Wall Street has ended the week in full retreat yet again. This time the stocks fell sharply, so much so that the Dow Jones Industrial Average ended the week with over 17% loss. The index has been declining in four of the last five weeks.
The latest sell-off as the Federal Reserve pumped in trillions of dollars, capped the market’s worst week since the 2008 financial crisis.
Investors are extremely worried that the coronavirus (Covid-19) would plunge the US and other major economies into deep recessions. Over 246,000 cases have been reported of novel coronavirus worldwide, with more than 10,000 people losing their lives to it.
“The coronavirus is shutting the economy down,” said Lindsey Bell, chief investment strategist at Ally Invest. Oil prices are also putting downward pressure on the market. “This is kind of a double-whammy for the economy,” she said.
Markets are now looking for more turbulence next week with this week’s US unemployment aid applications expected to increase to over 2 million, as per Goldman Sachs’ analysts.
“We are going to start to see really scary economic numbers,” said Bell.
Treasury yield also cascaded to record lows amidst the liquidity issues as frightened investors flock to the safety of cash.
Last weekend, the US Fed cut down the interest rates to between 0 percent to combat the coronavirus outbreak which billionaire investor Warren Buffett called to be “unbelievable.”
As global central banks take further steps towards financial stimulus to help countries counter the virus damage, the US Treasury bills dipped below zero.
Those with the lowest maturity period are seen more like cash because they are easier to trade. “People are desperate for cash,” said Kathy Jones, chief fixed-income strategist at Charles Schwab adding, “What you are seeing today is an example of a flight-to-safety on a massive scale.”
The yield on the one-month Treasury bill maturing in April fell to negative 0.003% while those bills maturing in May slid to negative 0.020%.
“It’s the fastest, sharpest decline we’ve ever seen. It’s been contagious across all asset classes — bonds, credit, commodities, you name it,” said Timmer, director of global macro at Fidelity Investments.
All of this has been after more intervention came from global central banks to keep borrowing costs in check as countries try to ramp up spending to offset coronavirus impact.
Treasuries yield turning negative according to the macro trader and co-founder of Gold Bullion International Dan Tapiero is bullish for bitcoin.
Just yesterday, Bitcoin climbed to nearly $7,000, jumping 32% from Thursday’s lowest level. At the time of writing, BTC/USD has been trading at $6,200 up 0.07% in the past 24 hours while managing the trading volume of $2 billion.
Bitcoin is making its way up and the next high trader Mr. Anderson believes won’t be a “bubble excuses’ but “will happen in the face of currency wars & a negative yielding environment, & unlimited QE. When it happens it will introduce the world to BTC.”
Bitcoin traders, enthusiasts, and investors are all bullish on the world’s leading cryptocurrency in the long term, although in the short term things could not be so good.
“I can not express how bullish I am on bitcoin. We are at risk of losing the entire system right now. I know they will find a way to save it but all trust is lost. Gold guys/girls – you’ll be fine too. It’s just that BTC has bigger upside, by far but is riskier than gold,” said Raoul Pal, the CEO and founder of Global Macro Investor.