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Will the stock market crash again?



At the end of last year, experts predicted that due to the escalation of the trade war, 2020 will become one of the most turbulent years in the history of financial markets. It turns out they were right. In fact, this year is indeed the most turbulent year on record, not because of feared trade tensions, but by a more deadly enemy: Covid-19.

The global pandemic directly led to the epic market crash in March, which was the fastest in history and may affect the market again.

After a brief rebound in our optimism that brought the flu pandemic under control, revenge has returned to the stock market due to the so-called “fear and volatility.”

; The second wave of Covid-19.

In the past 30 days, the commonly used volatility measurement tool VIX has risen 53%, while the market benchmark S&P 500 The biggest monthly decline was recorded on Monday. The S&P 500 has actually given up three months of gains, while the Dow Jones Index continues to fall into a deeper negative zone, which seems to be triggering another market crash.

CBOE Volatility Index (VIX)

Source: “Business Insider”

Source: CNN Money

Shattered stimulus hope

The recent market downturn is partly caused by Frances and Germany Consider the new lock limit, This trend may soon spread to other countries.

Before winter, the second wave of coronavirus infections has already overwhelmed many European countries, and its speed has exceeded the most pessimistic expectations. France’s new lockdown measures are reminiscent of previous lockdown measures, requiring people to stay at home unless they need to buy necessities, exercise for up to an hour a day or seek medical assistance. Meanwhile, Germany will close restaurants, bars and theaters from November 2 to the end of this month. Schools in both countries will remain open.

The timing of the second wave of coronavirus infections may not be worse, hope there is one Rapid government stimulus deal busted It is expected that the US election will bring greater turmoil.

Related: China believes natural gas demand will soar

Prior to the suspension of the Senate meeting, and until next week’s general election, hopes that an agreement would be reached on the US economy were dispelled. Inauguration.

Lawrence McDonald (Lawrence McDonald), best-selling author of The New York Times and founder of The Bear Trap Report, warned that Cobra effect Therefore, the stimulus measures aimed at saving the economy will be changed to “…An economic collapse that caused hyperinflation.“Larry issued a creepy warning, pointing out”Shrinking like Lehman Brothers’Develop in the market, and “…We are in the early stages of the largest cobra effect in the history of economics. “

of Cobra effect What Larry is alluding to is a genre where every human decision will have unintended consequences.

The market has become too dependent on the generosity of the government, but the government can only do a lot.

However, some analysts say that Trump may actually be a better deal for the market.

JPMorgan Chase announced “An orderly Trump victory is the most favorable outcome for the stock market“He predicts that if he can be re-elected, the S&P 500 index may rise by nearly 20% to 3,900 points.

On the other hand, JPMorgan Chase (JPM) believes that the Democrats have swept “Mostly neutral” market.

The fields of healthcare, energy, and finance may experience the greatest volatility in which direction, depending on which candidate is qualified for this day.

Provided to Safehaven.com by Alex Kimani

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