Well, it is really too fast! The damn COVID-10 virus hits the world in an extremely fast fashion and accordingly, everything in the world is also moving extraordinarily fast, too, including the market. We have just witnessed two historical events occurred within 10 days time: first, Dow Jones crashed over 2000 points never seen since 1930s since Great Depression. This triggered me to openly make a bold prediction that we might see a quick 20% jump pretty soon. Based on the feedback I got, virtually no one had agreed with me and thought possible. Well, we got it within 3 days, another biggest percentage hike by Dow Jones since 1930s again!! Sure, my perfect timing is just a coincident but I'm not surprised to see this kind of "rip your face off" oversold rally in this kind of pessimism.
I'm sure you all know that FED has fired a bazooka, no, actually a nuclear bomb to basically institute an open-ended unlimited QE to finance the whole economy now. Usually I'm never a fan of any QE but not this time. I must say I'm applauding for FED's bold action for this unprecedented move to save the economy and people's life. This is not a usual recession that is due to the economic cycle or financial crisis that triggers it. It is actually a government mandated recession, i.e. by order, all the businesses must stop working to fight the health crisis. In this kind of situation, the FED's rescue QE can bridge the gap to provide the whole country much needed time to go through this crisis and get the economy back to normal. Let me use an analog to explain this that may be easier to understand. Let's say the whole country's economy is like a gigantic tree and we people are the leaves that rely on the survival of the tree. At the moment, due to the natural disaster, all the sudden the water line (cash flow) is abruptly cut off, which is endangering the life of the tree and accordingly the lives of all the leaves as well. What FED is doing now together with the government $2 trillion rescue program is just to reestablish the water line for the tree so that it can survive to nurture the dependent leaves. Without it, the whole tree will collapse, i.e. the fundamentally strong economy will not stand up again. No one wants to see this happen, I'm sure!
Just for your information, below is the summary of what the major central banks and governments around the globe are doing in fighting for this pandemic: Government rescue programs
Central banks' QEs
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