European markets are likely to remain volatile due to another set of weak economic numbers out of China. The Chinese Caixin PMI , a fear-mongering level.
The Fear of the Unknown
There is some serious trouble brewing, and traders are not aware of what is to come. This is the message that investors took away from the Federal Reserve’s surprise action yesterday. The Fed delivered the biggest emergency since the financial crisis and it was completely unexpected. A traditional textbook trade would have pushed the stocks higher, blasting the roofs and ripping all the previous highs. However, there was nothing close to this level, markets took the message as a sign of panic. As a result of this, the plunged by over 700 points and closed lower with a loss of 2.94%, the dropped 2.81% and the fell 2.99%.
We think that the Fed has overreacted just like the markets have. The reason that we say that is because we do not see much evidence of a liquidity crisis, the coronavirus crisis…