Wednesday, 07 February 2018 10:51

This Market Has an Ugly Comparison to 2007

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(New York)

One of the Financial Times’ most respected columnists has just published an article making a grim comparison. Saying that he dreads even mentioning it, John Authers argues that the current state of markets and the context of the losses are very similar to the summer of 2007, or the eve of the Financial Crisis. In particular, just like then, stocks moved higher even as bond yields did, all until a yield threshold is broken, when stocks finally panic. Then, even though fixed income started the worries, equity investors flee into the safety of bonds. The important extension of the argument is that all the associated fallout will not occur this time, as the economy is stronger and more balanced.

FINSUM: So this is only a half comparison. The actual market event may be similar, but the condition of the economy, and its link to markets is very different, and almost inarguably better this time around.

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