(June 12): Which do you believe? Market indices like the Dow Jones Industrial Average or the Shanghai Composite Index, or economic information such as jobs numbers and PMI (Purchasing Managers’ Index) figures? The answer is simple for traders. They believe the market index and trade it accordingly. Given the great disconnect, they should be trading with tight stops because mass demonstrations, civil disorder, manipulated jobs figures and record levels of unemployment make the market’s “irrational exuberance” look precarious.

Looking beyond this dissonance raises the question of maintaining global economic stability after the Covid-19 crisis has dissipated. To be sure, there is every indication it is going to be some time before this happens, but the expected shape of the global economy post-Covid-19 should be informing investment decisions we take now.

Although the focus is on the US, China and Europe, investors cannot afford to ignore developing and emerging markets. Instability in these areas impacts global economic stability. It is an issue I discussed at this week’s Global Think Tanks Online Forum hosted by five Chinese and five international think tanks. Former Australian Prime Minister Rudd; Nobel laureate for Economics, Joseph Stiglitz; and Zhu Min, former deputy governor of the People’s Bank of China and deputy managing director of IMF, were some of the speakers who provided outlooks. 

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