The global markets are on a rollercoaster for the past few weeks, one day they are recording historical one-day gains the next they are tumbling into the abyss.
Just yesterday, Wall Street Journal’s latest heading read, “A new bull market has begun. The Dow has rallied more than 20% since hitting a low three days ago, ending the shortest bear market ever.”
And this has been after the Dow Jones Industrial Jones rallied 6.4% after the $2 trillion stimulus got closer to getting the green light. The blue-chip index has been up 20% from its low, which is the textbook definition of a new bull market.
As per the Investopedia definition, “the most common definition of a bull market is a situation in which stock prices rise by 20%, usually after a drop of 20% and before a second 20% decline,” although it does mention there is no metric to identify a bull market.
This jump reportedly ended the 11-trading day bear market, marking it the “shortest in history for the Dow.”
The similarities between the crypto headlines in early 2018 and shit like this is staggering..
Good luck. https://t.co/T3wwuaTnKd
— Loma (@LomahCrypto) March 26, 2020
Besides stocks, crude oil has also been plunging ever since the oil price war was started by Saudi Arabia and Russia. As Bloomberg notes, Canadian heavy crude has become so cheap its shipping cost is more than the value of the oil itself.
Better start mining Bitcoin https://t.co/q5pZ783Hxe
— Ceteris Paribus (@ceterispar1bus) March 27, 2020
Every stock trading like a “sh*tcoin”
While new for the stock market, these kinds of moves aren’t anything new for the crypto market. Recently, on Black Thursday, Bitcoin dropped over 50% in a two-day period.
Now, the global stock market is experiencing such high volatility, which momentarily went past that of bitcoin. And the market is divided into those who believe that from here the market would move on to yet new highs again while the other side believes a lot more pain is to come in the light of lockdowns and possibility of a recession.
All of this has is resembling a crypto market, as economist and trader Alex Kruger said,
“In 2020 the world has gone full crypto. Full crypto you know. In crypto half the people think prices will “moon”, while the other half think it's all a ponzi.
In the world now half the people think coronavirus is a sham, while the other half think everything will collapse.”
According to him, with volatility “up the roof,” every stock is trading like a “sh*tcoin.”
“Assets can't be valued any longer because nobody knows anything, (…) sounds very much like crypto to me,” Kruger said.
Fed Balance Sheet Jumps to a New High
On Thursday another big and devastating news came in the form of the number of people seeking jobless benefits.
In an unprecedented surge, a total of 3.28 million has been reported by the US government to have filed for unemployment insurance in the week ended March 21st. These levels exceed those reported since 1967.
“This morning’s data leaves no doubt that the economy is currently in a recession,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank AG.
In April, this unemployment rate is expected to touch 5.5% but won’t be the peak. The US meanwhile is awaiting a $2 trillion stimulus package for approval to boost the benefits for those who got laid off.
Besides providing for the unemployed, a huge chunk of money is being used to bailout institutions. The Federal Reserve has long been injecting liquidity into the financial markets and recently announced unlimited QE.
This has the Fed balance sheet jumping to a new high of $5.254 trillion, with the largest ever weekly increase of $586 billion made last week.