I heard a BBC Economics or Business Correspondent say that ‘it’s likely that these falls in stock markets will cause a recession’. He may have misspoken, but that’s not how it works. The value or price of the hundreds of company shares which are traded on those markets is based on the expectations of their future profits. It’s a share of those which you own when you own a share. If it’s thought they might go down, next month, quarter or next year, then less people want to own that share and market supply and demand reduces its price. If that happens to lots of quoted companies, markets fall, plummet or crash. Sorry to be so Janet and John (kids etc.). What that usually means is that, when everything is at its worst (when thousands were still dying of Covid, for instance), those same markets can quickly recover or even ‘soar’ based not on what’s happening now, but on what it’s thought may be to come. Sometimes the tunnel is long, sometimes short, but there’s always light at the end. Says Zen Master Hanley.
“Trade war: Stock markets rally as Trump rows back on Fed and China threats”
Yet another reminder, should one be needed, of how quickly things can and will change. A nod and a wink in the right direction from himself and/ or an underling can provide the solace the money men crave and turn a plummet into, if not a soar at this stage, then certainly a bounce.
