Why not buy FED accounts for anti -epidemic financial markets?

Source: Taiwan Economic Daily

Economic Daily News

The Federal Reserve (FED) urgently announced the reduction of 2 yards on the 3rd in order to respond to the proliferation of new crown pneumonia's epidemic in the United States and the global economy.Fed cuts interest rates urgently without regular meetings. Although it is unique, it is indeed unexpected.What is the situation?Is it because investors believe that the decline is not enough?Or is it useless to cut interest rates?

The first thing that must be understood is that the impact of the new crown pneumonia on the global economy covers two levels: supply and demand, and it also occurs at the same time: not only disturb production and suppress consumption; factories may be forced to stop work and close, consumers try to avoid going out;The store is not only shortage of supply, but also the doorke.Once the epidemic cannot be reduced, large -scale layoffs are inevitable.It rely on FED to cut interest rates by 2 yards. The effect of the short period is tantamount to the salary of water.

Secondly, in order to work for interest rate cuts, one of the supporting conditions is that one of the supporting conditions is that the transmission mechanism of the financial system must be unobstructed, especially to help small and medium -sized enterprises through the financial difficulties.In the face of the impact of the epidemic, the worst is actually financially distressed SMEs. Taking the United States as an example, more than 60%of small and medium -sized enterprises' profits are not enough to pay liabilities.Once a comprehensive finance appears, it is difficult to guarantee that the banking industry and the civil lending market will provide financing to SMEs. As a result, interest rate cuts may only be beneficial to the rich and powerful people.The effect is greatly reduced.

In fact, whether it is the FED or the head of the G7 wealth and gold, the biggest key to the current situation is not in response to the policy, but because of the development of pneumonia epidemic and whether it can be effectively controlled.Turning danger into peace, this is why FED has been closely monitored since the beginning of February.However, recently, the number of confirmed cases and deaths in the United States has continued to increase, so the FED has to take an emergency action. The goal is to take a shot before the economic deterioration of the economy, which helps to alleviate the negative psychology of the market and shorten the time delay of the loose policy.I don't expect to save the poor, I hope to be able to help.On the one hand, I hope that it can stabilize enterprises and market confidence, and buy a policy to prevent the decline of the economy. It is also an explanation of Trump.The epidemic is fully listening to the destiny, and the Fed can only be done.

As for why U.S. stocks rose first, and then fell?One of the reasons is that there is insufficient Lyba, that is, investors also realize that the effect of cutting interest rates alone is limited.However, investors are more worried about the confirmation of the air, that is, the FED's hand has more negative information. Therefore, the stock market rebound is not a buying point, but the escape line.On the morning of the 3rd, the head of G7 Caijin had just held the conference on the conference. After a few hours of FED, the interest rate cut rates, which showed that the seriousness of the situation was beyond expectations.In addition, a total of 12 regional federal preparation banks in the FED system have a dense commercial tentacle in the region and can better appreciate the grim of the economic situation. Therefore, precedent prevention measures must be taken.The latest week of unemployment payment will be announced this week, the non -manufacturing ISM index in February, and employment reports should further confirm the severity of the air.

In fact, no matter how long the pneumonia epidemic will be burned, after all, it will reach its peak, and the research and development of special drugs and vaccines will also achieve results over time; no matter how big the economy is, it is still a one -time shock, which is by no means irreversible.Economist Il Ailang divided the epidemic impact into four stages.The first is that the arbitration effect puts pressure on consumption, investment and trade; the second is that financial impact and physical damage form a vicious circle, which is exactly the current stage.The third stage is that the epidemic is finally controlled, and the bottom of the economy and finance is formed. The prosperity outlook is from L and W, which improves to U -shaped. The financial market is no longer just a dead cat rebound, but an opportunity to recover.It was only time that the time had not yet arrived.The fourth stage is long -term effects, including the rise in globalization, and the stricter of tourism and immigration control. Enterprises re -evaluate the risks of global supply chain, instant inventory management and pursuit of efficiency.

Based on this, the key factor that really affects the economy and the stock market is still the development of epidemic.Regardless of the interest rate cuts or more loose measures, even if the government expands public expenditure, it can only provide buffer pads for economic damage.As long as the epidemic does not cool down, the stock market may still maintain a tug -of -tug pattern with the changes in the news surface.