The Staple Trading Market Continues To Slump Only In Hopes Of China.

The block trading market downturn has entered its fourth year. Usually, commodity price slump usually stays for 7 years or so.

But on Friday (November 20th), Professor Carmen Reinhart of Harvard International Finance said that this year is slightly different from previous years, and the most important factor is the second largest in the world.

China.

Carmen Reinhart said, "since the late 18, a total of 7 to 8 big increases in crude commodities excluding crude oil were caused by the rising prices of manufacturing products.

These price increases usually last 7 to 8 years, but they lasted for nearly 20 years in 1933.

The fall in commodity prices is basically corresponding to these gains.

From peak to trough is about 7 to 8 years.

Carmen Reinhart points out that usually

The risk of crisis in banks, currencies and sovereign bonds increased significantly during the period of falling market prices.

And control risk has also become the top priority of policymakers in this period.

Carmen Reinhart points out that

Many companies have begun to invest further in the vicinity of the peak.

As these plans are built when prices have fallen, more output will continue to suppress prices.

At the same time, some export oriented countries will expand their output in order to maintain their balance sheet level after falling prices, which will further pressure commodity prices.

But Carmen Reinhart said that if China's economic growth continues to slow down, the prices of commodities will continue to decline.

Because there are no other commodity prices that are sufficient to support the current market size.

The demand gap created by China can not be replaced by other countries.

Carmen Reinhart said, "the growth of the US economy is likely to begin to decline.

The Fed is entering its tightening cycle.

Europe has just come out of recession.

Recent developments will still be relative to the middle reaches, and are still expanding within Europe.

The recovery of demand cannot be filled by the United States or Europe.

Carmen Reinhart finally said, "China is a key factor in the future trend of commodities.

But at the moment, we can not predict how long the commodity prices will fall.

What we can do is just prepare for the price to continue to fall and prevent the economy from being hit too hard. "