The US and global stock markets are now becoming detached from reality due to continued interventions by the central banks into bond markets. Risky assets have been rallying despite the economic crisis brought about by the coronavirus pandemic, and the fallout to the economy. Currently there are 38 million Americans who have filled for unemployment benefits.
But as of Friday, the US S&P 500 is up 14% for the quarter, while the Dow is up 11% in the same period. The coronavirus stock selloff that hit globally in March, shocked the planet, and with the recent rise in equity markets, the Bank of America strategist is saying that these are “fake markets” …. think about it. The central banks are heavily involved in bond markets and equity has risen, and risen fast. The idea is that markets are detached from reality and one day, one day soon, there will be a selloff of biblical proportions.
The Chief Investment Strategist Michael Hartnett said that these markets are fake, we tend to agree.