[ad_1]
Dow jumps over 300 points
However, an insider of the US Federal Reserve has issued a worrisome warning about the state of the global economy, which should set off an alarm on Wall Street.
The Dow gathered Tuesday a spectacular recovery of 300 points. | Source: Yahoo Finance
The short-term recovery of the Dow Jones was mainly attributed to the optimism of US President Donald Trump on a comprehensive trade deal with China after the break in the last round of trade talks.
"He just came back from China. We will let you know in about three or four weeks if this has been a success. … but I have the impression that success will be there, "said Trump during a dinner at the White House, according to Reuters.
However, as Eric Rosengren, chairman of the Boston Federal Reserve, has said, the break in the last round of trade talks poses a serious threat to the global economy, which could have a negative impact on the short-term market trend. American stock.
Fed Chairman Rosengren: Trade War Could Slow Global Downturn
Fed Chairman Eric Rosengren warned that the trade war could seriously disrupt global economic stability. | Source: Shutterstock
Addressing the Wall Street Journal, Rosengren said that despite signs of recovery in the first few months of 2019, the deterioration in US-China trade relations could lead to major disruptions in the economy. and Dow Jones performance.
He said:
"We need to be concerned that if trade is a more widespread problem, and especially if the financial markets react negatively to this situation, it could have the potential to slow global growth. It is too early to be able to make this assessment. "
The rising tension between the United States and China comes after the euro zone economy recorded a surprising rebound in the first quarter of 2019, after a sharp fall at the end of 2018.
Earlier, market strategist Russel Napier warned that if the eurozone's economic struggle continues, it could lead to the collapse of the global monetary system.
"The main consequence of this collapse will be the destruction of the euro. The expected success of the far right and the far left in the European Legislative Elections of last May heralds the beginning of the end of the monetary union. Both extremes share a commitment to the return of the sovereignty of their parliaments incompatible with a single currency, "said Napier in January.
No rise in interest rates on the horizon
If so, the fact that the Federal Reserve is reluctant to move its benchmark interest rate from the current level that has stimulated the stock market over the last few weeks is a positive benefit, if at all.
"I am comfortable with current interest rates. We are obviously discovering the magnitude of the shock we will feel with the recent announcement of tariffs and the retaliatory measures they have taken. We should really focus on the shorter term. And for the short term, I do not think we need to change the policy, "said Rosengren.
However, the Federal Reserve may consider lowering the benchmark interest rate if the trade tension between the United States and China worsens in the short term and if the indicators suggest that it represents a significant risk to the country. 'Mondial economy.
President Trump has expressed his intention to press for full agreement, even if this results in an interest rate battle between the two central banks, which could pose problems for the stock market and the Dow Jones.
"China will inject money into its system and will probably reduce, as always, interest rates in order to make up for the business it is losing and losing. If the Federal Reserve made a "match", it would be over, we would win! In any case, China wants an agreement! Said President Trump.
The last Dow traded at 25,625.02 for a gain of 300 points or 1.18 percent.
Click here to view the Dow Jones Direct Industrial Average Price Table.
[ad_2]
Source link