The current market is refreshing our three views every day. U.S. oil has never fallen into negative numbers in history. It is undeniable that this wave of bargain hunters have suffered heavy losses. As the author mentioned in the article yesterday, bargain hunting is a “golden pit.” The risk is huge, because you may fall into an abyss of eternal destruction at any time. This round of decline in crude oil prices once again warns us that there will be many black swan events in the future. Survival is more important than anything else.
The reasons for this round of plummeting oil prices are complex, including geopolitical influences and competition between major powers. Oil prices have never been dominated by supply and demand fundamentals. The impact of this collapse in oil prices on the world economy is obvious, especially under the influence of the new coronavirus. The outbreak is as powerful as a large-yield economic nuclear bomb. After Zheng Mian continued to resist the decline for a period of time, he could no longer hold on and fell below the 10-day moving average. Wherever it goes in the future, regardless of whether it is a second dip, it at least shows that recovery will take at least some time.
The author mentioned in the article yesterday that macroeconomic data and cotton consumption data in May are crucial. Entering late April, the global COVID-19 epidemic still shows no signs of turning a corner, and the number of infections continues to rise rapidly in some countries. Some people predict that the turning point of the epidemic will be the bottom of commodity prices. At present, whether the current bottom is true or false needs to be verified by the market. All investment logic becomes extremely fragile in the face of black swan events. It is foreseeable that the economic and consumption data in April will not improve much. In today’s era of economic globalization, the world economy is in a chain. If a break occurs at one point, it will be difficult for other countries to survive alone.
Cotton is now a famous brand. The supply and demand data released by various agencies can be seen everywhere. The operation of the entire cotton spinning industry chain is indeed getting worse. Since it is a famous brand, detailed analysis is of limited significance. “To catch the thief first, catch the king first, and to catch the snake within seven inches.” Only by grasping the main contradiction can we make correct predictions and judgments on future cotton price trends. The biggest problem in reality is that the epidemic trend is erratic and blooming everywhere. No one knows what will happen in the next stage. It is especially important to remain patient at this time.
Under the influence of the COVID-19 epidemic, central banks around the world have begun to release large amounts of money. Judging from the trends in stock markets and commodity prices, the effect is not ideal. Under inflation expectations, we must be more alert to deflation caused by falling prices. Especially when low oil prices are likely to export strong deflation to the world, the impact on weak economies will be greater.
As Dickens said: “It was the best of times, it was the worst of times;” We don’t have to worry too much about the future, nor can we relax our vigilance too much. This oil incident once again reminds us that in such a chaotic environment, there will definitely be other black swan events coming. The most important thing is to stay determined and survive. </p
