How to Keep Stocks Up
One-thousand-point swings are the new one-hundred-point swings; these market moves don’t care about your blood pressure. The tug of war will resolve eventually, though, and the dominant trend will re-assert itself.
In our poll today, the Invstr community dubbed COVID-19 a more significant threat to global markets than climate change, fake news, and debt combined. The winter virus may well blow over, but sentiment like that suggests it may already be too late for stock prices. If markets are to stay green from now until the end of the year, watch out for the following monetary moves!
Cutting Interest Rates
We’re not experiencing a crash, not even a contraction, and that makes now an untraditional time for the Federal Reserve to trigger its most traditional market fix; rate cuts! With little room beneath us, rates could end up going sub-zero like where borrowers and paid to borrow. However, Fed Chair Jerome Powell insists this won’t be allowed to happen. It’s also possible for central banks around the world to drop in one synchronized motion for a little extra effect.
QE (Quantitative Easing)
Printing money makes the stock market go up because it can be invested in bonds. That bids them up and reduces their value for money, incentivizing investors to buy stocks instead. It doesn’t do anything for the underlying economy mind you; it’s a fancy market facelift, “like putting lipstick on a pig!”
Accept Bad Loans
When consumers are shuttered in, and business people are afraid to take out loans for new ideas, forbearance could come into play. Essentially, the government tells banks to stop being so picky over whom they lend money to. Quantity, not quality. If loaning money to eccentrics with lower credit scores and higher default rates is the only way to get money flowing, so be it!
Fiscal Stimulus
Convince world leaders to build a few bridges, pave some new roads, or improve travel infrastructure. In the midst of an economic downturn, contrarian commitments from the top can give business leaders confidence to go out and invest themselves.
Easing Regulation and Tax
Cutting red tape can tempt new entrants into established markets, forcing everyone from entrenched organisations to customers to shuffle money about. Reducing value-added tax (VAT) on purchases can also help. The United Kingdom, for example, is considering changing the rules about sick pay following the coronavirus outbreak.
Cash Handouts
Spread the love! In Hong Kong last week, every adult citizen came into one thousand dollars of crisp dollar bills, courtesy of their government. Jealous? You shouldn’t be. Helicopter money is the last resort. Things must have either gotten pretty ugly out there, or politicians are desperate to get the public back onside following riots.
None of these policy shifts will reopen quarantined offices, universities, or parliaments. None will restore the bed-stricken to full health. None will advance scientific advancement toward a vaccine. They’re the holdover measures in place to stop investors giving up on life!Air travel rebounding is one of the inviolate laws of nature; people need to get places.
