Investors may be too optimistic of rapid economic recovery
22 June
Stock markets have been performing above average despite a warning from the World Health Organisation that a new and dangerous phase of the pandemic is emerging.
The possibility of a fourth phase of stimulus package in the US and reopening of the economy are some of the factors fuelling this performance, leading investors to predict a quick V-shaped recovery.
The huge impact of the pandemic and a possible resurgence of cases may not lead to such a quick recovery.
Timothy McBride, Bernard Becker Professor at the Washington University, shared an article on how some investors are too optimistic of a quick economic recovery.
The article notes that stock markets are performing well in the US despite the rise in the number of Covid-19 cases.
Over the last few weeks, markets have performed above average prompting some investors to predict a V-shaped recovery, the article adds.
Such projections seem premature as they do not take into account the permanent damage caused by the pandemic.