President Joe Biden is expected to launch a US$1.9 trillion bailout plan, the U.S. financial sector and investment circles have expressed concern about this, comprehensive media reports, the Bank of America warned that this could be a key factor in the bursting of the asset bubble. In addition, Jeremy Grantham, founder of asset management firm GMO, also warned that U.S. stocks could burst from an epic bubble, bringing a crash comparable to the Wall Street crash of 1929 or the dot-com bubble of 2000.
According to Market Insider, the Fed’s balance sheet has reached record levels since the outbreak of Chinese Communist pneumonia (Wuhan pneumonia), and the Fed has cut the federal funds rate to near zero; meanwhile, Biden is pushing for a $1.9 trillion stimulus package.
According to Bank of America’s analysis, Biden’s economic stimulus package will bring the Federal Reserve balance sheet to 42% of U.S. GDP, while the U.S. budget deficit reaches 18% of U.S. GDP.
Bank of America warned that this would bring “a disorderly rise in bond interest rates, a tightening of the financial environment, and volatile events” and other adverse conditions. The progress of the pneumonia vaccine will also depend on the extent of high interest rates and stock market weakness.
In addition, according to Bloomberg quoted Graham, pointing out that the next degree of collapse of U.S. stocks will be like the 1929 Wall Street crash, or like the bursting of the dot-com bubble in 2000, when the Nasdaq Composite Index plunged 80% in 31 months.
Graham warned that this influx of money into the stock market would last for weeks, and the fear of a spectacular crash would follow, “When the market reaches this level of hyper enthusiasm, the bubble always bursts within months, not years, without exception.”
Recent Comments