Us stocks rebounded violently on Tuesday, and together we witnessed a period of history worth writing.

The S & P 500 rebounded from its lowest level since 2016, rebounding for a third consecutive session, its biggest one-day gain since October 2008, while the Dow rose more than 2000 points, or 11 per cent, its biggest one-day gain since 1993.

For now, the joy of rising blood has not occupied the minds of investors. There is another worry in everyone's mind: is this a bottoming recovery? Or bear market technology rebound? For the current market, U. S. stocks have three legs, but the most important thing is the inflection point of the epidemic.

Us stocks have three legs, one of which is indispensable.

Before we discuss this issue, we should understand one truth:The current market is like a tripod, with three legs supporting the market, and if something goes wrong on one side, it will cause the tripod to tilt.

First, monetary policy.It takes the form of extremely low interest rates and a series of monetary plans aimed at keeping the market functioning and sending money to companies and individuals who need it. The Fed has made a lot of efforts over the past two weeks.

The following picture shows the market corresponding to the Fed's rescue measures.

The picture below is an overview of the Fed's monetary policy toolbox compiled by Societe Generale Securities. The √ on the right shows the measures that have been adopted in this round of bailouts.For now, the Fed still has room to use.

Second, fiscal policy.The epidemic has a direct impact on enterprise production, while financial support is used to help areas, enterprises and individuals affected by the epidemic. The latest news at noon today (25th)The U.S. Senate has reached an agreement on a bipartisan stimulus package, and the White House has said Democrats have reached an agreement on the stimulus package. This leg can be regarded as standing still for the time being.(specific reading:The US $2 trillion stimulus package has been approved by the Senate. Us stock index futures fluctuate violently）

Third, it is also the most critical point at present-- the inflection point of the epidemic.For investors, this is about when the economy will return to normal. Only when the inflection point appears, will the worries of the market come into contact slowly, and the whole tripod can really stand firm.

It has to be noted that the World Health Organization has recently indicated that the United States may become the "epicenter" of the global novel coronavirus epidemic. Judging from the stage of COVID-19 's development, the United States may still be some way from the inflection point.

Market viewpoint

Wang Han of Societe Generale Securities pointed out

In the short term, with the landing of Fed policy, bond liquidity problems may ease, indirectly benefiting the stock market. In the medium term, the pressure on the withdrawal of funds from the US financial market will remain, and the impact of the epidemic on the economy will be gradually exposed.In the long run, there is still great uncertainty that the Federal Reserve's use of "super bazooka" may lead to instability of the dollar system, or will force the United States to use other non-economic means to consolidate its dollar position.

Vincent Reinhart, chief economist of BNY Asset Management

Even if we have perfect policy makers, although I don't think so, as long as we are not sure about the trajectory of the virus, no one is willing to make a long-term commitment.

Reinhart even put forward what he thought was very important.The fourth leg is investors' acceptance of "negative" news.

According to economists surveyed by Dow Jones, the number of weekly first-time jobless claims announced on Thursday will reach150万. If Wall Street analysts' predictions are accurate, the figure is evenDouble. In addition, James Bullard, president of the Federal Reserve Bank of St. Louis, said this week that short-term unemployment could reach30%This is actually worse than it was during the Great Depression.

Goldman Sachs Group predicts that US GDP may decline in the second quarter.24%。

Can the market bear these negative news?

Reinhart pointed out that, even so,Investors still need to be convinced that the stock market crash is spontaneous and temporary.

If fiscal policy starts to take effect, if the Fed's tools help keep markets running, and if there is V-shaped growth sometime in the next quarter, it will be the scariest quarter.After that, we will rebound in the third quarter and strongly in the fourth quarter because we still have a lot of fiscal and monetary stimulus.

JJ Kinahan, chief market strategist at TD Ameritrade, is more cautious.

Kinahan says his clients are tired of the daily volatility of the market and he wants to see major indexes such as the S & P 500 find trading ranges. The market is likely to react ahead and expect Congress to pass the stimulus package, he added.

Now that we know that Congress has passed the stimulus package, will smart markets Sell the news?

For the epidemic situationKinahan said he was more concerned about the epidemic trend in Europe.Because the situation in the United States is about 2.5 weeks behind that in Europe. Italy, the worst, seems to have stabilized. He believes that when the European epidemic begins to be brought under control and production begins to resume gradually, it may bring confidence to the US market.

Going back to the question at the beginning, is this a bottoming recovery? Or is the technology rebounding?

Here is a picture produced by Hong Hao, chief executive of BoCom International:

He pointed out that credit spreads and swap contract prices began to converge.Signs that the market is beginning to recognize Fed policy. Politicians now have to choose between bad and very bad policies. Choose the lesser of two evils. The market may have a low in the next few days, but the 50% golden section withdrawal point is an important operational relay.

There is no only definite solution from the market point of view, but soundness is always better than rash advance.

What is certain is that the epidemic has brought irreparable losses to the economy in the short term, and the global economy has also reached the stage of upgrading and seeking breakthroughs. The market is bound to be full of volatility in the short term, and the two forces of bottoming out and rebound will continue to play.

For short-term investors, it is all right to comply with the trend and win short-term returns, but it is necessary to control their desires; for long-term investors, opportunities and crises coexist, and no spring will not come!

Extended reading:Bloomberg: be careful, what you may see is a bear market rebound