What do we see yesterday?
The US market is a sea of green! The power of hope of Fed rate cut.
See the headlines...
Bull's case:
Fed will cut rate to stimulate the US economy, businesses won't go bust. Stock prices of the businesses will then continue to chiong up and up.
Bear's case:
Coronavirus is causing worldwide productivity decline and it's nowhere near getting controlled. Economy is already seeing downturn, yield curve inversion's here.
Productivity decline = earnings decline = P/E go over the moon = stock prices would come down.
How will the market be tonight?
“Markets can stay irrational longer than you can stay solvent.” - Keynes
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A crash course for you on economy if there's difficulty in grasping what I am trying to say:
My takeaways:
Boom comes when spending increases. Recession comes when spending reduces.
When we are at the beginning of the debt cycle, we should borrow money to increase productivity.