21 Reasons That Shatter Hopes For a Quick Stock Market Recovery, Crypto Coins News
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Deutsche Bank says we will not see a V-shaped recovery in the economy or the stock market.
The bank highlighted behavioral shifts that will dampen growth in the coming months.
Even as coronavirus cases slow, we cannot simply turn the economy back on.
Deutsche Bank has slammed any hopes of a quick bounce back in the wake of coronavirus lockdowns. Analysts hoped the stock market would recover in a short-and-sharp V-shaped pattern after plunging 300% in a matter of weeks .
Instead, it’s clear this is a long -term crisis. The pandemic and its economic lockdowns will change everything. Deutsche Bank has already predicted a deep recession . Now they’ve released ‘behavioral changes’ that will cause slow growth for months and months to come.
Behavioral changes are the reason why we will not get a V-shaped recovery, and there is not much fiscal policy can do about it.
2. Spaced out seating in public places . This virus will change our public spaces. Restaurants, cinemas, planes, and sports events will increase spaces between seats, forcing lower revenues.
3. People aren’t going on holiday
. Fewer share buybacks . Companies purchasing their own stocks were the biggest buyers on the market. That buying pressure will disappear
Government regulation will slow stock market growth
And, of course, the heavy hand of the government will slow down productivity with over-zealous regulation. Deutsche Bank pinpoints a few notable shifts in the pipeline.
. travel restrictions . Some restrictions will stay in place, resulting in longer travel times.
Travelers wear face masks as they wait their flight at Hong Kong International Airport in Hong Kong on Jan. , . Face-masks were already sold out at the time. | Source: AP Photo / Ng Han Guan
. More planning and preparedness . A welcome change, but may divert attention and resources from other sectors.
310. More supply of government bonds . A debt crisis was a concern before the coronavirus pandemic. With unprecedented levels of stimulus, it’s now a much bigger reality.
These behavioral shifts combine to slow down the economy and squash spending habits. No doubt, the economy and the stock market will recover from this crisis. But it will not be swift.
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