Thoughts on the market on 04/11/2020
The last day I worked out the scenario from yesterday's review of the movement to 6800. Bitcoin price found support at this level, attempts to go below were quickly stopped, the main cryptocurrency returned to 6900.
Attempts to go above 6940 also do not lead to success, now Bitcoin is trading around 6930.
Market capitalization 198 billion, dominance index 64.0
For traditional markets, the week was positive.
Since the end of last week, the S&P 500 has grown by 15%, reaching levels March 10-11.
An agreement was reached on oil to reduce production by 15 million barrels per day.
If there is no negative over the weekend, oil may open up growth and pull other markets along with it.
Europe agreed on a plan to save the economy of 500 billion euros. The American scale is far, but nevertheless, the next portion of unsecured fiat is pouring into a falling economy.
Gold on Thursday updated highs and closed at 1752. The maximum remained from 2011, and it is likely that it will be exceeded next week.
The growth of gold indicates the return of liquidity to the markets and the great demand for anti-inflationary assets.
And this is not surprising if we consider how this crisis will differ from the previous one, 2008-2009.
Firstly, in 2008-2009 the crisis took place in the financial sector, it affected ordinary people only in terms of falling financial markets and national currencies.
If you didn’t have a mortgage loan or a block of shares, then you could find out about the crisis only from TV (then for the majority, as a source of information, it was even more important than the Internet).
The financial sector was hit then, and the real economy was virtually unaffected, as evidenced by rising commodity prices.
Oil then cost on average 3 times more expensive than now.
Now it’s getting worse. The fight against coronavirus dealt a severe blow to the real sector of the economy. The quarantine stops international trade, reduces the demand for almost everything, and in some areas, such as tourism and hotels, we can talk about stopping business in general.
Yesterday I talked with the owners of the hotel with 35 rooms. In two weeks, four visitors.
In this case, it is necessary in the usual manner to pay a loan for utilities, and staff. He expresses his opinion about quarantine and all this hysteria around the virus with the immortal phrase of Lavrov about morons, the hotel is going to sell and go to a crypt.
The closure of businesses means job losses. It is not for nothing that in the USA a record number of unemployed applied for benefits, and this is only the beginning.
What will they do with these people? Public work, as in the Great Depression, is not an option now; there will be no people willing to work for food now.
Therefore, they will simply distribute benefits and other material assistance. In fact, this is the only solution, since people need money for life here and now.
But only in a falling economy is the only source of money a printing press. And this is the road to nowhere. Business must be supported by all means, then there will be no such unemployment.