Kind of a worrying feeling that at present I am on track to make more money out of The Share Prices this month than all of my businesses put together. Very tentative thread...
... I think the @EpsilonTheory bloke is right to compare this to the Bear Stearns bounce. But history rhymes, it doesn't repeat itself. Sometimes it doesn't even rhyme, it just shares consonant sounds like traditional Welsh verse ...
... in this case, the cynghanedd is the theme of "massive policy mistakes". We had the Bear Bounce because the market presumed that systemic risk was being correctly underwritten, followed by the Lehman plunge when it wasn't. This time ...
... Well there are two interlinked policy problems. Management of the epidemic itself, and of its economic consequences. Earlier in the year, the market was pricing in not just a bad pandemic outcome, but an exaggerated economic effect and (in Europe at least) banking crisis...
... because you can always get your article printed saying there's going to be a banking crisis in Europe. Turns out that the ECB is a lot better than it used to be at managing banking crises. I think that's what's driving a lot of The Share Prices at the mo ...
... looking forward however, there are many opportunities for policy to screw up. We could have a second tap on the pandemic outbreak, an austerity response economically, and the banking sector policy is by no means twist free.
... but as the proverb goes, you can't bury next week's dead this week. Sufficient to some future hour is the evil thereof; for the minute all you can do is stay long and nervously watch the the reproduction rate R charts. Tbh I don't think they're coming down fast enough.
