About $40 trillion or $6 billion an hour, that is how much the equity markets have appreciated since the lows of March last year, an absolutely phenomenal pace that is ten times faster than what have seen in the recovery just after the 2008 financial crisis. Justify such a performance in a period of pandemic crisis that led to a strong economic contraction? Money, lots of money, lots of money, injected into the system essentially through monetary policy stimuli but also many dollars derived from fiscal aid, coming from successive aid packages approved by the US Congress, which supported the real economy and Wall Street, with a portion of checks sent to US citizens to the stock market, which is normal in a country with a strong investment tradition.
But with the prospect of the end of the oasis created by easy and cheap money, derived from the rise in interest rates on sovereign bonds because of the likely rise in inflation, investor sentiment is now much less stable which ended up reviving volatility after a period less activity in the post-shock of COVID. Indeed, since the beginning of 2021, market movements are more erratic and with more significant fluctuations, which ends up being good for those who invest in the short term and everything indicates that this new reality will become regular during the next few years, months, since the market will have the sword of interest on the rise, if only positive economic data, such as the non-farm payrolls that came out this Friday, were enough, revealing that the labour market, an essential component for the analysis of the EDF, has returned to growth significantly by creating an additional 379,000 jobs on non-farm payrolls.
