The Covid-19 pandemic has led to drastic actions around the world. Never before in history has it been so easy for Western governments to increase fiscal expenditures through debt. All of this supported by central banks providing unprecedented stimulus measures and vocal guarantees to keep the whole yield curve depressed.
Central banks’ influence has reached extreme levels and their interference of all kinds is leading to zombie companies (only surviving thanks to low rates/government support), inefficient markets and less growth further down the road. In the shortterm, the world economy will recover (to levels we do not know yet), financial repression (negative real rates) will continue and the wall of money, waiting on the side lines, will sooner or later find its way back into financial markets.
Equity markets may not be cheap on an absolute basis but are still attractive relative to government and investment grade bonds which have a negative real rate. In such an environment, alternative investments may become more popular again.
