It is unfortunate to say this, but it seems that the current crisis has more and more parallels with the Great Depression. As then, there is a sharp jump in unemployment caused by the collapse of the bubble in the stock market, which has become a consequence of the accumulated overproduction, and on top of all this, an additional aggravating factor not connected with the economy, is superimposed. However, no one knew anything about any production crisis. That was just a novelty. Indeed, industrialization was still far from complete, and humanity could not even imagine that there might be an overabundance of goods. Moreover, it would never have occurred to anyone that this very oversupply could provoke simply disastrous consequences. So the fact that during the Great Depression this moment was overlooked is quite excusable, for they have never encountered anything like it before. But today, when the world economy has repeatedly faced a crisis of overproduction, the fact that they overlooked it is simply an unforgivable mistake. But then, the fact that there are all signs of a crisis of overproduction has been evident at least since 2018, when a rapid decline in industrial production in Europe began. To this day, no one recognizes that we are facing exactly the consequences of the overproduction crisis. Everyone blames the coronavirus, which has only recently appeared. It is clearly much later than all the signs of an overproduction crisis. But it is the coronavirus epidemic that has become an additional factor that makes the current crisis extremely similar to the Great Depression. Moreover, There is no doubt that this terrible epidemic increases all the negative consequences. But during the great Depression, there was also an additional reinforcing factor - hunger. Yes, during the Great Depression there was a terrible and protracted drought, which led to famine, the last great famine in the world. The combination of these two factors led to the fact that then the collapse of the labor market became protracted and in itself provoked a worsening of the economic situation. After all, if people do not have a job for a long time, then they do not have money. This means that there is no one to sell anything to. Consequently, businesses will not have the money to expand production, raise wages and create new jobs. A kind of vicious circle, from which it is impossible to get out. The result is a self-replicating economic crisis. And recent data on the labor market in the United States suggests that the risk of a new great Depression is extremely high. Millions of people are unemployed in just a week, and the coronavirus epidemic is creating a situation where finding a new job will be extremely difficult. This means that there is a risk of prolonged mass unemployment. First in the United States itself, and then around the world. But it is not necessary to draw definite conclusions yet. It is hoped that the surge in unemployment will not be prolonged, although the chances are slim. Nevertheless, these fears contributed to the weakening of the dollar over the past week. Another thing is that it is completely unclear where to run from the dollar. After all, the economy of the United States is so strongly linked to the economy of any other country in the world that if there are problems in America, then everyone else will have them.
Moreover, in reality, the flight of capital, which provoked the collapse of markets continues. For example, the yield on Italian 6-month bonds jumped from -0.287% to 0.055%, becoming positive for the first time in a long time. Of course, to some extent this is due to the coronavirus epidemic, which in Europe is most pronounced in Italy. But the main reason is the collapse of exchange bubbles and the massive flight of capital back to the United States. Well, this is a consequence of just the very crisis of overproduction. The coronavirus epidemic only worsens this process.
However, they reported at least some improvement in macroeconomic dynamics in the UK, which, of course, was disappointing. The decline in car production slowed from -2.1% to -0.8%. This, of course, is still a recession, but not so strong. However, one cannot decline forever. Sooner or later, a zero mark will be reached, below which output cannot fall. Like it or not, it is simply impossible to physically produce less than zero products. But the UK has another very serious advantage - it is affected by the coronavirus to a much lesser extent than the United States or the eurozone countries. Although Boris Johnson himself admitted that he was infected with a coronavirus. But lately, prime ministers in the United Kingdom have changed so often that one doesn't even want to talk.
Car Manufacturing (UK):
At the same time, as expected, data on personal income and expenses in the United States did not produce any effect at all. Revenues themselves grew by 0.6%, and expenses by 0.2%. And it seems like, a much faster growth in income is a negative factor, as it indicates a decrease in consumer activity. But this is data for February, and in March in the United States everything turned upside down. At the same time, we are witnessing further consequences of a sharp drop in oil prices, since, according to Baker Hughes, the number of active drilling rigs in the United States has decreased from 664 to 624. Thus, American oil companies continue to incur enormous losses. Apparently, it is true that current oil prices are lower than the cost of its production. Which means it won't be able to last long, since sooner or later, due to a drop in profitability, production will fall enough to start threatening a real shortage of black gold. Well, then a simple law of supply and demand will work, and prices will begin to recover. At the same time, I want to draw attention to the fact that the number of drilling rigs has been declining for quite some time. This process began in 2019. That is, signs of overproduction of black gold have been observed for a long time, and the fall in oil prices was only a matter of time.
Number of rigs from Baker Hughes (United States):
Now, we are seeing a hint of a pullback compared to the previous week, during which the dollar was only engaged in the fact that it was losing its position. However, the losses were insignificant against the background of previous conquests. In many ways, a hint of the resumption of dollar growth is a consequence of the ongoing outflow of capital to the United States. At the same time, the single European currency has cause for concern, since preliminary data on inflation in Germany are published today, which should show its further decrease from 1.7% to 1.4%. If such a sad picture develops in the largest economy of the euro area, then in all other countries the situation is no better. Moreover, similar data for Spain have already shown a slowdown in inflation from 0.7% to 0.1%, which means that deflation may well return. Hence, inflation in Europe continues to go down, which means that the European Central Bank has more and more reasons to think about lowering the refinancing rate. Followed by other major central banks of the world.
Inflation (Germany):
The forecasts for the UK are no better. More precisely, the lending market in the UK. Most importantly, the number of approved mortgage loans should be reduced from 70.9 thousand to 67.5 thousand. And the volume of mortgage lending itself may decrease from 4.0 billion pounds to 3.8 billion pounds. And all this is extremely sad, since the real estate market is traditionally considered the main criterion for determining the investment attractiveness of the UK. And if there was a decline in the housing lending market in February, then you can expect just a catastrophic picture from March. In addition, I would like to draw attention to the fact that for many years the volume of mortgage lending has remained quite impressive, which means that it also shows signs of overheating, and in the current conditions, it is likely to wait for its collapse together with the entire UK property market. But everything is going wrong not only in terms of mortgages, but also in other segments of the lending market. Thus, the volume of consumer lending should be 1.0 billion pounds against 1.2 billion pounds in the previous period.
Mortgages Approved (UK):
Do not think that the dollar today will not meet any obstacles at all. Its own American statistics will be in the way. In this regard, growth in pending home sales should slow down from 5.7% to 1.5%. Therefore, we should expect a decrease in activity in the housing market in the form of a decrease in sales. Another thing is that, unlike the UK, there was a noticeable decline in the housing market in the United States a couple of years ago, after which it was recovering, so there is no overheating in this regard, which means there will not be a significant drop in the market. Nevertheless, a recession is a recession, so it will hold back the dollar.
Unfinished Home Sales (United States):
In addition to all the above negative factors, do not forget about the ongoing outflow of capital as well as today's placement of French bonds which may be another confirmation that it is too early to talk about a change in trend. Thus, we should expect a gradual decline in the single European currency to the level of 1.0950.
The pound is no different from the single European currency. Another thing is that the current placement of American bills will be indicative of it. Moreover, the volatility in the pound is much higher than in the single European currency. The medium-term pound target is 1.2050, but it will decline to the level of 1.2275 today and continue to the level of 1.2175.
*这里的市场分析是为了增加您对市场的了解，而不是给出交易的指示。
InstaSpot分析评论将让您充分了解市场趋势！ 作为InstaSpot的客户，您将获得大量的免费服务以实现有效的交易。
