excuse me. I forgot about the matching 401k. I wonder what percentage of twelve dollars a person can manage to contribute?

There are many reasons why local governments want to encourage certain companies to come to an area. In the case of Oregon, we wanted Amazon to come in order to further diversify the economy, add professional high wage jobs in Portland area, working class jobs in a distressed area (Salem); and substantial building to bulge up the local construction market which had been hard hit. Diversifying a local economy is important so that if one sector is down (tourism) the other sector (manufacturing) can boost up the other, and vice versa.

 

[T.G.G. Moogly]

Why does any state need to make a deal with Amazon? Amazon is going to build out their distribution network regardless. It’s been no secret they want to handle distribution down to the last mile. Is this thanks for all those twelve dollar an hour fulfillment center jobs? Excuse me. I forgot about the matching 401k. I wonder what percentage of twelve dollars a person can manage to contribute?

There are many reasons why local governments want to encourage certain companies to come to an area. In the case of Oregon, we wanted Amazon to come in order to further diversify the economy, add professional high wage jobs in Portland area, working class jobs in a distressed area (Salem); and substantial building to bulge up the local construction market which had been hard hit. Diversifying a local economy is important so that if one sector is down (tourism) the other sector (manufacturing) can boost up the other, and vice versa.

That's okay so long as it's done equitably and someone isn't left holding the bag, so long as it's a win, win, win. It appears to me that that it's not been determined whether it was a win, win, win or just a money grab.

 

[Harry Bosch]

Why does any state need to make a deal with Amazon? Amazon is going to build out their distribution network regardless. It’s been no secret they want to handle distribution down to the last mile. Is this thanks for all those twelve dollar an hour fulfillment center jobs? Excuse me. I forgot about the matching 401k. I wonder what percentage of twelve dollars a person can manage to contribute?

There are many reasons why local governments want to encourage certain companies to come to an area. In the case of Oregon, we wanted Amazon to come in order to further diversify the economy, add professional high wage jobs in Portland area, working class jobs in a distressed area (Salem); and substantial building to bulge up the local construction market which had been hard hit. Diversifying a local economy is important so that if one sector is down (tourism) the other sector (manufacturing) can boost up the other, and vice versa.

That's okay so long as it's done equitably and someone isn't left holding the bag, so long as it's a win, win, win. It appears to me that that it's not been determined whether it was a win, win, win or just a money grab.

Why do you think that? I don't know how economic decisions are made in other states. But in Oregon, it's a process open to the public. The state of Oregon wanted Amazon to come to our state. It's been a big win win for us due to the jobs, the increased economic development, other companies that have come in the support Amazon, and etc. Again, Oregon has had a deliberate strategy to diversify it's employment base.

 

[T.G.G. Moogly]

That's okay so long as it's done equitably and someone isn't left holding the bag, so long as it's a win, win, win. It appears to me that that it's not been determined whether it was a win, win, win or just a money grab.

Why do you think that? I don't know how economic decisions are made in other states. But in Oregon, it's a process open to the public. The state of Oregon wanted Amazon to come to our state. It's been a big win win for us due to the jobs, the increased economic development, other companies that have come in the support Amazon, and etc. Again, Oregon has had a deliberate strategy to diversify it's employment base.

Has it been quantified? That's all I'm asking. If there were tax breaks involved how was it determined that it was a win in the end for everyone? Did everyone pay/receive an equitable share?

A simple example from my experience would be new housing, water and sewage. It used to be the practice around here that to pay to service new construction everyone's rates were increased. Today the practice is to have higher rates for a period of years for those persons getting the benefits of the new construction and services. It makes sense. It was even a double whammy in the past as private property was condemned and taken for right-of-way.

If there aren't any numbers how do you know it was a good thing?

 

[TV and credit cards]

Harry, This is the part I don't get, is Oregon (or probably most any state for that matter) paying up for warehouses and fulfillment centers that Amazon would probably build in every population center in the US regardless.

It looks like the good paying Amazon jobs in Portland was happenstance. They bought out another software company. Oregon didn't have to drop any coin on that. Hillsboro (fulfillment center) and Salem (warehouse) are all sub-fifteen dollar an hour jobs. Unless these areas were hurting for low wage jobs, I see little benefit. Perhaps some easing on social services since Amazon provides healthcare.
By the way, construction jobs are not guaranteed for the area. The local contractors have to bid on the contracts along with out or area firms.

Oregonlive

Warehouses and fulfillment centers

My guess is politicians pay up for these warehouses and fulfillment centers they don't need to pay for so it looks like they are responsible for bringing these jobs into the area.

 

[Elixir]

Harry, This is the part I don't get, is Oregon (or probably most any state for that matter) paying up for warehouses and fulfillment centers that Amazon would probably build in every population center in the US regardless.

It looks like the good paying Amazon jobs in Portland was happenstance. They bought out another software company. Oregon didn't have to drop any coin on that. Hillsboro (fulfillment center) and Salem (warehouse) are all sub-fifteen dollar an hour jobs. Unless these areas were hurting for low wage jobs, I see little benefit. Perhaps some easing on social services since Amazon provides healthcare.
By the way, construction jobs are not guaranteed for the area. The local contractors have to bid on the contracts along with out or area firms.

Oregonlive

Warehouses and fulfillment centers

My guess is politicians pay up for these warehouses and fulfillment centers they don't need to pay for so it looks like they are responsible for bringing these jobs into the area.

The principles that Harry cites are operative in some cases IMHO, but I think what you point out is the dominant dynamic in virtually all Amazon transactions. The whole administrative force of the Company is avaricious as hell, as anyone who has ever sold to them knows too well.

 

[Harry Bosch]

Harry, This is the part I don't get, is Oregon (or probably most any state for that matter) paying up for warehouses and fulfillment centers that Amazon would probably build in every population center in the US regardless.

It looks like the good paying Amazon jobs in Portland was happenstance. They bought out another software company. Oregon didn't have to drop any coin on that. Hillsboro (fulfillment center) and Salem (warehouse) are all sub-fifteen dollar an hour jobs. Unless these areas were hurting for low wage jobs, I see little benefit. Perhaps some easing on social services since Amazon provides healthcare.
By the way, construction jobs are not guaranteed for the area. The local contractors have to bid on the contracts along with out or area firms.

Oregonlive

Warehouses and fulfillment centers

My guess is politicians pay up for these warehouses and fulfillment centers they don't need to pay for so it looks like they are responsible for bringing these jobs into the area.

Yes, your right they bought out another company. But it was strategic. Portland isn't far from their HQ. But we see large Fortune 500 companies buying tech or software companies in Oregon - then moving the jobs to NY or San Francisco all the time. It's not that politicians are paying for much. It's more that most of the incentives are deferred or forgiven property taxes or other types of taxes. But if the company hadn't located there, it's not like the taxes would have been paid. For example, the property in Salem was a bare lot that had never been developed. There were no plans to develop it. Yes, it was for a fulfillment center. Blue collar jobs. Yes, these are "low wage". But in Oregon, $17 an hour is considered fair wage. More importantly, they have great benefits and medical. Very good 401k. Very good profit sharing. Salem is my hometown. I have a son of a friend who works there. He got a $7,500 bonus there last year. When amazon put out the jobs notice, more than 4,000 people filed for the 800 jobs.

Finally, people always want to slam sleazy politicians. If you want to find a boogyman, the problem in local communities are developers. They generally don't give a damn about anything about anything except enriching themselves. Yes, local developers put tons of pressure on local politicians to land the Amazon deal. It increased the value of real estate in the area. But the reality is this: even in liberal Oregon, you can't be a local leader unless you support economic development. People want good jobs. They want opportunity. And the political process that allowed the politicians to decide on the incentive package was public, known well in advance, and fair. Very few people have complained.

Final point: yes, large construction jobs are always opened up to all. Yes, some out of state contractors get in the act. But it's generally cheaper for local firms to win some of the bids. But even when out of state GCs win, they will employ (and are required to employ) many locals. The building of these buildings helped the local Oregon construction economy greatly.

 

[TV and credit cards]

Well, I’m guessing the markets should stop their wild swings for awhile, now that President Behind the Curve finally figured out we’re not coming out of this anytime soon. This should tamp down the emotional responses. Hopefully we’ll just bounce around in these choppy waters until real numbers start coming in on how bad or not this is really going to be.

My worry is how many trillions can the government throw at this economy? We do have to pay interest on all this, don’t we?

 

[T.G.G. Moogly]

My worry is how many trillions can the government throw at this economy? We do have to pay interest on all this, don’t we?

I don't think Trumpo and his kind really care about the health of the U.S. To them the world is simply a place to play your game and make yourself as wealthy as possible. There isn't anything special about any place or country on the planet. It's all there to be exploited.

Deficit spending is how you make yourself wealthier, the more the better. Concern about repayment is something for losers.

 

[funinspace]

Bottoms Up

I thought this was a decent summary of when things may bottom as any. It also makes a good point about how corporate buy-backs were a significant party of the last few years market gains, and it probably won't be nearly so big going forward...
https://www.marketwatch.com/story/s...riteria-are-met-says-goldman-sachs-2020-03-30

To feel confident that the stock market has found a bottom, Kostin and his colleagues say three criteria must be met:

1 The viral spread in the United States must begin to slow, so that the ultimate economic impact of the virus and containment efforts can be understood.
2 There must be evidence that “extraordinary measures” taken by the Federal Reserve and Congress to support the U.S. economy are sufficient.
<snip>
3 Investor sentiment and positioning must bottom out. Goldman analysts point to their U.S. Equity Sentiment Indicator, which combines nine measures of equity positioning, noting that it has only declined by 1.4 standard deviations, versus standard deviations of between -2 and -3 in recent corrections.
<snip>
“Buybacks have represented the single largest source of U.S. equity demand in each of the last several years, and we believe higher volatility and lower equity valuations are among the likely consequences of reduced buybacks."

 

[Elixir]

I thought this was a decent summary of when things may bottom as any. It also makes a good point about how corporate buy-backs were a significant party of the last few years market gains, and it probably won't be nearly so big going forward...
https://www.marketwatch.com/story/s...riteria-are-met-says-goldman-sachs-2020-03-30

To feel confident that the stock market has found a bottom, Kostin and his colleagues say three criteria must be met:

1 The viral spread in the United States must begin to slow, so that the ultimate economic impact of the virus and containment efforts can be understood.
2 There must be evidence that “extraordinary measures” taken by the Federal Reserve and Congress to support the U.S. economy are sufficient.
<snip>
3 Investor sentiment and positioning must bottom out. Goldman analysts point to their U.S. Equity Sentiment Indicator, which combines nine measures of equity positioning, noting that it has only declined by 1.4 standard deviations, versus standard deviations of between -2 and -3 in recent corrections.
<snip>
“Buybacks have represented the single largest source of U.S. equity demand in each of the last several years, and we believe higher volatility and lower equity valuations are among the likely consequences of reduced buybacks."

I suspect it's a mistake to try to apply a template from past crashes to this situation. I agree with the three criteria to some extent but suspect that the timeline is going to be drawn out to at least 2 years before previous levels are attained. I don't think we're going to see another 2008 deep steep trough following the initial 20% drop, but rather a slow erosion over 12-16 months followed by a moderately fast recovery.
If effective treatments or a vaccine comes along in the meanwhile, that will cause a bunch of spikes as the fear factor is mitigated but entire economic engines are compromised, and that isn't going to be a quick fix no matter how much money Trump prints and stuffs in his and his donors' pockets, or how fiscally wise a Democrat President might be. That fact is slowly going to dawn on people, and the markets will continue to slip. Dirty Don's delayed reaction and bungled response probably stretched the recovery timeline by year for the US.

 

[TV and credit cards]

Clownstick Orange and the Incredible Recessing Legislature may actually get one right and push through an infrastructure package. We could actually make America's infrastructure great safe again. Nancy, that shrewd negotiator told Donald he'll get to wear his hardhat so he's all in.

Trump and Democratic House of Representatives Speaker Nancy Pelosi have found common ground in wanting to include capital works projects in this “Phase 4” legislation to provide jobs for millions of newly displaced workers. These will be labor intensive jobs. I wonder how many of our newly unemployed country(wo)men are even fit enough to work construction eight hours a day? I was thinking CAT would be a good play here. Now I'm thinking makers of AEDs.


Read on CNBC mortgage applications are off 24% annually. Owie!

 

[Jimmy Higgins]

Wait... what? The solution to a pandemic is to get all the people who lost their jobs all together so they can build roads and buildings and sewers?

 

[Elixir]

Wait... what? The solution to a pandemic is to get all the people who lost their jobs all together so they can build roads and buildings and sewers?

Sure - it's Infrastucture Week! (AGAIN)
Of course most of the jobs will be working on The Wall, and paychecks will be signed by President Obrador.

 

[Jimmy Higgins]

I think one problem with an infrastructure bill at this point is that in '09 they were pushing "shovel ready". Infrastructure is a long term stimulus, not instant stimulus. It takes time for engineers to work hard with designs, put them to bid, and have the contractor fuck it all up and send engineers into therapy for suicidal tendencies.

I know Ohio has been strapped for cash, so construction is taking longer because we can't afford to build it straight up. So that could be accelerated a bit. But then we also get back to the issue of, we only have so many contractors. Right now, we don't need a stimulus like we did in '09.

 

[Ford]

Wait... what? The solution to a pandemic is to get all the people who lost their jobs all together so they can build roads and buildings and sewers?

It's such an innovative and original solution to a national crisis! All we need next is an economic/environmental catastrophe to hit the middle of the country, a world war, and we'll be right back to where we were in the "good old days" of the 1950s!

 

[James Brown]

Down another 5% today.

I believe new unemployment figures come out tomorrow, and they're expected to be even worse than last week, since not all states were locking down yet when the last figure was calculated.