Chapter Four: On the Eve of a Tumultuous Era

"Feng Yu, have you heard? Something huge has happened," Li Sen said urgently over the phone.

"What is it, Sen? Even if the sky falls, I'll hold it up. Don't worry," Feng Yu replied nonchalantly.

"Haven't you seen the news? The epidemic has intensified. It looks like it will get even worse soon. I heard there might even be a city-wide lockdown," Li Sen said anxiously.

Hearing this, Li Fengyu began to feel tense as well. It was partly due to the epidemic, and partly because the Lunar New Year was approaching, meaning the stock market would be closed for a period, which could lead to major unforeseen changes. Li Sen, on the other end, did not yet know what was happening, only hearing Li Fengyu say, "It's fine, Sen. Don't worry unnecessarily. What is meant to be will be, and what is unavoidable cannot be dodged. Just follow the directives of the national government."

Li Sen could only agree, and then he hung up. Li Fengyu’s mood remained unsettled for a long time afterward, as his instincts sensed an impending crisis. Although he had only been studying for a month, he had found the intuition quite easy to grasp, yet he was powerless to act at that moment. He felt a vague sense that something was wrong, and just two months later, on March 9, 2020, he finally understood exactly what it was.

On March 18, 2020, the U.S. stock market triggered its fifth circuit breaker. Prior to this, on March 9, March 12, and March 16, the U.S. market had already experienced three sharp plunges that triggered circuit breakers. The Dow Jones Industrial Average dropped by 7.8%, 10.0%, and 12.9% respectively over those three days, each decline more severe than the last. On Sunday the 15th, the Federal Reserve had suddenly played its trump card, cutting interest rates to zero and initiating quantitative easing, but the market did not buy it; the U.S. markets plummeted and hit the circuit breaker as soon as they opened on the 16th.

As of March 16, the Dow Jones, S&P 500, and Nasdaq had fallen 31.7%, 29.7%, and 29.5% respectively from their highs for the year, all entering technical bear market territory.

On March 17, local time, the Federal Reserve unleashed its "big gun," a tool typically reserved for financial crises—restarting the Commercial Paper Funding Facility. Previously, the Fed had only utilized this instrument during the 2008 financial crisis and the Great Depression.

On the same day, the U.S. government announced a "helicopter money" strategy, proposing a $1 trillion economic stimulus plan, including sending $500 billion in checks directly to American citizens to mitigate the impact of the epidemic on the U.S. economy.

Stimulated by this news, the U.S. stock market staged a desperate counterattack on the 17th, surging violently. The Dow Jones rose 5.2% for the day, reclaiming the 20,000 and 21,000-point marks; the Nasdaq rose 6.23%, and the S&P 500 rose 6%.

Meanwhile, the futures market in China had also been hit hard, plunging since the start of the new year with no bottom in sight. Li Fengyu, however, held a different view. Historically, every major crash is often followed by a new bull market. At that time, the market price had even dropped to around 135, just 30 points away from a historic low. To put it simply, the process of a bull market is the creation of a bubble, while the process of a bear market is the squeezing of that bubble. The two complement each other; whenever one reaches an extreme, the other begins to emerge. Therefore, a massive plunge is often followed by a rebound, and a massive surge is often followed by a crash. It was here that Li Fengyu would fight his first battle, a moment that would set the stage for the story to come.