Ahead Of Employment, The Dream Of American Economic Recovery Has Come True? Fed Is Expected To Maintain Easing And Boost Recovery.

Under the impact of the new crown pneumonia, the US economy has fallen into recession, and the unemployment rate has soared to a record level. The anti racial protest that swept across the United States has led to social unrest. However, in the financial world, the US stock market has been advancing all the way in recent years, and the S & P 500 index has recovered completely.

The huge "disconnection" between stock market and economic reality has aroused concern. Some Wall Street analysts pointed out that there are reasons for this difference. They warn that the stock market is not the economy. Howard Silverblatt, an advanced index analyst at the S & P Dow Jones index, said: "one is watching today, and the other is concerned about where I am going." "What the market is saying is that we already know where we are today, but the question is where are we going tomorrow? In this case, tomorrow is 2021. "

Since May, the states of the United States have been restarting the economy, boosting confidence of investors in Wall Street. Recently, the report on non farm employment in May has been far ahead of expectations. However, some analysts have pointed out that the epidemic situation in the United States has not been completely controlled, and the two epidemic risk has not yet been lifted, and the recovery may take a long time.

Whether the market ideal of "V" revival can go into economic reality, it still needs time to test. Beijing time on June 11th morning, the Fed will announce interest rate decisions, while announces economic forecasts. After the expected May employment figures shake the market, investors are closely watching the Fed's next move and hope to get more clues about the future of US economic recovery.

Zhang Jun, chief economist of Morgan Stanley Huaxin securities, told the twenty-first Century economic news reporter that the Fed will give a relatively cautious and optimistic argument. On the one hand, it stressed that the policies currently promulgated have greatly reduced the impact of the epidemic on the financial market and the real economy. On the other hand, we will observe the follow-up effect of the current policy to decide whether to take further steps. New action.

There is a risk of "expected difference" in reality and in the future.

Driven by the optimistic expectations of economic recovery, the three major indexes of the US stock market have rebounded more than 40% from their lows in March 23rd. The S & P 500 index has recovered all the lost land lost this year. The NASDAQ index has reached a record high for the first time in history, breaking 9900 points for the first time and reaching 10% at the beginning of this year.

At present, all 50 states in the United States have reopened the economy to varying degrees. "From a market perspective, the economic impact of the new crown epidemic is basically over." Schroder Callahan, an investment strategist, told reporters in an interview: "we may still see a sharp increase in the number of cases, but it is politically difficult to shut down the economy again" Bill Callahan.

President Trump did say in late May that even if the two outbreak of the new crown outbreak occurred, the United States would not shut down again.

In the first quarter of this year, the US GDP fell 4.8% by the impact of the epidemic. The two quarter figures were generally expected to be worse. Federal Reserve Chairman Powell predicted that the US economy could shrink by 30% in the two quarter. Over the past two months since the implementation of the "home ownership order" in mid March, more than 40 million people in the United States have applied for unemployment benefits. The unemployment rate surged from a record low of 3.5% in February to 14.7% in April.

But the latest figures released by the US Department of labor are much more than expected when the employment situation is expected to deteriorate further. In May, the number of non farm jobs increased by 2 million 500 thousand, while those who accepted the Dow Jones survey were expected to lose 8 million jobs. In May, the unemployment rate dropped to 13.3%, even if the error of 3 percentage points resulting from the "bureau of Labor Statistics" classification error, the unemployment rate rose to 16.3%, which is also better than the 19% expected market expectations.

According to Zhang Jun analysis, by the impact of the new crown epidemic, the US economy stopped and the unemployment rate soared in the two quarter. This expectation has been fully reflected in the market decline process in 3 and April. The latest figures for economic and employment figures released in 4 and May did show a cliff type fall, but the drop was less than expected. Therefore, the expected difference has become a catalyst to promote optimism in the market.

Zhang Jun pointed out that the market is probably leading the economy for the 1-2 quarter, and the optimism in the market also comes from the anticipation of the resumption of the economy in the three quarter of the United States. But he cautioned that considering the fact that the current US epidemic is still serious, it is relatively difficult to restart the economy in the future. If the economic data are not as good as expected, "we think that there will probably be a downward expectation, which will lead to market adjustment."

Yang Delong, managing director and chief economist of the Qianhai open source fund, pointed out that the Fed lowered the benchmark interest rate to zero and adopted unlimited quantitative easing, releasing a lot of liquidity to the market, resulting in serious excess liquidity. The European Central Bank and the Bank of Japan carried out negative interest rates and implemented a lot of loose measures, which also brought a lot of liquidity to the market. Excess liquidity and less investment opportunities in the real economy have led to massive capital inflow into the stock market, which has led to a big rebound in US stocks.

However, "although the US stocks have rebounded sharply, the recovery of the US economy will take longer to verify." Yang Delong said.

Fed is expected to maintain easing to boost economic recovery.

Since February, in order to hedge against the economic impact brought by the new crown epidemic, the Fed has resolutely promulgated a series of strong policy measures, including lowering interest rates to near zero levels, easing the ceiling and launching a series of credit schemes to inject liquidity into the financial market and the real economy.

Powell has repeatedly promised that the Federal Reserve will continue to use all available tools until it confirms that the US economy is on the road to recovery.

For the Federal Reserve's monetary policy conference this week, the market is not expected to have any major policy decisions. Some analysts believe that in order to help the economic recovery, the Fed will reaffirm its commitment to maintain low interest rates for a long time, while Federal Reserve officials will explore ways to help those companies that have not yet been covered by any economic aid plan.

Before the meeting, the Fed also announced the further expansion of the Main Street Lending Program, reducing the minimum loan amount previously stipulated, while raising the maximum amount of loan available and extending the loan repayment period to five years.

This is part of the Fed's plan to provide relief to small businesses affected by the epidemic, aimed at helping businesses survive the crisis and retain the positions of their employees.

At present, "the signs of economic recovery have emerged, the United States launched more than 2 billion billion economic stimulus plan, coupled with the Fed's water drive, led to the recovery of the US economy, most of the states in the United States have resumed work ahead of time, also boosted economic growth." Yang Delong believes that the May non farm employment data show signs of marked improvement in the labour market.

On the day of the non farm employment report, President Trump declared that the United States ushered in the "greatest recovery in history". Of course, he is willing to add some momentum to the economic recovery. According to reports, the two parties in the United States are still expected to launch the fourth round of economic stimulus plan in the future.

On Monday, White House spokesman Kayleigh McEnany said President Trump had an open mind to reintroduce an economic rescue plan to tackle the new crown epidemic. "He hopes to introduce a number of measures, one of which is to provide payroll tax relief, which can directly benefit low-income workers."

For the aftermath of the recovery of the US economy, Zhang Jun told reporters that the focus of future observation is to see the pace of economic redevelopment in various states, especially whether the data on consumption and employment have improved significantly.

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