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From Recession with Love

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  • Jan Libich

Abstract

This article examines why some conventional finance theory no longer seems to apply in the post-2008 period. It discusses the reasons for financial markets responding to good news about economic fundamentals as if it was bad news. My controversial conjecture is that (as long as inflation is no longer an imminent threat) recession news would be welcomed by the financial markets – boosting equity prices rather than lowering them. I further document the increasingly-important “flight to focal points†phenomenon, offering examples from the meme stocks and cryptocurrency asset classes as well as some predictions going forward. This paper was accepted September 23, 2022; published online October 26, 2022.

Suggested Citation

  • Jan Libich, . "From Recession with Love," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 0(0).
    • Handle: RePEc:wej:wldecn:873
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    File URL: https://www.worldeconomics.com/Journal/Papers/Article.details?ID=873
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