Long road ahead, goodbye V and hello W

As daily cases around the world increase, the fact that in 2020 we will not see any return to the pre-pandemic level becomes more and more obvious. Lucky if this happens in 2021.

In light of the US labor market data released last week, there were some interesting forecasts from the Congressional Budget Office (CBO). The US unemployment rate could reach 4.4 percent only in the fourth quarter of 2030. By the way 4.4% is much higher than the historically low level of 3.5 percent that was observed in the USA before the outbreak of COVID-19. This is about the long road ahead. So goodbye V-shape and hello W (with any luck).

CBO gave their updated and very gloomy vision on US GDP growth in 2020: -5.9%. This is even worse than the updated forecast from Goldman Sachs, which is expecting a 4.6% slowdown in the US economy in 2020.

JPMorgan Chase & Co. forecast global debt growth of $ 16 trillion by the end of 2020, and the total amount will exceed $ 200 trillion. This is to the question of why stock markets do not fall against the background of such forecasts of economic growth rates and its current state. In fact, there is an unprecedented injection of money into the stock market. How this will end is understandable, the whole question is when the bubble will burst (sooner or later, debts will need to be repaid, which means selloffs in the stock market).

The Chinese stock market index CSI 300, for example, has grown by 14% over the past 5 days, and added another 5.7% yesterday after state-owned media in China set up an advertising campaign for investing in the Chinese stock market. This growth is even greater than in December 2014. By the way, the Chinese stock market collapsed in 2015 (just a fact).