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Tao Dong, director of Credit Suisse First Boston and chief economic analyst in Asia, posted on his personal blog that risk markets will wander between hyper-liquidity and economic recession for quite some time to come, and ups and downs are inevitable. Means and determination. Furthermore, the ultra-low interest rate environment can continue for a considerable period of time: assets are king and cash is master, perhaps becoming a symbol of an era.The following is the full text of the blog:
After the stock market experienced a storm caused by a credit crunch, April marked the biggest rally in a single month after the 1987 stock disaster, and then fell on a Malaysian horse on the first day of May and fell on the last week of April. All Credits The conversation between the two people and the performance of the two companies shook American stocks.
The Fed Open Market Committee did not expect policy adjustments, but Fed Chairman Powell made it clear that the economic outlook is extremely uncertain and that the US economy. USA It faces deep adjustments in the second quarter. United States President Trump conveyed the threats to the market, saying the source of the virus should be investigated and that the different “demands” for policy options should be examined.
At the same time, the performance of the two star companies in the United States was unsatisfactory. Economic data for the United States and Europe experienced a cliff-like decline. The market returned from growing liquidity to economic reality, and the stock market fell sharply. The national debt market is relatively stable, and the corporate bond market is well supported by Fed purchases.
The European Central Bank kept interest rates unchanged, the dollar index rebounded after a rebound, the euro strengthened and the pound sterling once gained 170 points against the dollar. There has been a new uncertainty in Sino-US relations, and the offshore RMB exchange rate fell by 500 points per day. In the oil market, after the end of the futures renewal, Brent crude prices and WTI futures gradually normalized. Gold stabilized at the 1700 mark and Bitcoin faced off.
Fed President Powell believes the W-shaped recovery of the US economy may be overly optimistic, but market economists disagree. Among Wall Street economists surveyed, less than half believe a U-shaped recovery, five V-shaped and ten W-shaped. Market trends are equally divided: the stock market appears to be betting on a rapid economic recovery, while the bond and commodity markets are betting on a prolonged recession.
In my opinion, the real difference lies in the judgment on the effectiveness of the Federal Reserve’s monetary policy. At the balance sheet expansion rate announced by the Federal Reserve, the new year-end liquidity is equivalent to 27% of the total market value of the US stock market. USA, So the stock market is optimistic.
However, in the past five weeks, 30 million people in the United States have lost their jobs and received less than half of the original average wages for emergency government aid. Rent, car loans, and credit card overdrafts will soon be in trouble. The damage to the economy caused by the disruption of the industrial chain and the lowering of income expectations cannot be repaired overnight.
In my opinion, the risk market will wander between the liquidity boom and the economic downturn for quite some time to come. Ups and downs are inevitable and the possibility of the second bottom is also high. Whether the second fund is lower than the first depends on Trang. The political determination of the General Government and the Federal Reserve and the ability to appease the market have disappeared. Sell in May, may appear again this year.
Deutsche Bank reportedly plans to impose negative interest rates on personal savings. Among the world’s largest banks, this is the first to impose negative interest rates on individual depositors. I think other banks will do the same in the future. Europe and Japan have already entered the era of zero interest rates, and an epidemic has brought the cost of capital to the United States to zero. China’s interest rate is relatively high, but it has also fallen from the historical average level, and it may be a matter of time before it tends to zero.
All the main countries in the world are in a state of fiscal deficit. To face the serious economic challenges brought about by the epidemic, they have to implement a very fiscal expansion policy, and they only depend on the central bank to issue currency subscriptions. The combination of fiscal and monetary bailouts is an important feature of crisis management and a precedent for policy. With the first time, there will be a second and third time, and the ultra-low interest rate environment can continue for quite some time. In an environment of ultra-low interest rates, bank savings may continue to depreciate. Assets are kings and cash are invaders, who can become a symbol of an era.
Focus of the Week: US giants earnings and employment figures, nonfarm employment expected to decline by 25 million in April, 13 times the worst month of the 2008 financial crisis; Hourly wages may rise, but that’s because all low-paying jobs gone. European industrial production and retail numbers are estimated to be disastrous, while China’s Caixin PMI has improved significantly. The Bank of England will have no political initiative, but the words are expected to be moderately moderate.
This week’s journal explains the author’s understanding and understanding of the economy, politics and markets. It is a personal point of view, not an investment or persuasion tip.
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