Markets world over have strongly recovered from the lows. Markets crashed anticipating economic slump and slowdown due to lockdown - largely world over - because of corona virus.
The reaction to Corona Virus (also called as Wuhan Virus or China Virus since it came from China) was a) Lockdown and b) Fiscal Stimulus.
Wikipedia defines Fiscal stimulus as to increasing government consumption or transfers or lowering taxes. Effectively this means increasing the rate of growth of public debt, except that particularly Keynesians often assume that the stimulus will cause sufficient economic growth to fill that gap partially or completely.
As this stimulus takes effect - the largest one being in the USA - it will result in more monies/incomes (given by the govt!!) in the hands of ordinary Americans. The belief is that this will increase spending by people and hence increase consumption.
Currently talks between European leaders aimed at securing a mammoth stimulus package (again!!) are continuing. The two main outstanding areas are finding a mechanism to ensure funding is used properly, and whether to make distributions contingent on adherence to democratic standards.
While the European stimulus deal is close to being finalised in Washington meetings are on to formulate another package to counter the effects of the pandemic.
Further an article in the medical journal Lancet published today (Read Here ) gave hopes of a Covid Vaccine being a possibility - perhaps earlier than expected.
Markets are a forward discounting mechanism -they will rally or fall in anticipation. Maybe markets are anticipating the global economy to turnaround sooner. Many economists however feel that it will take time for the global economy to rebound.
If these economists are right - then the markets should correct. That is the risk - which we watch out for and hence remain cautious. Can we do anything more? Quite frankly No.
(Disclaimer : View expressed here are my own and in no manner are to be interpreted as soliciting business of any kind or any kind of investment advise. I am an investor in equity markets and hence please be aware that my views can be biased. Please make your independent analysis before investing in equity markets. Investing in equity markets is a with risk investing including risk to capital.)
The reaction to Corona Virus (also called as Wuhan Virus or China Virus since it came from China) was a) Lockdown and b) Fiscal Stimulus.
Wikipedia defines Fiscal stimulus as to increasing government consumption or transfers or lowering taxes. Effectively this means increasing the rate of growth of public debt, except that particularly Keynesians often assume that the stimulus will cause sufficient economic growth to fill that gap partially or completely.
As this stimulus takes effect - the largest one being in the USA - it will result in more monies/incomes (given by the govt!!) in the hands of ordinary Americans. The belief is that this will increase spending by people and hence increase consumption.
Currently talks between European leaders aimed at securing a mammoth stimulus package (again!!) are continuing. The two main outstanding areas are finding a mechanism to ensure funding is used properly, and whether to make distributions contingent on adherence to democratic standards.
While the European stimulus deal is close to being finalised in Washington meetings are on to formulate another package to counter the effects of the pandemic.
Further an article in the medical journal Lancet published today (Read Here ) gave hopes of a Covid Vaccine being a possibility - perhaps earlier than expected.
Markets are a forward discounting mechanism -they will rally or fall in anticipation. Maybe markets are anticipating the global economy to turnaround sooner. Many economists however feel that it will take time for the global economy to rebound.
If these economists are right - then the markets should correct. That is the risk - which we watch out for and hence remain cautious. Can we do anything more? Quite frankly No.
(Disclaimer : View expressed here are my own and in no manner are to be interpreted as soliciting business of any kind or any kind of investment advise. I am an investor in equity markets and hence please be aware that my views can be biased. Please make your independent analysis before investing in equity markets. Investing in equity markets is a with risk investing including risk to capital.)
