It is no doubt that the GDP of several countries fell drastically and even worsening is the unemployment rate that increased around the world leaving so many people jobless and without a means of feeding and survival to add up to the financial falls, the rate of bankruptcy around the world is on a rise but even in the midst of this, the stock market in so many countries are seeing their best period (I think this is also the same with cryptocurrency as the price of cryptocurrency is going green as well) but I am not talking about cryptocurrency here, I am talking about the economy currently.
How will the economy be deterring, and the stock market is on the rise? I am trying to find a logical reasoning to this act, and I am yet to see it but maybe I could say the stimulus checks and bailout is doing the magic. A lot of companies have doubled or even tripled their valuation compared t their earnings simply because the stock market is on the rise.
I feel the government is doing so many things wrong. Giving bailouts to big corporations is entirely wrong as this will eventually mean that the company could use the bailouts to fund their fallen stock market, in most cases they do not pay off their debt as the government would remove/reduce interest rate to a very reasonable point. The federal reserve has given out about $3 trillion to save the economy from crashing and all the greens in the market looks like the result of the $3 trillion and then I ask again, are we not in a bubble?
I could also agree that the stock market should not be determined by the economy, but at the same time, it is no doubt that when there is a financial crises, there is always a drop in the stocks. A lot of people are comparing the next economic downtown to the 2008 recession or the great depression.
Around the world, Travel, Restaurant, Entertainment and Retail are facing the hard part of this recession and even with the bailout available, it didn’t stop companies like JC Pennies to go bankrupt but at the same time, their share prices still went above 100% after bankruptcy.
It is no doubt that we are in uncertain period and at this point, we do not know if we are in a bubble or not, we do not know if the economy will never crash thanks to the funds being pumped in by the reserves in nations or if the economy will still crash after the several pump in the stock market.