John Normand, head of cross-asset fundamentals strategy at JP Morgan Chase executives, said that cryptocurrencies are difficult to appreciate when other assets plummet.
According to Marketwatch, he pointed out that in the current environment of the new crown virus epidemic, the market is mainly plagued by three major factors, namely the sharp decline in the U.S. stock market, the second wave of outbreaks that China may face from overseas imports, and the initiative of the Organization of Petroleum Exporting Countries. Price war.
Affected by these factors, the global stock market was battered on Monday, and the US stock market's S & P 500 index fell 7% on the day, triggering a fuse protection mechanism. Since the introduction of the US stock index fuse mechanism in 1987, it was triggered only once on October 27, 1997, when the Dow Jones Industrial Index plummeted 7.18%, the largest decline since 1915.
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Normand said that Saudi Arabia ’s decision to increase production caused crude prices to fall by more than 20%, and its impact on the market could be compared with the supply shock caused by the 2008 Lehman Brothers bankruptcy and the last OPEC price war in 1986.
He pointed out that the oil price war will reduce U.S. capital expenditures and corporate profits in the field of shale gas, worsen the fiscal and trade balance of a few large emerging market economies, bring higher downgrade and default risks to American companies, and weaken Emerging Markets.
In addition, the collapse of oil prices will make central bank interest rates expected to be zero. By the second half of this year, the policy rates of the Federal Reserve, the European Central Bank, and the Bank of Japan may be reduced to zero or lower for the first time in history.
Normand believes that at least two-thirds of traditional hedge funds have appreciated in shrinking major stock markets, with the dollar performing best against emerging market currencies, followed by the yen against the dollar.
Cryptocurrencies do not work because "their limitation is that they are financing instruments, so it is difficult to appreciate when other assets plummet."