While the disconnect between markets and the real economy has widened further, there is no guarantee that it will narrow, especially with central banks acting as the buyer of last resort. Yet the risk of an extended run of corporate insolvencies remains. In this environment, high-quality income generation is the key, together with the flexibility to move quickly as new opportunities and threats emerge.
The strong risk rally in markets in recent months has opened up a broad disconnect between markets and the weak real economy. While this condition suggests caution, its possible it persists, even in the absence of a breakthrough on the vaccine front.
First, markets are averages, and there are both winners and losers from the pandemic. Whi…
Read the full article at: https://www.sharecafe.com.au/2020/09/11/when-markets-diverge-from-fundamentals-look-for-quality-income/
