• Covid-19. IMF drastically worsens its forecasts for Spain

"Dow Jones Best Week Since 1938", "More than 16 million Americans have lost their jobs in three weeks." Both starters went to the same time in the program chain CNBC financial television Mad Money ( Money Loco ) in early April. Since then, the divergence between the real economy and the financial markets has been growing, until becoming one of the characteristics of this crisis.

Stock markets in developed countries have recovered 85% of their January levels on average, as evidenced by the Report on World Financial Stability published by the International Monetary Fund (IMF) on Thursday. Debt spreads have shrunk by 70% from their March highs, and high-yield bonds - often known as the less charitable junk bond denomination - have returned to the market.

All this is for a reason: the intervention of central banks. The markets discount that there will be zero interest rates for years. But the decoupling between the so-called 'real economy' and the 'financial' one carries risks. "There is a divergence between the price of risk in the financial markets and the economic outlook, as investors are apparently betting on unprecedented and continued support from central banks," the report states.

The Fund does not hide its concern about this situation, which, in its opinion, has reached dangerous levels . "According to IMF models, the difference between asset prices and fundamental-based valuations is close to all-time highs in most bond and equity markets in advanced countries," the report states, fair after stating that "market valuations appear to have stretched across many bond and stock markets." It is an euphemistic way of saying that there are financial bubbles .

The fact that the financial markets are not in trouble is good news. If having the worst crisis in 90 years is already problematic, it is better not to imagine what would happen if the financial sector went bankrupt as it happened in 2008 in the United States and Great Britain or between 2010 and 2013 in most of the Eurozone. The problem is that it is not clear that this will last.

There are many factors that can puncture these 'bubbles'. The most obvious, a deeper recession than expected (in fact, the Fund is much more pessimistic than the markets regarding the depth of the crisis), or a second wave of Covid-19, a stimulus from central banks less than the market expects, or a resumption of trade wars. If that all sounds very hypothetical, watch Wall Street drop 2.72% yesterday with news that the United States had broken its own record for virus 'positives' and that the Donald Trump administration is preparing a new wave of tariffs against imports from Great Britain, Spain, France, or Germany.

If the markets 'click', the economic problems derived from the coronavirus would multiply . For the time being, companies would have difficulties in obtaining liquidity. It should be borne in mind that private and family debt had already been growing at very high levels before the pandemic, making the market vulnerable considerably. That could trigger a wave of defaults and late payments that, in turn, would hit banks, funds, and insurers. The result would be to add one more crisis to the one the world already has. Although this does not seem to be happening at the moment, the Fund's warning is clear: optimism in the financial markets rests on a fragile foundation.

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