While OPEC and its compatriots struggle to cope with the demand weakness caused by the covid19 virus, it must be asked if this is more than a brief interlude in an otherwise robust oil market (robust in terms of price, not demand). The sharp decline in world equity markets is certainly alarming and raises the issue, mentioned in an earlier column, that a recession is being triggered.
The soaring stock market of recent years does suggest that there is perhaps a financial bubble which is now being burst. The U.S. economy appears strong to the point of being overheated and the stock market has been supported in part by increasing debt, in this case, the U.S. federal deficit being used to stimulate the economy.
