2020/3/15 Still pessimistic on global economy
Global financial markets experienced the biggest turbulence since 1987 and 2008 during the week of March 9th to March 12th. In addition to the spike in the number of new crown virus cases in Europe which may lead to recession, oil prices also fell due to price wars between Saudi Arabia and Russia. The multiplication of the two caused great market unrest. European and American stock markets have fallen below 20% from their highs this week and entered a technical bear market. In addition, US President Donald Trump announced on Thursday that the ban on European entry for 30 days caused the market to slump. Bond prices fluctuated sharply and interest rates fell rapidly. The US debt yield curve was once inverted.
Central banks and governments around the world have rushed to calm the market, including the Bank of England, the Bank of Iceland, and the Norwegian Central Bank cut interest rates by surprise; although the European Central Bank did not cut interest rates, it proposed to relax the ratio restrictions of banks. In addition, fiscal policies in many countries will include the US investing $ 50 billion in stimulus and deferred payroll taxes. The market continued to fall in early Asian hours on Friday, but market sentiment has clearly improved since noon, as the United States is expected to formally control the spread of the epidemic. On 3/12, Trump announced that the United States had entered a state of emergency and offered a number of medical relaxation measures, including free testing (but not including free treatment). The market was encouraged. The three major US stock indexes rebounded by nearly 10%, erasing the losses caused by the European and American travel restrictions panic on Thursday.
As far as Friday's closing is concerned, the market's response to Trump’s policy in the short term was positive, at least the short-term decline stopped. However, from a technical point of view, it may also be interpreted as a sharp rise after a sharp decline. After all, the current price has rapidly deviated from 10MA and is close to the support of 1200MA. There must be some to buy low. Therefore, whether the Friday's rally is at its lowest point or whether it is a dead cat’s bounce has not yet been determined.
European chaos continued to intensify during the weekend. As expected, Spain has seen a rapid increase in cases and declared a nation-wide lockdown, making it the second country in Europe to lockdown. In addition, the Czech Republic, Denmark, and other countries have declared banned entry and exit. These measures will help delay the epidemic but will do more harm to the economy.
There is still a worry in the economy that corporate debt levels have been exploded due to low-interest rates in the past 10 years. Whether there will be a large-scale bankruptcy due to the economic downturn. At present, only junk bond prices have plummeted, but there has been no news of large-scale business bankruptcy. But if the epidemic continues, it can be expected that debts that have skyrocketed in the past 10 years will face judgment day. In particular, history has repeatedly proven that those companies with bad financial conditions who used to fake financial reports always went bankrupt during the recession, and then the economy was facing a credit crunch. If this step is reached this time, the current decline in US stocks may have to continue to fall at least 25%. pessimistic
Central banks and governments around the world have rushed to calm the market, including the Bank of England, the Bank of Iceland, and the Norwegian Central Bank cut interest rates by surprise; although the European Central Bank did not cut interest rates, it proposed to relax the ratio restrictions of banks. In addition, fiscal policies in many countries will include the US investing $ 50 billion in stimulus and deferred payroll taxes. The market continued to fall in early Asian hours on Friday, but market sentiment has clearly improved since noon, as the United States is expected to formally control the spread of the epidemic. On 3/12, Trump announced that the United States had entered a state of emergency and offered a number of medical relaxation measures, including free testing (but not including free treatment). The market was encouraged. The three major US stock indexes rebounded by nearly 10%, erasing the losses caused by the European and American travel restrictions panic on Thursday.
As far as Friday's closing is concerned, the market's response to Trump’s policy in the short term was positive, at least the short-term decline stopped. However, from a technical point of view, it may also be interpreted as a sharp rise after a sharp decline. After all, the current price has rapidly deviated from 10MA and is close to the support of 1200MA. There must be some to buy low. Therefore, whether the Friday's rally is at its lowest point or whether it is a dead cat’s bounce has not yet been determined.
European chaos continued to intensify during the weekend. As expected, Spain has seen a rapid increase in cases and declared a nation-wide lockdown, making it the second country in Europe to lockdown. In addition, the Czech Republic, Denmark, and other countries have declared banned entry and exit. These measures will help delay the epidemic but will do more harm to the economy.
There is still a worry in the economy that corporate debt levels have been exploded due to low-interest rates in the past 10 years. Whether there will be a large-scale bankruptcy due to the economic downturn. At present, only junk bond prices have plummeted, but there has been no news of large-scale business bankruptcy. But if the epidemic continues, it can be expected that debts that have skyrocketed in the past 10 years will face judgment day. In particular, history has repeatedly proven that those companies with bad financial conditions who used to fake financial reports always went bankrupt during the recession, and then the economy was facing a credit crunch. If this step is reached this time, the current decline in US stocks may have to continue to fall at least 25%. pessimistic
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