A higher financial contraction is unfolding not just in the United States however throughout the world …
In this last section of our multi-part research study short article, we wish to highlight our expectations of the Covid-19 virus event and how the next 6+ months of international market activity might play out. We have actually covered a few of the data points we believe are necessary and we have actually touched on the civilian casualties that may be unidentified at this time. Today, we’ll try to put the bigger photo together for investors to assist you comprehend what our company believe might be the 12+ month outcome.
As the international central banks and US Fed attempt to come to the rescue, the truth is that monetary policy works better when customers have the ability to in fact go out and engage in spending and financial activity. If the Covid-19 virus event agreements global consumer activity, as it has recently, for an extended amount of time (4 to 6+ months), then we have a real concern with how QE efforts and customer activity equate into any genuine healing effort.
The real risks to the global markets is a prolonged risk that the Covid-19 virus produces a contracting financial environment for lots of months/quarters and potentially promotes an environment where extensive civilian casualties to corporations, customer activity, credit/debt markets, and other huge financial threats boil over.
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This is a pretty big security damage risk for the international markets.
The next phase of this contraction is a rate decrease, required selling/foreclosures and an excess of assets waiting for a bottom.
” Home-purchase applications stopped by 14.6% while
refinancing applications plummeted 33.8% … “
I think the most important element of this global infection occasion is to remember that we will survive it (in some type) and we will live to reconstruct after this event completes. Yet, the truth is that we were not gotten ready for this occasion to happen and we don’t understand the total scope of this Covid-19 virus occasion. We simply don’t know how long it will require to remove the hazard of the infection and for societies to reengage in normal economic activity– which is the essential to beginning a real healing.
If we desire to learn what to anticipate in the US and how the process of including this infection may play out, we need to begin discovering from other nations that are ahead of us in the curve.
It appears that any effort to resume rather typical financial activities while the virus is still active spouts a new age of infections. This would suggest that the only way to attempt to reengage in any rather regular economic activity would be when a vaccine or real medical cure remains in place to allow nations to try to get rid of the virus as these waves continue. (Source: https://www.marketwatch.com/story/third-wave-hong-kong-thought-it-had-a-handle-on-coronavirus-it-doesnt-2020-03-23 )
We think the security damage of this occasion is just starting to be understood and we believe a higher financial contraction is unfolding not just in the United States but throughout the globe.
Proficient traders need to comprehend the total scope of this event. We have actually attempted to highlight this danger in this post and in our “Crunching Numbers” research study article ( PART III). An economic contraction, like the Covid-19 virus event, could contract global GDP by as much as 8 to 15% over an extended 16 to 36+ month period of time. Are we worried about the Real Estate market? You Wager! Are we worried about international markets? You Wager! Are we prepared for this as traders? You Wager! Are the central banks worldwide nations gotten ready for this? We definitely hope so.
As a technical analysis and trader given that 1997, I have been through a couple of bull/bear market cycles. I believe I have a great pulse on the marketplace and timing essential turning points for short-term swing traders.
Check Out my ETF Wealth Structure Newsletter and if you like what I provide, and ride my coattails as I browse these financial markets and build wealth while others lose nearly whatever they own during the next financial crisis.
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