Vladislav Ginko, an author of this OP-ED story, is a former vice-rector of Moscow-based Jewish University. He worked as a Corporate Finance lecturer at New York-based Touro University. Currently, he is an analyst and lecturer at Russia’s leading state think-tank Presidential Academy.
What’s going on Wall Street looks like a total disaster. On the last trading day, Friday, April 3rd, the S&P 500 lost 1.51% adding YTD loss to 22.97%. From the all-time-high in February 2020, the index lost 26%. Dow Jones bleeds with the YTD loss of -26.23% and Nasdaq has slump -17.83%. The “money bazooka” of the U.S. F.R.S. doesn’t deliver. It pumps more money into Wall Street but this effort to reignite the rise of the S&P 500 is a fiasco.
Investors may re-gain appetite for the stocks if they see an improvement in oil prices. The WTI oil has made a great attempt to catch the wind at the end of last week. It has staged a +32.78% 5-day rally but still loses by 52.62% from the beginning of this year.
It is evident that the coronavirus pandemic impacts the economy in a very negative way. However, a few corporations in e-commerce, pharmaceutical businesses perform better than the market, but this is the only good news. Kristalina Georgieva, the head of IMF, even describes the current economic situation as far worse than we’ve faced in the 2008-2009 world financial crisis:
“This is way more than during the global financial crisis, and some countries are highly dependent on commodities exports. With prices collapsing, they are hit yet again.”
The higher oil price is a vital factor for Donald Trump’s win in November’s U.S. Presidential elections. If the oil price will keep getting higher then the investors will flock to Wall Street again. For the last few days, we’ve witnessed an oil rise.
Efforts to spur oil price
According to my sources, this was triggered by unprecedented Trump administration efforts to spur demand for oil. We see a historical level of buying up crude into U.S. strategic oil reserves, up to one billion barrels while last year at the same time there were just 400 million barrels.
The dozens of idle tankers are filling with oil. Moreover, Trump sits on the telephone and tries persuading everybody he can do the same: buying as much oil as possible.
The U.S. President hints that he gives back as good as he gets. Trump also asks Saudi Arabia and Russia to cut oil production by at least 15 million barrel oil a day and only until the landmark November ends. This trick is a means of last resort if one speaks about financial means to prop Wall Street. We see that other means have failed so Trump’s fight for pricier oil is his last effort to secure a win in November.
Trump’s helicopter money politics goes in contrast with traditional U.S. Republican Presidents. The sponsors of Trump’s bid start feeling disappointed over President’s “yes” for $1,200 pay for every U.S. citizen. And at the same time, these sponsors see a drastic decline in their wealth, and there is no financial compensation for that.
The same disappointment spreads among millions of U.S. residents whose wealth suffers from great stock downward revaluation. The political fate of Trump is at the stake, and he dreams about $60 a barrel as he clutches at straws.