The third week of March, it seems like a century has passed, financial markets around the world were adrift. In a month, the main stock indices had fallen between 35 and 50%. The Ibex 35 fell 39% and the Dow Jones fell 37%. The word "panic" made all the headlines. Comparisons with the crash of 1929 and the consequences of the bankruptcy of Lehman Brothers in September 2008 abounded. Experts estimated that we were facing an unpredictable supply and demand crisis. The price of oil became negative. Never seen before. The uncertainty was absolute because nobody saw the health and economic damage that Covid-19 could cause.

Three months later, the main stock markets have entered a period of unexpected euphoria. The Dow Jones has gained 46% since March lows and is trading at the same levels as in October last year. The Ibex has recovered 29%. Oil is trading again at $ 40 a barrel and the price of gold, the everlasting refuge value, has fallen 6% in a week. The price of Treasury bonds in developed countries shot up thanks to the return of confidence. Excessive euphoria?

The ability to search for arguments that justify market movements is infinite. The fiscal and monetary stimuli deployed by governments and central banks have convinced investors. The US unemployment data yesterday gave another boost. The de-escalation, especially the opening of mobility, is working better than was presumed in many countries and the economic recovery, after hitting ground in April, is forecast faster than previously feared: V better than U. Ylo most important: the continuous wave of information that the virus is losing fatality.

To these factors, one that also helped in the post-Lehman years: the world overflows with liquidity, the same that generated the upward surge in the markets of the last five years. With a projected scenario of interest rates close to zero or negative and with the hope that corporate profits will grow at the usual rates within six months, many investors have seen the opportunity to seek bargains and earn a lot of money in the short term. But as easy as it has been to move from one stage to another, any excuse could be a good one to sell again. And this excuse cannot come only from a re-emergence of the virus, but from a more unpredictable one: bad politics.

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