Those who worry that the extraordinary stock market rally will come to an end in 2022 may be worrying too soon: equities could still power ahead, and particularly so in Europe.
Continue readingTag Archives: fiscal stimulus
Market turmoil tests the power of central banks
The turmoil we are currently seeing in stock and bond markets is just one battle in the war that has been going on in capital markets for a long time: debt versus equity versus central banks.
Continue readingThe bad type of inflation is here
Despite good news about vaccine roll-outs, it is too early to tell when or even whether economies will fully reopen and life will go back to “normal.”
Continue readingBlack box or Pandora’s box? Central bankers face dilemma
By Mirela Roman
This “like-no-other” Covid-19 pandemic is clearly a dangerously unique event, with ongoing severe economic and social consequences all around the globe. Nassim Taleb has famously described the Black Swan and more recently, BIS researchers pointed to the Green Swan in reference to the impact of climate change.
But the Covid-19 Swan is quite a combination of colours. It is an ongoing emergency situation, with fear often overcoming hope while anxiety heightens amid a decline in living standards.
Rishi Sunak’s stamp duty holiday will deepen inequality
The Covid-19 pandemic has forced many British people to look for the first time at their homes in a new light: as a place to live, rather than simply an investment.
The lockdown has served as a time of reflection on their home’s advantages and disadvantages and perhaps a reassessment of priorities.
When panic selling is over, stocks could benefit more than bonds
The panic buying of essential items around the globe – from food to, fittingly, toilet paper – sparked by the spread of the COVID-19 coronavirus has been mirrored by panic selling in capital markets. It’s almost as if investors were taking cash out of stocks and bonds to buy whatever food, hand sanitiser and toilet paper they could get their hands on.
Pessimism in global financial markets has reached heights not seen since the dark days of the great financial crisis of 2007-2009, which this current crisis threatens to overtake in depth and significance. But, as news about rapid tests for COVID-19 and resilience to deal with the virus begin to multiply, could investors hope for a bottom in the capital markets’ selloff?
Policymakers could have lifted inflation, if they wanted
Central banks are still worried about the danger of deflation, even though they have timidly started to lift interest rates. How else would they explain real negative rates almost everywhere in the developed economies?