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Are Financial Markets None the Wiser?

Obviously, a disaster scenario in which COVID-19 vaccine trials fail and the pandemic spins out of control would expose the ongoing equity rally as a case of irrational exuberance. But the worst-case scenario isn't necessarily the most likely, and the bears have not adequately considered the possibility of permanent positive changes.

LONDON – In an April commentary about the wild gyrations in financial markets during the February-March phase of the COVID-19 pandemic, I noted that the behavior of equity markets had been as bewildering, complex, and fascinating as ever. Still, I suspected that a weird logic was at work, and argued that markets might continue to rally despite the collapse of the world economy. And so they have. Will that change?

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