Why are the markets in the USA and UK going up?

NorthernJoe

BrockStoker said:

That's an eye opener. The market reaction appears to make no sense in this individual case.

That said, I think markets have bounced at least partly due to the intense focus there has been to find a vaccine/treatments for covid-19. There are around two dozen vaccines being worked on/trialed, plus many anti-virals/treatments that could help treat patients - something like 100+ I think. There is a very good chance that some will work, so there is reason in general for the markets (and us) to be optimistic.

There is a larger but unpublished NIH trial which is slightly more optimistic but still a stretch to claim significance I think.

I agree, markets are responding to a more general sense of optimism rather than a specific trial 

BananaRepublic

BrockStoker said:

That's an eye opener. The market reaction appears to make no sense in this individual case.

That said, I think markets have bounced at least partly due to the intense focus there has been to find a vaccine/treatments for covid-19. There are around two dozen vaccines being worked on/trialed, plus many anti-virals/treatments that could help treat patients - something like 100+ I think. There is a very good chance that some will work, so there is reason in general for the markets (and us) to be optimistic.

It normally takes years to get a vaccine out. Six months would be optimistic. Till then much of the hospitality and leisure industry is snafu’ed. My local brewery can survive a couple of months without sales apart from a trickle from the shop. Any longer and they are history after 30 odd years in business. Restaurants, pubs, sports clubs, gyms, breweries, swimming pools, saunas, cinemas, airlines, tour operators and so on. Are we going to see a whole segment of the economy go down the pan? No doubt the big knobs in charge are thinking about this as I write ...

dunstonh

John464 said:

Its not the deaths thats damaging the economy - its the lockdown, and markets are rising on signs of it being lifted

Plus, at the start of this, the markets were pricing in a longer lockdown period than appears likely to be the case (unless there is a second wave. In which case, watch them fall again).

John464

BananaRepublic said:

It normally takes years to get a vaccine out. Six months would be optimistic.

Certainly would. It normally takes about 10 years, as it included things like clinical trials to inject volunteers and wait to see the long term side effects.  Covid 19 is worse because its fatal with no cure - you can't ask volunteers to catch a fatal incurable disease to see if the vaccine works, like you would if it was a common cold.
So it depends how many corners they are going to cut. 

Bastiat

moneyfoolish said:

Can some of the many experts on here please tell me why on earth the markets are recovering as I see absolutely no reason why the economy for the foreseeable future will be anything other than disastrous? Companies going bust by the hundreds, unemployment in the many millions and a mountain of debt!

There is a common misconception that markets must follow the economy but the stock market is not the GDP. Markets are forward looking. If everybody knows that the economy will be terrible then there is no reason for the market to tank. The bad news is already reflected in the price. Markets only react to unexpected news or when expectations are adjusted. That why they can go up on bad news and down on good ones.

Sailtheworld

Markets have risen, depending how you look at it, at around 4% ahead of inflation for a couple of hundred years. Betting against the market might make some money in the short term but over the long term betting against human ingenuity (because that's what a long term short is) has nearly always been a losing bet.

Judging by the surprise here plenty should be realising that they can't call the markets and invest accordingly. Ironically CV might be teaching a valuable lesson which although a little expensive in the short term will lead to long term wealth.

Bravepants

In any technological project, including the development of vaccines, it's the testing phase that takes the majority of the time.

kinger101

John464 said:

BananaRepublic said:

It normally takes years to get a vaccine out. Six months would be optimistic.

Certainly would. It normally takes about 10 years, as it included things like clinical trials to inject volunteers and wait to see the long term side effects.  Covid 19 is worse because its fatal with no cure - you can't ask volunteers to catch a fatal incurable disease to see if the vaccine works, like you would if it was a common cold.
So it depends how many corners they are going to cut. 

I think there are also added complications in that the demographic usually recruited for clinical trials is very different from the one likely to prioritized for vaccination.  What might be safe in a healthy volunteer aged 18-55 might not be as safe in 55+ or someone with a pre-exististing condition.  The same goes for efficacy, as immunogenic response to vaccines can vary with age.

I can see why trials need to start in the young healthy population, but if the plan is to prioritize at risk groups for vaccination (as currently happens with flu) then this will at some point need addressing.  

EdGasketTheSecond

Sailtheworld said:

Markets have risen, depending how you look at it, at around 4% ahead of inflation for a couple of hundred years. Betting against the market might make some money in the short term but over the long term betting against human ingenuity (because that's what a long term short is) has nearly always been a losing bet.

Try telling that to someone who invested in Japan's Nikkei in 1989.

Malthusian

EdGasketTheSecond said:

Sailtheworld said:

Markets have risen, depending how you look at it, at around 4% ahead of inflation for a couple of hundred years. Betting against the market might make some money in the short term but over the long term betting against human ingenuity (because that's what a long term short is) has nearly always been a losing bet.

Try telling that to someone who invested in Japan's Nikkei in 1989.

I did and they said "The Nikkei was only a sensible part of my globally diversified portfolio so my overall returns have considerably exceeded cash over the last three decades".

Should we perhaps ask someone who invested all their money in Enron in our attempt to obtain the answer we decided on before we asked the question?