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Follow on Google News | Algorithmic Trading and Coronavirus Causing Flash CrashesAlgorithmic trading and the Coronavirus are causing extreme volatility. Markets vacillate from stimulus from central banks and fear of recession caused by a global economic slowdown.
By: Dr. Steve Johnston author.com While deaths from the Coronavirus epidemic are minor in comparison to the normal flu, the novel virus has been blown way out proportion by the mainstream media. Because the media is tracking this epidemic in minutia, the latest news of new outbreaks has resulted in closing of schools, public events, and travel. Supply chain problems have occurred because of travel restrictions in China. Reduction in demand and less supply is slowing global growth. The world's central banks have panicked, because the credit markets are flashing world wide recession, with historically low bond rates and widening credit spreads. Central banks have countered with even lower rates. This tends to cause a spike in equity prices. As a result markets swing between euphoria over lower interest rates and flash crashes because of the concern of $225 trillion dollars in global debt, and economic slowdown. Coronavirus will eventually peter out. The question is whether we will have a global recession or whether central banks can kick the can down the road, and keep the bubble afloat. Zero interest rates will hurt savers and banks, and should give gold a boost. I am long Gold Resource Corp. http://www.drstevejohnstonauthor.com/ End
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