Economists are often lampooned because of their inability to forecast changes in the business cycle. But the pandemic helped them overcome the challenge this time. A record contraction in Q2 was anticipated before in March. Similarly, economists generally expected the recovery after the March-April body blow. However, after an initial surge, some high-frequency data point …
Overview: Officials appear to have persuaded investors that they have put into place measures that will cushion the economic blow and ensure that the financial system continues to function. After seemingly goading officials into action, investors are choosing not to resist. Moreover, there is a recognition that many programs are scalable. Risk assets dipped initially …
Overview: Bottom-picking, after officials step up efforts and some optimism creeps in, is helping lift spirits today. As one looks at the equity bounces, it is important to remember that among the biggest rallies take place in bear markets. Nearly all the bourses in Asia-Pacific rallied, led by a 7% advance by Japan’s Nikkei and an …
Relief Bounce On Tuesday, but Turn Around not Secure Read More »
With swarms of locusts in Africa and the Middle East and a particularly virulent virus spreading around the globe, the coming crisis may feel like the end of days. An economic tsunami has been unleashed. A consensus appears to be emerging among economists of the largest contraction in global GDP in a generation. Separately, but partly …
The Economic Tsunami that has Begun and the Drive for Cash Read More »
Overview: A new phase of the market turmoil is at hand. Bonds are no longer proving to be the safe haven for investors fleeing stocks. The tremendous fiscal and monetary efforts, with more likely to come, have sparked a dramatic rise in yields. Meanwhile, equities are getting crushed again. Steep losses were seen in many Asia …
Overview: While the markets are not as disorderly as they have been, the tone is fragile, and the animal spirits have been crushed. Australian stocks fell more than 10% last week and dropped another 9.7% yesterday before rebounding by almost 6% today to be one of the few Asia Pacific equity markets to rise. The Nikkei …
There is folklore among many investors that is preventing an understanding of what is happening. The fiction is that the Fed has killed the last three expansions by pursuing too tight of monetary policy. In fact, the previous three downturns were caused by financial crises (the S&L Crisis, the Tech Bubble, and the Great Financial Crisis) …