Do we see a ‘dead cat jumping’ in the FTSE?
As the FTSE 100 has risen sharply since the March crash there is concern among the economy that we may face a “dead cat”, a temporary recovery in another bear market. With France and Italy getting into trouble, and other countries to follow, will the conference last longer?
“Too often there have been a number of accidents that have resulted in false meetings that have given keepers a false hope that has been temporary.”
As the financial adviser Ben Carlson points out, “historically large accidents have exposed false meetings that gave investors a false hope that was short-lived. Prior to the meeting, stocks had dropped by 45%.
According to Ben, the stock market can move faster and faster on a group of dead cats AND under the bear market. The exact details of these bumps can be determined later.
Dot-com damage – a dead cat jumps
UK suffers from the worst decline in history
The UK labor force has plummeted as Covid-19 destroys businesses in the UK. March data shows a sharp decline in the UK workforce for more than two decades, according to a recent report from the IHS Markit PMI.
UK Composite Output PMI ⬇️ to 36.0 in March, led by a decline in employment while shops were closed to reduce the spread of COVID-19. Recent PMI figures are related to a fall of 1.5% qr / qr in GDP. Details: https://t.co/73y7CXKyEZ pic.twitter.com/FQ51W3s5Ae
– IHS Markit PMI ™ (@IHSMarkitPMI) April 3, 2020
UK economy down 10%
Bloomberg Economics estimates that the UK economy will lose almost 10% in the first half of the year due to the outbreak of the coronavirus.
In an effort to save the U.S. economy, the US Federal Reserve has agreed to inject $ 125 billion a day, or $ 2.5 trillion a month, to support the areas devastated by the COVID-19 epidemic.
– Bloomberg Economics (@economics) March 23, 2020
UK PMI fell short of the 2008/09 economic downturn.
The Flash UK PMI dropped to 37.1 in March, with the COVID-19 epidemic more devastating to the UK economy than during the economic downturn, despite tougher channels of shops, pubs and restaurants before last Friday. More here: https://t.co/l6mZjC7JDw pic.twitter.com/F4nMuCgYtV
– IHS Markit PMI ™ (@IHSMarkitPMI) March 24, 2020