China News Client, Beijing, June 12 (Cheng Chunyu, Xie Yiguan) On June 11, local time in the United States, U.S. stocks that have continuously hit new highs encountered a "black Thursday". The three major U.S. stock indexes closed with a plunge, and the Dow fell 1861.82. point. Facing the plunge of US stocks, US President Trump again fought the Fed: The Fed "made frequent mistakes."
Why did US stocks plunge? Is the market for "Buffalo" under unlimited quantitative easing to end?
The daily K-line chart of the Dow Jones Industrial Index.
Market panic soars, US and European stock markets plummet
On June 11, the three major US stock indexes opened lower and lowered, and the market panic index VIX rose nearly 50%. As of the close, the Dow fell 1861.82 points, down 6.9% to 25128.17 points; the Nasdaq fell 527.62 points, down 5.27% to 9492.73 points, the previous day the Nasdaq just stood at a record high of 10,000 points; the S&P 500 index fell At 188.04 points, it fell 5.89% to 3002.10 points, and it once fell nearly 6% during the day, only 1% away from the triggering of the fuse.
On the disk, Boeing fell more than 16%, leading the Dow. US stocks energy stocks, aviation stocks, technology stocks, financial stocks, etc. have declined to varying degrees.
VIX panic index trend.
Among large US technology stocks, Apple fell 4.8%, Amazon fell 3.38%, Google fell 4.29%, and Facebook fell 5.24%. In terms of financial stocks, JP Morgan Chase fell 8.38%, Goldman Sachs fell 9.1%, Citigroup fell 13.37%, Morgan Stanley fell 8.48%, Bank of America fell 10.04%, Berkshire Hathaway fell 6.86%. Energy stocks fell across the board, Exxon Mobil fell 8.85%, Chevron fell 8.4%, ConocoPhillips fell 8.17%, Schlumberger fell 11.64%.
Most of the popular Chinese stocks closed down, Alibaba fell 3.77%, JD.com fell 5.7%, and Baidu fell 4.26%; most of the Chinese stocks that had soared before plunged, Jiayin Jinke fell 32.76%, Magic Line fell 27.61%, and the house A lot more than 20.04%.
On the same day, European stock markets fell sharply. The French CAC40 index closed down 4.71%, the German DAX index closed down 4.47%, and the British FTSE 100 index closed down 3.99%. International oil prices also fell across the board. NYMEX crude oil futures closed down 8.66% to $36.17/barrel, a two-week low and the largest decline in six weeks; Brent crude oil futures fell 7.98% to $38.4/barrel.
The Fed expects the US economy to shrink by 6.5% in 2020
The card found that most analysts believe that the market is worried about the outbreak of the second wave of public health crisis, and the Fed is pessimistic about the economic prospects, which is the main reason for the decline of US stocks.
On June 10, the Fed released its latest economic outlook, which is expected to shrink by 6.5% in 2020. Fed Chairman Powell said that in the second quarter of this year, the decline in US real GDP may be the worst in history.
Data map: US Federal Reserve Chairman Powell. China News Agency reporter Sha Hanting
Stephen Innes, chief global market strategist at Axicorp, said short-term and fast money traders are very inclined to immediately sell or profit at the hint of any pessimistic data.
On the other hand, due to the continuing anti-racial discrimination protests in the United States, Foch, director of the National Institute of Allergy and Infectious Diseases, warned on the 10th that protests may lead to an increase in infections.
According to data from Johns Hopkins University, as of 7:33 on the 12th, Beijing time, the cumulative number of confirmed cases of new coronary pneumonia in the United States was 2018, 875, and 113, 774 died.
Despite the gradual relaxation of prevention and control restrictions in the United States, Disneyland plans to reopen in phases in July. However, due to fears that large-scale crowds may cause outbreaks, California health officials announced on the 10th that the Coachella Music Festival and the Stage Horse Music Festival will be canceled this year. In addition, the Iowa State Fair, originally scheduled for August, was cancelled for the first time since World War II.
According to US media reports, Texas had 2,504 new cases on Wednesday, the highest in a single day. Florida this week added 8553 cases, the highest in a week, while the number of inpatients in California reached the highest level since May 13, with 9 days in the past 10 days.
However, according to US media CNBC report, US Treasury Secretary Mnuchin said on the 11th that even if new cases of new pneumonia infections surge again, the United States should not stop the economy again. "This will cause more damage, not just economic damage, but also medical problems caused by shelving. We cannot shut down economic activity again."
Trump tweeted that the Fed "made frequent mistakes"
Faced with the collapse of US stocks, US President Trump tweeted on the 11th that the Fed often makes mistakes. The non-agricultural data performed very well, we will have very good third and fourth quarters, and 2021 will be the best year; vaccines and treatments will also be provided soon.
Since March this year, the Fed has injected liquidity into the market through zero interest rates and unlimited quantitative easing (QE), and has provided loans to companies, cities and states through a series of credit instruments. As of last week, the Fed’s balance sheet has soared from approximately US$4 trillion in early March to US$7.21 trillion.
The growing deficit problem has caused many people to worry. Jeffrey Gundlach, the CEO of Double Line Capital, known as the "New Debt King", recently said that the "double deficit" (fiscal deficit and foreign trade deficit) is a problem for the United States. Due to the adoption of radical policies, the United States' "double deficit" "It is expanding rapidly, which will threaten the stability of the US dollar in the international market.
Data map.
On the 10th, the Fed reiterated that it will use various tools to support the US economy, thereby promoting its goal of full employment and price stability. Before the economy "enters the track of full recovery", the interest rate will be maintained at a level close to zero.
But EvercoreISI macro research analyst Dennis DeBusschere (Dennis DeBusschere) said in a report that the Fed's friendly monetary policy cannot offset the second wave of the new coronary pneumonia epidemic. As new cases and hospitalizations in Texas, Arizona, and California increase, the risk of continued weak economic and income growth in the United States also increases.
The Fed’s 10th meeting statement also pointed out that “the United States still has a long way to go to return to the level before the outbreak of the new coronary pneumonia epidemic in the United States. At least millions of people may not be able to find work in the next few years. The impact of the market is'heartbreaking.' In the eyes of analysts, this has hinted that the Fed does not expect a "V-shaped" recovery in the economy.
"The Fed has no way." Hong Hao, Managing Director of Bank of Communications International, commented on Weibo.
Hong Hao, Managing Director of Bank of Communications International, commented on Weibo.
US stocks epic rebound or end?
"Institutional funds have not really participated in the current round of US stocks rise," Gundlach (Jeffrey Gundlach) said that US stocks are likely to fall from the current high. Recently, retail investors have created an epic rebound in US stocks, but smart and experienced large investors are skeptical. Independent research institution Monita also believes that the funds generated by the Fed's expansion of the table are not the main force pushing up US stocks. The funds pushing up US stocks should mainly be the residential sector and leveraged funds.
Guotai Junan Hong Kong believes that the current US stock pricing has taken into account the most optimistic expectations, which fully reflects the improvement of the global epidemic situation and the ease of liquidity. In the future, investors need to be alert to the following risks: First, the impact of economic slowdown on companies needs to be carefully evaluated. Second, the solo dance of the Fed’s liquidity will eventually stop. The current liquidity loosening expectations are too optimistic, and the margins need to be revised. Third, the company's ROIC (return on capital) and WACC (weighted average cost of capital) are narrowing, which will increase the risk of future fluctuations in US stocks.
"Investors must realize that the epidemic is not over, global trade is not fully open, and the current US economy is unlikely to rebound in a'V' shape. The profitability of US stocks may not be quickly restored to the level before the epidemic, and the current US stocks may be overdrawn In the coming months, investors need to be vigilant against factors that are below expectations and the risk of the Fed tightening monetary policy." Guotai Junan Hong Kong said.
Monita believes that there are two possibilities for the follow-up of US stocks: the first may be that the valuation will return to the mean, which will fall sharply in the short term, and will lead to a major adjustment in the index; the second may be the profit digestion of valuation, profit, Under the valuation, the index continues to rise. Judging from the history of the Internet bubble and the post-financial crisis experience, the second case is more likely. "If there is no particularly unexpected black swan event, the possibility of a sharp decline in US stocks in the short term is very small. In the future, the valuation of US stocks will be adjusted downwards appropriately, but the index will still maintain an upward trend, but the rebound rate will slow down. "
In the capital market, history always repeats itself, what will happen to the US stock market, some netizens ridiculed: prepare to move to the bench, and wait to see if the fuse is reproduced. What do you think? (Finish)