Up Crash: why are markets soaring as the economy tanks?

Shops are boarded up. More than four million people are on furlough with little idea of whether they will have jobs to go back to. Global trade has hit levels last seen a decade ago, and government deficits are soaring, while most developed economies have seen output shrink by 10 per cent, a collapse not seen since the Great Depression of the 1930s. On just about every measure imaginable, the global economy has never been in worse shape, and we are all a lot poorer.

And yet here is a puzzle. Why can’t we see any evidence for that in the financial markets? Instead we are witnessing a series of extraordinary, epic bull markets. Crypto-currencies finally took a dive this week, but Bitcoin has quadrupled in value in recent months. Tesla is worth more than Toyota. Commodity prices are racing upwards, and small day traders are taking on the big Wall Street hedge funds, sending prices of obscure companies through the roof.