There is a lot more than meets the eye. If it was just the virus at play, I would not be overly worried, I would see this as just a normal and even a much-needed correction. But I believe the virus is just a catalyst that is unmasking many problems in the financial system, and that such violent market movements seem to portend some larger, bigger problem at hand.
The massive amounts of free money that has been pumped into the system for the past 12 years have created record levels of corporate indebtedness which for the first time in history even exceeds the GDP in many countries (including the US). This came to a head last September when the Fed had to bail out the Repo market by pumping an additional 400 billion USD, and every day since then the Fed has been pumping more and more liquidity in the market. Companies -- even cash-rich ones like Apple and Cisco -- borrowed billions of that free money to buy-back their shares, thereby artificially inflating their stock prices, and parallel to that they issued massive amounts of high-yield (read high-risk) corporate bonds.
The credit market was already stretched to the limit before the virus showed. With the virus shutting down production, global supply chains and global demand, and now an oil price war, you can be certain that the credit market is under extreme stress. Who knows, maybe the system will correct itself and things will get back to normal now that all the central banks are stepping in in a big way. In any case, from what I am reading it would appear that the complacency that built up for 12 years has come to an end and that interest rates will rise again once this immediate has been put behind us, which the stock markets won't like.
Below are some good reads for anyone interested.
https://fortune.com/2019/09/23/repo-market-big-deal-400-billion-bailout-unnerving/
https://www.cnbc.com/2020/03/09/corporate-debt-downgrades-and-defaults-inevitable-following-stock-markets-slide.html
https://banyanhill.com/real-ticking-time-bomb-how-to-profit/
$29-$31 target, page-248
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Last
$2.56 |
Change
-0.190(6.91%) |
Mkt cap ! $667.4M | |||
| Open | High | Low | Value | Volume |
| $2.71 | $2.74 | $2.53 | $27.48M | 10.57M |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 13 | 81935 | $2.56 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $2.57 | 20000 | 1 |
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| Last trade - 16.10pm 18/11/2024 (20 minute delay) ? |
| APX (ASX) Chart |