Forget everything you’ve ever learnt more about the economy and the expected link with financial markets.
Just 3 months into what the Bank of England describes as the inmost and sharpest slump in centuries and stock markets are on a tear, galloping back towards record levels at breakneck speed.
Financiers, a lot of them new converts to the cargo cult, are overlooking the hit to corporate incomes that has yet to play out, the potential housing market downturn and costs blow from a prolonged duration of raised joblessness or the many geo-political risks building, especially in between China and the West
Instead, they are pricing in a swift and almost perfect recovery based upon the anticipation that perhaps, just maybe, there’ll be a vaccine that will unexpectedly rid the world of the pandemic that has actually developed so much pain and hardship in such a quick space of time.
Or perhaps, the entire thing is just an impression.
For when it pertains to finance, free markets have actually ended up being hostage to reserve banks, which now are putting trillions of dollars into the worldwide economy monthly to fabricate a recovery.
It’s cash that’s being produced out of thin air.
And a big part of it is being poured directly into stock exchange regardless of what is occurring out there in the real world.
Don’t even consider thinking
On Thursday night, Jerome Powell, the head of America’s central bank, made no bones about where he saw the American economy heading.
The alarming photo he painted, a future where countless Americans would never ever get their jobs back, included