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Coronavirus, China and financial market impact
Old 02-02-2020, 04:48 PM   #1
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Coronavirus, China and financial market impact

According to this article, China is "injecting $174 billion in 'liquidity' into their markets Monday." But I do not understand how this will happen - could someone explain "reverse repo operations" - I take it that money is being "given," not loaned, by the central government to banks? And the purpose is to prevent the coronavirus epidemic from setting off panic selling? Definitely not my area of expertise!

Can this work? I guess we will see how it affects global markets.



https://finance.yahoo.com/news/china...073630793.html
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Old 02-02-2020, 04:55 PM   #2
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An excellent post to start a separate discussion on the market impact, and allow the other thread to focus on health.
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Old 02-02-2020, 05:17 PM   #3
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I don't know all the mechanics but is this materially different than what the FED has been doing to prop up liquidity in the US? On December 31, they injected $255 Billion - a single day. I seem to recall that they increased their balance sheet by over 10% in the last three months of the year. I often listen to Powell's press conferences and Q&A and it is increasingly clear that the FED doesn't have a complete grip on the US repo market.
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Old 02-02-2020, 05:30 PM   #4
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No expertise here, just a couple of thoughts. The Bank China can instruct banks and intermediaries to use this money to buy Chinese equities, so it might keep equity markets from falling for a few days. After that, who knows. Will other Central Banks follow suit?

The problem I see is alll the quarantines and travel disruptions, which will likely have an impact on global supply chains, and will probably strengthen in the next few days until they can stop the growth and spread of the disease.

We were in the early phase of a global recovery from a global manufacturing slowdown. This has the potential to derail the recovery.
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Old 02-02-2020, 08:51 PM   #5
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The problem I see is alll the quarantines and travel disruptions, which will likely have an impact on global supply chains, and will probably strengthen in the next few days until they can stop the growth and spread of the disease.

We were in the early phase of a global recovery from a global manufacturing slowdown. This has the potential to derail the recovery.
Bingo! Anytime travel disruption occurs GDP globally takes a dive. It's what happens. Expect them (us equities markets and global equities) to go down a bit until the hysteria wanes... I see the USD is slightly up against the JPY

remember... we just had that thread on all the Armageddon scenarios...this is a VIX driven FEAR driven mechanism and the result is people moving to ...cash?

Buy the dip! Dry Powder!
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Old 02-03-2020, 05:07 AM   #6
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According to this article, China is "injecting $174 billion in 'liquidity' into their markets Monday." But I do not understand how this will happen - could someone explain "reverse repo operations" - I take it that money is being "given," not loaned, by the central government to banks? And the purpose is to prevent the coronavirus epidemic from setting off panic selling? Definitely not my area of expertise!

Can this work? I guess we will see how it affects global markets.



https://finance.yahoo.com/news/china...073630793.html
But don't forget that usually during the new year celebration, the shut the Chinese stock market down. If that doesn't screw up liquidity.......
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Old 02-03-2020, 06:28 AM   #7
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I think the manufacturing and shipping disruption this virus could cause is concerning. Workers at least for now in some areas are being told to stay home and that will shut down a lot of operations. My guess is this move is to financially stabilize their equities market so the panic selling won’t snowball. But the question is will this work?
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Old 02-03-2020, 07:22 AM   #8
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I would expect to see pictures of short lines and empty terminals on the TV news if there was a noticeable drop in passenger traffic at the airports. That presumably would indicate some financial impact. I don't watch TV news, but nothing is showing up in the online versions. Has anyone seen such reports yet?

I'm also waiting to see if anyone at the airport is wearing the latest version of tin foil hats, the plastic beverage bottles...
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Old 02-03-2020, 07:50 AM   #9
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Looks like Fidelity has a China focused mutual fund. Now how to time the purchase correctly....

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Old 02-03-2020, 08:51 AM   #10
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I just made $19,000 off of Gilead coronavirus news (bought Friday, sold today). Sadly not in Robinhood...this took some serious cash.

Hmm....and I estimated our 2020 income at $25,000....oops.
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Old 02-03-2020, 09:38 AM   #11
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Fermion, might want to start looking at a new Porsche......
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Old 02-03-2020, 10:21 AM   #12
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I just made $19,000 off of Gilead coronavirus news (bought Friday, sold today). Sadly not in Robinhood...this took some serious cash.

Hmm....and I estimated our 2020 income at $25,000....oops.
That $25K (after tax) should easily cover your truck transmission repair!
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Old 02-03-2020, 11:18 AM   #13
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That $25K (after tax) should easily cover your truck transmission repair!
GRRR I am still fighting that and the truck isn't even repaired yet (they are waiting on parts). All the snow is melting too, so there goes snowmobiling...
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Old 02-03-2020, 01:03 PM   #14
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Nephew just flew back to Bejing. He said there were less than 50 people on the plane, the airport empty, and that Bejing looks like a ghost town.
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I would expect to see pictures of short lines and empty terminals on the TV news if there was a noticeable drop in passenger traffic at the airports. That presumably would indicate some financial impact. I don't watch TV news, but nothing is showing up in the online versions. Has anyone seen such reports yet?

I'm also waiting to see if anyone at the airport is wearing the latest version of tin foil hats, the plastic beverage bottles...
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Old 02-03-2020, 01:42 PM   #15
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Nephew just flew back to Bejing. He said there were less than 50 people on the plane, the airport empty, and that Bejing looks like a ghost town.
A number of folks here travel regularly. For those that have been in an airport in the last week or 10 days, have you noticed a decrease in the number of people going through the airport from what you usually see? Are your flights less full than usual? I can see that flights to Asia, especially China, would be impacted, but I'm curious if there are overall decreases in the numbers of passengers or if specific airports are experiencing declines in passengers.
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Old 02-03-2020, 02:09 PM   #16
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Nephew just flew back to Bejing. He said there were less than 50 people on the plane, the airport empty, and that Bejing looks like a ghost town.
Reminds me of when we flew international on TWA after the '86 bombings. Lots of room to stretch out & enjoy the flight.
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Old 02-03-2020, 02:38 PM   #17
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We went on vacation to Cancun a few years ago during one of the flu scares. We had most of the resort to ourselves.
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Old 02-04-2020, 05:10 AM   #18
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A number of folks here travel regularly. For those that have been in an airport in the last week or 10 days, have you noticed a decrease in the number of people going through the airport from what you usually see? Are your flights less full than usual? I can see that flights to Asia, especially China, would be impacted, but I'm curious if there are overall decreases in the numbers of passengers or if specific airports are experiencing declines in passengers.
I just flew through the Atlanta airport on Thursday. It was as crowded as ever, and my flights were full. Many people were wearing face masks.
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Old 02-04-2020, 05:50 AM   #19
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We are touring Southeast Asia. Attractions like Angkor Wat are notably less crowded and the sound of Chinese is nowhere to be heard. Good for tour comfort; bad for nations that need tourist renminbi.
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Old 02-04-2020, 05:58 AM   #20
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There have been multiple health scares to the market over the years. They pass.
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