Laughter dumped tears. The main cause of the global recession became coronavirus, but when he was just starting to dissolve its tentacles throughout the world, stocks plummeting. Now, when the number of infected people is growing by leaps and bounds, S & P 500 marked a 20% increase in the three trading sessions. Those who look only to the chart, it may seem that the epidemic will save the world economy. Quite possible. Another week quarantine - and the mask will be my small.
If you are sent on all four sides, go to the south. There warmer. If we exclude the Black Monday in 1987, it never has the US stock market did not fall into the territory of the "Bears" as fast as in 2020. "The recession will be deep but short-lived" - repeat the tabloids. When coronavirus first appeared on the front page of the newspaper, about it said the same thing. Three or four weeks at most. The mortality rate is lower than that of SARS in 2003 ... Now the recent optimism was gone, the country closed the borders and people radically changed their views. Well, where we do not? No! Now there's just awful.
It is clear that a rapid rebound S & P 500 on the levels of more than 3-year lows could not be realized, if the Senate has not adopted the proposed White House aid package of $ 2 trillion, and the Fed did not use to conventional wisdom, the cuckold husband: if you want to learn truth - learn how to appear suddenly. Decision to lower the federal funds rate, on the resuscitation of the quantitative easing program to purchase unlimited amounts of Treasury and mortgage bonds, a market support corporate borrowing were adopted at an extraordinary meeting. However, even the coronavirus caused FOMC meeting scheduled to conduct remote, so what's the difference?
The pandemic has forced the powers that be to spin like a man from the frying pan. More than three dozen central bank lowered key interest rates at the end of the second decade of the spring, and the total amount of fiscal stimulus in the G20 countries is estimated at $ 5 trillion. In this case, if the application for the grant of unemployment in the US will grow at the same pace as the week to March 20 over the next three to four sevendays, the money may not be enough. Governments and central banks will only exclaim:
- Do not worry, everything will be fine! We were flying to the aid of a meteorite!
Coronavirus is moving from Asia to Europe and from Europe to America. So far, the most affected by the epidemic looks like the Old World. There's even a dog in shock - everyone muzzled. First, point the finger at those who wore masks, are now indignant with those who do not wear. Italy and Spain are burning with a blue flame, and even the ECB was forced to change the rules of the game, giving up limit for the acquisition of no more than 33% of the bond market of the issuing state. You need to give money to those who really need them, rather than continue to use the principles that are good for normal conditions. Today some abnormal conditions:
- My mom always said that I did not achieve lying in bed all day. But look at me now, I'm saving the world!
Source analyst LiteForex