Peter Isackson | When nearly all incremental wealth is tied up in assets that may come tumbling down at any moment, nobody is secure. After the crash, the rich will lament their losses and their inability to rebuild. Millions will lose their gig work and below-survival wages in real jobs with no hope for a rebound. And with COVID-19 still creating havoc and climate change more and more visibly aggravating its effects, the problem of inflation we should be most worried about is the verbal inflation of experts who believe their discourse is capable of shoring up a failing system.
Romain Boscher (Fidelity International) | Former US Federal Reserve Chairman Alan Greenspan is famed for describing booming markets during the dot-com bubble of the late 1990s as “irrational exuberance”. A generation later, this concept is back with a twist, and, as it happens, fuelled by the US central bank itself.
DWS | There are a few reasons to think that unlike the economy, inflation could see a V-shaped recovery. Recently published inflation data seem to confirm this theoretical view. Without taking into account the energy component, which, thanks to the oil price, fluctuated wildly in 2020, the inflation rate in the Eurozone was 1.3% in June. That is exactly the same level as at the beginning of the year.
Unigestión | Despite macro data coming in significantly below very low consensus expectations, equity markets have rebounded more than 25% off their lows. When stock markets rally on bad news, investors often lose a sense of reality. Currently, overly bearish sentiment, improving virus-related data, some optimism about reopening the economy and backstops from both the Fed and governments seem to be the main drivers of the brisk recovery in financial markets.