After the non-farm payrolls numbers sparked hope for a rapid recovery in the world’s largest economy, which in turn gave rise to yet another upward pull by the Wall Street Bulls that allowed Nasdaq a new historic high. However, at the end of Wednesday’s EDF meeting, Jerome Powell put some water in the boil of enthusiasm by saying that the recovery will be a prolonged process and not a V-shape move, as was said after Friday.
If this wakeup call is going to be the catalyst for a significant correction, it is too early to be sure, however if recent history serves as a reference then the power of extreme liquidity in the market will serve as a support network, giving space for Bulls continue to dominate the market. This is clear until the day when the fairy tale turns into a nightmare, since it is admitted by almost all market players that there is a bubble that is inflating the value of assets and allowing valuation versus profit ratios that only existed in the dot.com bubble, that is, one day reality will hit harder, but for now that day has not yet arrived.
