The headline is a great example of cognitive dissonance.
Market commentators will say the drop is already priced in. Yet the market is down just shy of 20% from its peak of 7674 on 7th Jan 2020.
How can we have removed 20% of the economy and the market still be happy - it is not priced in at all.
The next argument the commentators will use is that this is not only priced in, but the markets are already looking to the future bounce back. I say this is very unlikey to be fast bounceback. In the medium term I am sure there will be new restaurants and coffee shops, in the short term a huge amount are dead and only exist now because of the wasted furlough support (wasted as in it is being used to support companies that can't make it, not as in I want people jobless and poor!).
IAG and EZY - two major listed airlines are indeed down 50% and of course the market is also made up of companies doing well in the pandemic. But 50% down for airlines is optimistic, I am very bearish on their prognosis - flying will be very limited for a long while to come and appetitite for it will take years to come back. Indeed, if capacity is not used in the next quarter they will be a fraction of the size they were pre-crisis.
We have the Government spending money, the Bank of England pouring liquidity in the background (which finds its way to assets, like shares), a closed economy and not quite sorted pandemic.
It will be very rocky, but I stick by what I have been saying for a couple of weeks, the end of this month is key. Quarterly rents, these GDP numbers and their quarterly companions and the move to economic re-opening as much as it will be possible for a few months will all be in place. At that point we could easily see the big market correction - or, as ever, market irrationality and acceleration. My hunch is the former.