Global markets tumble, The US Stock market takes the biggest dive in history, the SEC halts trading, the beer bug spreads, and Saudi Arabia escalates a price war. We are going to be covering all of these topics in today's video, but at Zip Trader we are inherently selfish people because we loved profiting off the misery of the masses. and we're going to show you how to do that in this video. But to fully understand the context, let's go ahead and review how we got here.

February 19th 2020 The market climbs to new all-time highs at 3393, it's all berries and roses, roses and berries. Then boom. the market gets beat down like a rabid dog as the beer bug spreads and creates anxiety over global trade and the domino effect it could have started with the transportation industry. The Dow also has a record fall during this period.

In fact, it fell faster than your hand going and hitting that ravishing like button. Hey got you there But this leaves us down to 28 50 less than 10 days after we hit all-time highs at 33 93. Then we got some slider coveri investors momentarily decide to snap up profits at a discount. This combines with the biggest Dow gained in trading history, so we just had the biggest loss.

Now we had the biggest game. Meanwhile, global anxiety over the spread of virus hits the travel industry extremely hard. But more importantly, it hits the supply chain of many companies based in China and around the world. And this hit - the supply chain.

what's actually providing me products and services that are being shipped to companies in different worldwide economies. This hit the supply chain obviously cuts the outlook for many companies, but more importantly, it decreases the demand for shipping and transportation because less things are being produced and demand is decreasing. So less shipping and transportation and the low demand for shipping and transportation. What does that do? What does that do? Charlie Well, it decreases the demand and thus the price for oil.

And who hates it when the price of oil is decreased? Well, big oil exporters. This drop in oil prices creates tension between the biggest oil producers in the world and Russia decides that it will lower its price of oil by dumping more on the market. And this comb, it's in a rough Sunday morning. Saudi Arabia decides to escalate this price war by dumping more oil in the market and ramping up their production even though global demand is decreasing rapidly due to the beer bug.

So now we are in this period hither where in terms of oil, we have rapidly increasing supply and rapidly decreasing demand. And when you have too much of something with too little demand, you get plummeting prices. And this move from Saudi Arabia was of course in retaliation to Russia breaking the agreement. So the way that this works in a beautiful nutshell is that Saudi Arabia and other oil-producing countries have an agreement to essentially collude on prices, artificially keeping the prices high.

This creates an environment where they can all pretty much guarantee a high availability of profit, but also guarantee that somebody's not going to undercut the others because if they're all competing to lower prices, then somebody's going to end up losing. But there's an optimal level where everybody can make a bishop level of profit while not undercutting others. However, if one of the partners decides to undercut the others by producing more, and thus lowering the price of oil and short term profits, flock to that exporter. and they make tons of money in the short term.

but it screws everybody else over so other people are going to retaliate. However, in the long run, the partner that has the most power is the partner. They can produce oil the cheapest. That's because whoever can set the bar lowest in terms of price can withstand the biggest brunt, and that Saudi Arabia cost them at least to produce oil.

So thus, they have the most power in this relationship. But for everyone else that has a higher cost of oil production, such as the United States, this is a disaster because they can no longer operate at a profit because the cost is just too high versus the profit margin is just non-existent when you lower the price of oil so far down. But why Why Charlie Do we care about this oil crisis? Why is the market selling off? This is happening in Saudi Arabia Are you an idiot Charlie this is the US market that's crashing. Well, let's take a narcissistic look at how this impacts the US economy as a whole.

So according to the Oil and Natural Gas reports, America's oil and natural gas industry supports about 10 point three million jobs and accounts for nearly eight percent of our nation's GDP. If you compare this expenditure to other US industries such as manufacturing, finance, health care, utilities, and transportation, you can see that oil and natural gas is a you'll sector. It's about as crucial as crucial. McGee And it is responsible for some of the nation's highest paying jobs with an average salary that is about eighty-five percent higher than the average of the rest of the private sector.

So this is an industry with tons and tons of good jobs and a huge part of our economy and because of the oil prices decreasing and making it hard for US companies to compete because of the fact that they can't produce oil at costs that Saudi Arabia can. All of a sudden were in this time period where we have this major US sector that is being pushed off the proverbial cliff. But Charlie You're an idiotic. Oh, the oil industry has made so much money in the last ten years.

Obviously, they can afford a few years of low oil prices. Well, not exactly. You see, the US oil and gas industry has about 86 billion of debt due in the next four years now. These seem like abstract numbers, but in terms of the sector, that's quite a bit.

They can't just push that debt off towards a later date down the road because in order to collapse all of that debt, they'd have to take out new deck. And who would loan to these companies? And yes, it should be quite difficult for them to take out more loans. Why? Well, the simple is because they have poor credit. Their debt is essentially junk.

It says junky as junk McGhee But the more specific answer is, why would banks loan more money to companies that they know aren't going to be profitable? The companies they know have tons of debt already that they can't pay off. As long as oil prices are so low. Banks know there won't be any profitability. and so if a bank decides to loan, they'll risk going bankrupt themselves.

So in effect, this crucial U.s. industry is put on the figurative clip while also being at risk of defaulting on its debt. But if it defaults on its debt, who suffers? Well, the banks and lenders that had previously issued this debt? those are the ones that suffer. If the banks suffer that crashes the banks.

If the banks crash, more jobs are lost, more spending is cut, and more businesses crash, creating a domino effect that just keeps going. And so far in this video, I've only covered the impact of the crash within the United States. And there's tons of different factors that I didn't mean to cover in the US. But we haven't even spoken about the global economy as a whole in the last 24 hours, Equity markets around the globe have tumbled from Germany to Hong Kong.

Markets are in quite a panic folks, and this is combined with an already growing market slowdown even before all of this happened. But hey, at least there's no other skin. At least there's no beer bug that's going around and killing people. Oh wait, there is.

Omits All this. The beer bug continues to spread widespread anxiety. Now, the beer bug itself isn't really that dangerous to individuals based on current statistics. However, it is very dangerous in terms of economic impact in Italy Italia For example, the spread of the beer book has led to quarantine of Milan and Venice Milano Folks I don't know how to say Venice in Italian but I know how to say Milan Milano.

But again, these are huge tourist centers. but more importantly, huge economic centers in Europe. This makes people speculate on the impact that this would have on the rest of the world. If say, we start quarantine large financial sectors or large cities within the United States Imagine if we quarantine San Francisco or New York or Los Angeles Imagine cutting off all trade within a city of millions of people.

Imagine what that has in terms of company growth rates. Imagine what all of this government intervention, how all of that impacts the market, and how that impacts each individual consumer and their spending habits no matter how bad the beer bug is. The truth is that at the end of the day, if it causes a panic and an economic panic, then it really doesn't make a difference how bad the bug is because it's causing this panic and anxiety that's injecting so many other different problems within the economy. This is the bug that catalyzed the oil crisis that we're in now.

So imagining what other Domino effects this could have and it's been rapidly eating away at the cruise industry obviously. and I'm not talking Ted Cruz either, but the cruise industry, the transportation industry, supply chains of different companies and the effect has been getting exaggerated by widespread panic. So some things to keep in mind, but as traders, it has also created some beautiful opportunities for us. Take a look at IBO from our top stock pick last week and II know from our video that we just released yesterday these are some huge runners, but there's tons of other opportunities that ran double digits or even triple digits throughout last week because of the huge amount of hype over this beer bug and this is a great time to be a trader.

But anyways, as this economic crisis continues to get worse and develops more information I Want to give you some ideas as to how the government or how people are speculating that the government is going to handle this so the first one is through interest rates. Now to me, this seems like a little bit of a moot point. Interest rates are already so low and the last few reductions didn't really have much of an impact on the overall economy or the stock market. I should say so.

There's definitely a 10 Sheen return to lower interest rates if it's already so low and then you lower it even more. Does that really stimulate growth? Maybe a little bit, but it hasn't really been doing a great job. So the number two solution is supplying liquidity. The Federal Reserve can act as a stabilizer in this way by buying back Treasury debt.

What this simply means is loaning banks money so that they have the liquidity which can then go and have ripple effects within the economy. This can create an opposing force to stabilize the economy against all of the backlash. In terms of all these different issues, all stemming from the bug. now, number three is a solution that sort of a variation of what I just said with a few notable exceptions, but the U.s.

can opt to inject cash into different sectors that are struggling such as the oil sector, the airline sector, different parts of the supply chain based in the United States and instead of loaning it, this is sort of like bailing them out providing The cash to keep these industries afloat could stop the domino effect from falling and protect US jobs in the short term, but the ripple effect of debt down the road could just simply put off the inevitable which is a huge debt collapse. and the last speculation that I've been seeing a lot of is called helicopter Money. Now this is something that I've been slightly familiar with since college, but like I wasn't totally informed on it. but I've been doing a little bit more research and it's kind of an interesting thing that I do want to mention to you for folks who were Econ nerds like I am.

So Helicopter Money is essentially a piece of fiscal policy enacted by the government in the form of broad-based tax cuts and open market purchases. This is designed to increase consumption and the stimulate growth to combat the effects of a downturn. And this is a solution in an environment where interest rates are already way too low to stimulate much growth overall. But anyways, enough with the speculation.

let's go into exactly how to use this information to make yourself some money. Let's start with the practicals of how to protect your money. For those of you who are trading this morning, you may have noticed a Holt the S&P 500 plunged about 7% upon open this morning and likewise, the SEC halted it for about 15 minutes. Follows what's called the circuit breaker rules if the market crashes 7% 13% or 20% in a given day.

Essentially how this works is that it get it gets automatically halted. This is just the way that they say helps add stability to the market, but it can become an issue for us as traders. If you're not aware that you can have this circuit break Holt at any point, so understand that when you get to that level of 7% 13% or what was the other one 20% make sure that you understand that there's a Holt that's inevitable. So yesterday I put out a video where I talked about the top things that I'd be watching I talked about chicks I talked about Inu I talked about drip was another one that I did a last-minute edit because of the oil crisis.

but I talked about all those things in that video. So make sure to go back and check that if you'd like to recap as to how to actually take advantage of some of these movements. But in terms of an update, Drip has provided some insane price frames. But Gush and Drip are the two sides of the equation.

When oil is going up, Gush is the one to trade. When oil is going down, Drip is the one to trade. And this is fantastic because that means you can easily play both sides of the move. so when the fighting goes up and down, you can play the one that corresponds to the direction.

On the other hand, T VIX VIX is our volatility etn and that allows us to ride uncertainty and what is so great about uncertainty? Well, the fact that everything is so uncertain right now, nobody knows where things were going. So a volatility and uncertainty ETF or etn like VIX is a great opportunity. So my suggestion to you is to follow the market and take advantage of opportunities when they present themselves. Another thing that I do recommend doing is making sure to find concrete catalyst place in terms of companies that are getting hyped up around the virus.

If you can figure out where the hype isn't and you could buy in around the hype all of a sudden you have this opportunity where you have insane price break that's going up double or triple digits. How do you do that? Well create yourself a watch list of about 10 to 15 different tickers that are impacted and have a history of being impacted by the hype around the Spear bug because I'm such a nice chap. I've decided to put one together for you and I put it in my zip trader circle watchlist so you can go ahead and join that and I updated every night with all of the top stocks that I'm watching. but you can do this on your own by going and googling and researching the different tickers and setting price alerts for when they have activity because again at the end of the day, we don't know which stocks are going to win the virus fight or which stocks are going to be the most profitable.

Most of it's all hype, so be very careful of that. Some of the recent picks that we had or Ibo and Inu and CEO CP and Ce O--'s DX So there were tons of different opportunities and if you're not following us on Zip Trader Circle, you're going to miss out on a lot of these. and it's again a free Facebook group. so there's no reason to not join unless you hate Mark Zuckerberg which like I Understand that.

But anyways, folks, I Wish you all the best this week. There are a ton of opportunities so don't keep your close. keep your eyes wide open to what the markets doing and follow the direction. If you have any questions, feel free to reach out to us in the comment section below or join us on our Zip Trader Circle Facebook group.

Aside from that, if you're wondering what brokerage to trade these stocks on I Always like to send new traders over to Weeble. They have an excellent platform and they just updated it and it's very, very powerful. So if you'd like a free platform and would like two free stocks for just signing up and depositing any amount, make sure to check people out. I'll put the link in the description below Anyways, folks, have a great day and I'll see you in the next video.