When did the economic bubble burst?

the economic bubble

In addition to the recent ups and downs in the stock market, a lot of things have happened in the financial sector, including a series of bail-out measures including major central banks, the liquidity test of the bond market, and even more, terrible data show that even Wall Street hedge funds, everyone Confused about the current situation.
The bubble-filled world of financial assets has triggered a domino effect. The Fed experienced a repurchase that began in September 2019. After a shortage of market funds, it has been printing money to save the market. The crazy bailout should be temporary. Until February 14, 2020, the Fed issued a statement saying that it will gradually reduce the bailout to the repo market from 120 billion to 100 billion per day, and will seize the market for 14 days of repurchase from 30 billion to 20 billion. This move may bring liquidity pressure to the market. In turn, it will cause turbulence in the stock market, I did not expect this day to be so fast!

In the single-day repurchase market on March 4, 2020, the Fed provided 100 billion US dollars of bailout funds, which is not enough. The main institutions have applied for 111.4 billion loans in the repurchase market! And in the 14-day repurchase market on March 5, 2020, the Fed provided 20 billion liquidity as planned to save the market, and major institutions applied for 72.5 billion loans. In other words, the number of liquidity applications, which is 3.6 times the amount of Federal Reserve assistance. By the way, the repo market requires a lot of liquidity from the Fed, which is very unusual in itself. Not to mention that the market is still short after bailouts. It started as early as February 25, 2020, so the Fed decided to lower the interest rate by 0.5%. Not only are there more ways to stimulate the economy and reduce liquidity pressures in the repo market, but the problem is that the shortage of funds in the repo market is not because banks have no money, and they dare not invest in the repo market.

Therefore, the impact of emergency interest rate cuts on this shortage of funds is the first time since the 2008 financial crisis that the Federal Reserve united the Central Bank of Australia and the Bank of Canada to jointly reduce interest rates. After the interest rate cut, the stock market reacted like this, because the emergency interest rate cut was different from 2008. The financial crisis in 2008 was to deal with bad debts and low-quality loans. This time, the emergency interest rate cut must be dealt with, from the supply chain to the supply chain. Two-way destruction.

JP Morgan’s latest global index report shows that the manufacturing index and the service industry index plummeted in February 2020 to the lowest point since the financial crisis in May 2009. The decline was the second-highest in history, and the first high point was in After the events of September 11, 2001, although the impact of the current event on global GDP has not yet appeared. However, compared with the composite index, GDP is usually delayed. If the composite index continues to fall, the impact of this event on GDP is obvious. And this 0.5% emergency interest rate cut cannot motivate people to get rid of the fear of spending and cannot solve the supply chain problem.

The Fed and major central banks have shown the true severity of the incident. The few Fed and Bank of Canada in history have lowered interest rates by more than 0.5% in the same month. What followed was the global financial crisis. Will this be a repeat of history? Has the economic bubble burst?

Comments

Why has international oil(USO) prices plummeted?

As OPEC and Russia failed in negotiations and could not reach an agreement to reduce production, Saudi Arabia issued a comprehensive production increase announcement. Russia followed Saudi Arabia to increase production. Due to the sharp increase in oil supply, international oil prices plummeted, and US stocks were affected by the spread of the epidemic, and international oil prices The plunge, the U.S. stock market plummeted, triggering multiple fuses. S&P500 Index Oil is a commodity whose price is affected by supply and demand. When oil production increases, supply increases, prices fall, and at the same time affected by the epidemic, demand decreases, and prices also fall. Oil supply increases and demand decreases, which is the main cause of the plunge in international oil prices. In terms of oil supply, since the United States developed shale oil, US oil production has become the world's largest. The production cost of shale oil is more than US $ 40, which is the

4 George Soros advice to investors!

Who is George Soros? George Soros is a Hungarian-born Jewish businessman. It is one of the most influential investors in the world. In 1969, the Double Eagle Fund was established for Arnhold & S. Bleichroeder, an investment management company. In 1973, Soros and his assistant Rogers left Bleichroeder to co-found Soros Fund Management. In 1979, the well-known Quantum Fund was established and continued to make profits. In the Asian financial turmoil in 1997, George Soros sniped the Thai baht and the Hong Kong dollar, which was frightening. Learning from the experiences of successful people can benefit a lot. Here are 4 tips George Soros gave investors. First, to be successful, you must have ample free time. Most people want to be rich, but not everyone realizes the importance of free time. Many people spend a lot of time working to accumulate wealth, sleep, and forget. Set the goal to complete the work indicated by the superior, or the needs of business partners. But they hav

FB stock forecast 2022: Facebook’s latest earnings report analysis

Today I will interpret its just-announced financial report for the second quarter of 2021. combined with the digital advertising industry's general development direction and competitive landscape. First, let’s summarize Facebook’s latest earnings report. I think Facebook’s second-quarter earnings report is very, very good. We can see how good it is from year-on-year and quarter-on-quarter. Revenue in the second quarter increased by 56% year-on-year, while it increased by 48% year-on-year in the first quarter. Operating profit in the second quarter increased by 107% year-on-year, while the first quarter increased by 93% year-on-year. Net profit increased by 101% in the second quarter, compared with a year-on-year growth of 94% in the first quarter. Earnings per share in the second quarter increased by 101% year-on-year, while the first quarter increased by 93% year-on-year. The operating margin in the second quarter was 43%, compared to 32% in the same period last year. The perform

AMZN stock forecast 2025： Amazon's main advantages

On July 6, after the US stock market opened, Amazon broke through $3,600, a record high. Amazon has been oscillating between 3000-3500 US dollars in the past year, and the stock price finally broke through. Amazon is a stock that has a high valuation from PE but is seriously undervalued by the market from the perspective of its development prospects. It is one of my favorite technology stocks. Amazon's main advantages are: 1. Amazon's current GMV is only half that of Alibaba. Looking at the current penetration rate of e-commerce in China and the future penetration rate of e-commerce in the United States, we will find that Amazon e-commerce has huge growth potential in the United States. Amazon e-commerce is far from saturated in the United States. 2. Cloud computing has unlimited potential. As the industry leader, Amazon's cloud computing can maintain a growth rate of 20%-30% for many years in the future. 3. The international expansion of Amazon's e-commerce

Many companies will China close in 2020?

Starting in March, all walks of life in China began to resume work. People stayed at home for more than two months. Many people's moods changed from tension to leisure, and now they are anxious. It's not just the bosses who are anxious. Many employees find that their rents and mortgages are still being paid, the holidays are extended, they can't go to work, and their salaries aren't. Whenever there is no money it is a big problem. More than 700 companies closed down in February, but getting fewer wages is also better than the company suddenly closing down. In February, more than 700 companies have closed down, and this number should be exceeded. Statistics show that more than 55% of catering businesses in China have resumed work, but compared to the same period last year, affected by the epidemic, 78% of catering companies have lost more than 100% of their operating income, and another 16% of them have lost over 70%. This year's sudden outbreak, the impact

FinanceLinkway

Search This Blog