Two months into nationwide lockdowns, 22 million (~15% of US workforce) lost their jobs so far and still counting, small businesses struggling to survive, large corporations begging for bailouts. But still, the stock market keeps going up day after day (after that initial crash). How can someone explain this with a sane mind?
Printing trillions and trillions of dollars by the Fed, stimulus injections, bailouts, short coverings, hopes of early vaccine, etc., whatever it may be, the Dow Jones rose by 35% from the bottom. But the big question is, how sustainable is this rally?
A bounce is always on the cards after such a big crash, but no one can confidently say what’s coming next. This bounce compares very similarly to what happened in the initial stages of the 1929 Great Depression. But what followed next was a massive downtrend wiping out the previous lows and sending the entire world into the longest Depression of the 20th century.
While history may not repeat itself, but it often rhymes. We may not see the same long depression but at least a downtrend is still on the cards once this bounce fades. Stay safe.