Global Recession Price Targets Recession
In the UK we came to the end of the financial year and at this point the end to the first quarter for the global economy. Governments around the world will now declare that GDP our economic production has decreased, and unemployment has increased. We’ve seen all major central banks update fiscal and monetary policy, the Fed has announced a 6.2 trillion stimulus package. S&P 500 has seen the most significant downturn in history. What can we expect over the next coming months?
The main catalyst for this recession is global debt, housing debt, energy industry debt, household consumer debt, and corporation debt. This is the everything bubble. It has been further fueled by COVID-19, The pandemic has caused Global quarantines and lockdowns. Consumers are being told to stay at home for a period of 2 to 3 weeks at which point the infection will be reviewed and the quarantine assessed. Consumers and not driving the vehicles this is reducing demand for oil and gas. Consumers spending habits have reduced significantly emphasizing a decline in economic activity. Non-essential Businesses have been closed indefinitely this has had a knock-on effect on people’s jobs and employment. Many are waiting for government funding packages to provide financial support during self-isolation and unemployment. We can see an extortionate amount of government spending with no max parameters in place. Over the next few months we will have to see how cases increase and how companies will be affected we will need to see how cold it is treated and how effective the quarantining is. These quarantines are not a one off I have been implemented to slow the spread of the infection and once they have lifted and the infection reemerges, they will be forced again to Quarantine. Businesses and executives know that this will occur and so will be hesitant to open or continue their business operations, they will be on likely to begin recruitment and re-employment because of this. This has a significant knock-on affect the economic activity. Governments suppressing the spread of infection in order to curve the peak demand on to healthcare services. Health officials are waiting for a vaccine to be developed or for herd immunity, both of these can take many years. All of these factors contribute towards fear uncertainty and doubt in the general public. This is setting up to be a depression, the great depression 2.0
What does this mean for SNP 500 index? For me look at the 2001.com bubble price fell 50% in the bear market. In the 2008 housing crisis the price sale 58%. If we continue this pattern into our current circumstances from our all-time high of around US$3400, we are likely to fall50% again placing the S&P 500 index at 1700, this is the decline of over 1700 points. If we use the all-time highs from 2001 and 2008, We can conclude a resistance for our current downturn of around US$1500. We need support, we can see support at US$1800 in 2014 and 2016 Low’s. And this gives us are likely target price range for this current recession, however if we breach and full-blown resistance of US$1500 I’m confident that we will reach loads of US$800 this sort of drop and contraction in the overall economy will be defined as a depression and it will have significant adverse effects on the globe.
Each and every financial crisis governments have attempted to stimulate the economy and we see a short-term correction from the stimulation. By the long time it doesn’t help realistically the sessions depressions and the business cycles will continue to occur because the global economy is built on continuous quanitivie easing and liquidity injections.
I hate to be so pessimistic. However, there is optimism for we investors Have the greatest opportunity to enter the markets of multiple industries exceptionally low prices and we will likely see corrections up to all-time high of 2019 US$3,400. Realistically this timeframe is likely to be up to 7 to 12 years until we even get close to that price again. Could we be in the midst of the financial systems collapse?!
