World Record
To the average person, one of the biggest head scratchers of the year is how well the stock market has performed despite the effects of the coronavirus. Some argue that this disconnect between the markets and the economy is justified while others believe it is a logical response to the federal reserve’s efforts to stabilize markets.
On Wednesday, the total value of global equity markets hit a record high of $95 trillion, according to the chief economist at Apollo Global Management. The S&P 500 for example, on Monday hit an all-time high of 3645.99.
There are many ways of seeing why this might be happening. On one end, the markets are regarded as being forward-looking. With that being said, it could be that the investors are already pricing in a full recovery and that vaccine is widely available for citizens in the next few months.
Another way to view the rebound comes from the unprecedented quantitative easing measures as well as governments’ fiscal stimulus. Central Banks across the globe have cut interest rates down to floor! As for the United States, not only have the slashed interest rates but U.S. lawmakers even passed a $2 trillion dollar relief package that included enhanced unemployment benefits, stimulus checks and much more.
What if this rise came from some sort of trading mania from the coronavirus as many new players started investing and could have helped create a bubble?
Coronavirus cases don’t stop rising so this vaccine better hurry up if these market valuations want to be justified any time soon. Who do you think will win the race to a corona cure?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
