Robert Redfield, director of the Centers for Disease Control and Prevention, said a new wave of coronavirus infections could come along with seasonal flu. How will this affect the economy, and is it worth investing in cryptocurrencies and stocks now
The second wave of the coronavirus pandemic could begin in the US, said Robert Redfield, director of the Centers for Disease Control and Prevention (CDC). According to him, most likely this will happen in the winter, during a seasonal outbreak of influenza, reports the BBC .
The second wave may be significantly worse than the first, as it will lead to an “unimaginable burden” on the health care system, Redfield added. He also urged not to refuse vaccinations against influenza, because this will help prevent overcrowding in clinics.
The USA is now in first place in the world in the number of cases of coronavirus infections, more than 855 thousand of them. Of these, 78 thousand people recovered, about 48 thousand died.
The coronavirus pandemic has had a significant impact on the global stock market. March 23 quotes of the American S&P 500 index fell by more than 30%, to the level of 2330 points. German DAX fell by 40% to 8441 points. Now both indices have recovered to 2,800 and 10,389 points, respectively.
A blow to the stock market came at once from two sides. Firstly, due to quarantine and an increase in the number of infected, demand in many sectors of the economy has fallen sharply. This especially affected the areas of tourism, entertainment and services.
Secondly, the demand for travel and air travel decreased, and, accordingly, the demand for fuel fell. This led to an overflow of oil storage facilities, as a result of which oil fell in price, and in some cases its cost went into the negative zone. On April 21, trading in WTI black gold futures closed at minus $ 37.
Both that and another as a result affected the incomes of the companies and quotes of their shares. For example, securities of American airlines Delta Airlines, American Airlines group and United Airlines Holdings over the past three months have fallen by 65-70%. Macy`s and Gap retailers fell about the same price. Cruise companies Carnival and Royal Caribbean Cruises suffered even more.
Is it time to buy?
Perhaps the current crisis has provided an opportunity to purchase shares of large companies at a low price. However, investing in securities is now risky. First, savings may be needed in the event of job loss or other unforeseen circumstances. Secondly, there is a risk of bankruptcy of firms, and it is the higher, the longer the quarantine lasts. In addition to this, a new wave of coronavirus spread, about which Redfield warned, could aggravate the situation.
The creator of ITLEADERS venture capital club and KLOPENKO GROUP consulting company Egor Klopenko believes that the second outbreak will not have such a strong effect on the stock market as the previous one. Having coped with the first wave of coronavirus, the international community will draw certain conclusions, including organizational ones, which will allow avoiding fatal consequences for the economy, the expert suggested. In his view, the current economic downturn was partly due to the fact that the international community was taken by surprise.
Klopenko added that signals will soon appear that speak in favor of restoring the global economy. This will be a sign for investors that it is time to buy shares, the expert said. He specified that possible bankruptcies are not only a risk, but also an opportunity to buy securities even cheaper.
“In any case, soon we will see signals of the global economic recovery and this will be a sign for investors to buy shares. A positive outlook will be at least 6 months, and this is more than enough for a profitable investment. The economic crisis allows a lot to buy much cheaper, and bankruptcies here will also play into the hands, ”said Klopenko.
Anticipation game
Klopenko’s opinion is partially shared by the founder of the Garantex cryptocurrency exchange, Sergey Mendeleev. From his point of view, it will be possible to start investing in stocks at the first signs of economic recovery. However, the risks associated with the second wave of the spread of coronavirus should be taken into account, since this can cause a new blow to the stock market, he said.
“You can try to carefully enter the stock market when the first signs of recovery appear. You need to carefully monitor the situation and, if possible, play the lead. But I would not recommend doing this until a possible second wave of pandemic in the fall of 2020. Let me remind you that it was the second wave of the famous "Spaniard" that claimed more lives, "Mendeleev warned.
He suggested that the stock market could recover quite quickly. This will happen if quarantine measures yield results, and also due to the fact that financial regulators allocate significant amounts to support the economy, the head of the exchange explained.
CEO of Six Nines data center Sergey Troshin recommended investing in stocks with caution. A better time for investing is now determined than two months ago, but securities can still fall in price to new lows, the entrepreneur admitted. For this reason, he advised to postpone part of the capital in case the stock market continues to fall.
“You have to buy carefully. It’s better to shop for a small portion of your portfolio and be prepared to buy half the price later. Probably many assets have not reached the bottom. Now it is not known how events will develop with a pandemic and the stability of financial markets, so it is prudent not to go all-in. It is very likely that in a year and a half, the influence of the coronavirus will completely disappear, but no one promises that the recovery will be smooth, ”Troshin shared.
When to buy cryptocurrency?
In late February - early March, the cryptocurrency market collapsed after the stock market. The price of bitcoin in the middle of last month during the day fell by 50%, to $ 3800. Despite this decline, the asset rate was able to win back more than 80% of losses in 3 weeks, rising to $ 7400 by April 6. BTC is now trading slightly above this level, around $ 7,500.
This suggests that cryptocurrencies are also prone to crisis, like the stock market. But at the same time, digital assets have an important advantage over securities. Bitcoin, unlike airlines or retail chains, cannot go bankrupt.
However, acquiring digital assets is now no less risky than stocks, Klopenko continued. According to him, cryptocurrencies are a risky asset. And investments in such assets can be justified only after the economic recovery, the expert explained.
Mendeleev added that at the moment, investing in cryptocurrencies is "mathematically not justified." With confidence, it will be possible to buy bitcoin after its rate drops below $ 3000, the head of the exchange said. He offered to buy gold or winter oil contracts in case the crisis worsens.
A rise in gold is also expected at Bank of America. According to the forecasts of analysts at one of the largest US banks, the price of the precious metal will rise to $ 3,000 within a year and a half. The main reason for this will be the release by countries of additional money supply to combat the crisis, reports Bloomberg .
Returning to bitcoin, Troshin added that there is a risk of another market collapse if this happens on the stock market. However, there are no direct prerequisites for the sale of cryptocurrencies, the head of the data center believes. He is confident that the crisis has already dealt a major blow to all holders of digital assets.
On the other hand, the cryptocurrency market is protected from manipulation, Troshin noted. He warned that now, amid fears for the global economy, there is a risk of speculative actions by large players. They can use the mood of the market to bring it down or, conversely, provoke a rally, the entrepreneur allowed. He also suggested that the revolutionary rise in the price of bitcoin and other coins, if it happens, will not be as fast as before.
Buy, but carefully
Experts agreed that the current crisis is an opportunity to invest in stocks. However, acquiring them is now extremely risky. It is likely that companies will go bankrupt, and it will increase significantly if the world faces a second outbreak of coronavirus. Melita Vujnovi , WHO spokeswoman for Russia, said yesterday that the planet is still in the early stages of a pandemic.
As for cryptocurrency, the opinions of experts diverged. Klopenko believes that it will be too early to acquire digital assets until the economy recovers. Mendeleev admitted that the Bitcoin exchange rate may drop to $ 3,000, and then it will be justified to invest in it. Troshin is sure that there are no obvious reasons for a new recession. However, the market is subject to manipulation, and large players can provoke a sharp rise or fall, using the news background and uncertainty.
Therefore, if you invest in cryptocurrencies or stocks, you should divide the capital and invest it in parts. There is always a risk that an asset, even for no reason, will fall in price to a new low. Deferred funds in this case will not only help to find the most successful “entry point”, but will also become an airbag for a rainy day.
