Monetary policy heavyweight Jean-Claude Trichet has tossed his hat into the ring by weighing in on whether global asset markets have priced in enough risk from the deadly coronavirus pandemic.
“When I look at what happened in the U.S. as well as in Europe, I see of course a correction which is very ample,” Trichet said on Yahoo Finance’s The First Trade.
Despite several rally attempts in the wake of extraordinary new stimulus measures by the Federal Reserve, European Central Bank (ECB) and U.S. government, stock markets across the globe remain in bear market territory. Experts universally believe there is a better than average chance markets retest the lows hit in late March as bad economic news due to the coronavirus piles up.
Trichet, 77, is no stranger to studying market movements amidst a time of great financial uncertainty and stress.
Trichet led the ECB as president from 2003 to 2011. Under his watch, the ECB responded to several financial flareups ranging from the Greek debt crisis to the Great Recession. In 2011, he gave way to hand-picked successor Mario Draghi in 2011, who recently retired from the ECB.
Today, the ECB is led by former International Monetary Fund (IMF) managing director Christine Lagarde.
Added Trichet, “Of course you would tell me there was a correction in the cards even before the pandemic. We had maybe inflation in a number of asset classes. But all taken into account, I think that the amplification and the expectation or anticipation of the real economic crisis has been done quite substantially by the markets. That being said, we will see what happens. After all, markets are there to anticipate, expect and amplify if they judge appropriate to do so.”