MACROSCOPE No. 32: Disconnect between markets and the economy
A rising chorus of influential voices are warning about the risks posed by the global pandemic-induced lockdown to the economy and stock markets. Earlier this week, Federal Reserve officials including its chair Jerome Powell warned that the virus outbreak and shutdown of the U.S. economy would result in an output decline of historic proportions in the current quarter and potentially trigger massive bankruptcies.
Hedge fund legends such as Stan Druckenmiller and David Tepper weighed in with their views on the markets, saying that the risk-reward of holding stocks is the worst they have encountered in years. Druckenmiller called the notion of a V-shaped recovery – a scenario that investors seem to be banking upon, judging by the strong rebound from the lows – a “fantasy,” while Tepper said that apart from the dot-com bubble of 1999, equities are the most overvalued he’s ever seen. Click here to continue reading Macroscope No.32
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