Three fuse trips in two weeks: the Fed ‘s release of water can save the emergency, but it ca n’t solve the economic problem

Three fuse trips in two weeks: the Fed ‘s release of water can save the emergency, but it ca n’t solve the economic problem
On March 16, the Fed announced the largest emergency interest rate cut in history, which will reduce the reduction to zero, while launching a large-scale quantitative easing stimulus plan.However, the market did not seem to respond actively. US stock index futures continued to plummet, even triggering the third meltdown in just two weeks.In the thirty years before this month, the only thing that triggered the meltdown in the US stock market was 1997.This shows that the Fed’s interest rate cuts have gradually failed to appease market sentiment.The highest, after the interest rate is reduced to zero, the Fed’s policy space is basically reduced, and the market adjusts the Fed without “behind hand” to deal with possible future pressures and risks.At the same time, the Federal Reserve responded to the policy so quickly, the market currency and currency exchange rates re-expected the potential potential risks in the market, and these risks suddenly broke out again at some time in the future, the Federal Reserve is likely to cope with the lack of ammunition.However, the core issue is that what a voice in the core financial market believes is that there is no new coronavirus vaccine in the hands of the Fed. Therefore, what the market is most looking forward to seeing is the actual response to the new coronary pneumonia epidemic, rather than simpleDrain.The epidemic was ultimately a public health crisis, not a liquidity crisis.The only thing that can boost market confidence is good news about epidemic prevention and control.After all, if the real economy fails to recover after the fight against the epidemic, the release of too much liquidity will only cause the stock market bubbles to pile up.However, emergency actions to release liquidity also have positive significance.Many physical enterprises are surrounded by the shortage of capital chain due to insufficient preparation for the outbreak of the sudden outbreak, and some have even been on the verge of bankruptcy.If the liquidity released by the Fed can smoothly flow into the real economy, it may relieve the difficulties of enterprises to a certain extent and avoid the bankruptcy of a large number of enterprises. In this way, after the epidemic, as long as the enterprises are still there, the economy may recover quickly.All in all, the Federal Reserve ‘s quantitative easing has limited boost to US stocks, but it can gradually reduce the magnitude of the increase to a certain extent to avoid a sharp increase in the market ‘s sharp decline, and it has a direct and immediate positive effect on economic difficulties.With regard to the impact of the epidemic on the global economic landscape, we must further observe the development of the epidemic.Eventually, the focus of China’s epidemic prevention and control has shifted to preventing overseas imports, and it has gradually provided support to other countries, including medical teams, protective materials, and drugs. The extent to which the US epidemic will develop in the future is unknown, but, “The idea of “promoting the return of manufacturing to the United States” may be temporarily lost.However, the trade war that the United States has launched in the past two years has also allowed too many multinational companies to merge geopolitics to have greater impact on economic and trade activities than in the past. This will be the manufacturing supply chain that has been taking stability, cost and scale as the main consideration for many years.New layout logic.At the same time, the impact of domestic outages and downtime caused by the outbreak of the Chinese epidemic on global manufacturing has also made many multinational companies see how well they allow China’s supply chain.This will allow many industries around the world to rethink the relationship with China’s supply chain. For the purpose of risk avoidance, they will increase the flexibility of the supply chain and find suppliers in multiple countries.At the same time, countries such as East Asia, Southeast Asia, South Asia, and South America are accelerating their participation in the global value chain, which will also have a certain impact on China’s “world factory.”But for now, large-scale transfer of China’s manufacturing supply chain is still impossible.Although emerging emerging countries such as India, Vietnam, Thailand, and Thailand are actively participating in the division of labor in the global value chain, and have their own advantages, large-scale population size, industrial manufacturing capacity, infrastructure, etc., but no country like China has the sameAll these advantages.In addition, China’s fundamental advantage lies in the complete supply chain.For example, Shenyang, China has become BMW ‘s largest manufacturing base in the world since 2018. Every day, more than 10 million parts are delivered to the factory in Shenyang, and these parts are not from “global procurement”, or even all from within 400 kilometers of Shenyang.And this is just a microcosm of China’s supply chain network.In general, the epidemic is a serious public health event, and it is also a test of the economic composition of various countries. The role of conventional monetary policy is very limited.Of course, the epidemic will also have a major impact on the world economic pattern, but the transfer of global industries will still follow its internal laws in the long run. The epidemic may accelerate this process, but it will not have a disruptive remodeling effect.Pan Helin (Executive Dean of the Institute of Digital Economics, Zhongnan University of Economics and Law) Wang Jinyu, proofreader, Li Xiangling