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Stock markets after the crash – Jens Erhardt on the outlook

Equity markets are in a bear market: America’s main index, the S&P 500, has lost more than 20% since January 3. Above all, the reaction of central banks to high inflation causes a kind of emergency halt in the stock markets: if central banks suck liquidity from the markets by raising interest rates and reducing balance sheets, raising prices is naturally difficult.

Inflation, in turn, stems from the imbalance between supply and demand, so central banks try to reduce demand because they cannot influence supply. One current study The New York Fed has now shown that two-thirds of inflation in the United States can be attributed to the reduction in supply caused by the crown blocks and the war in Ukraine, and only one-third to excessive demand (stimulated by helicopter controls). .

Equity Markets – Jens Erhardt on what he is doing now

Jens Erhardt bought stocks in 2020 during the collapse of the Crown – precisely because central banks flooded the markets with liquidity. But he’s more skeptical now, precisely because equity markets are more likely to face headwinds from central banks this time around. Jens Erhardt believes central banks are now tightening their monetary policy when the economy is weakening – and therefore a rise in equity markets is rather unlikely.

So what does a professional like Jens Erhardt do who, as is well known, must invest as a professional investor? In an interview with Carola Ferstl he provides information:

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