Nasdaq Chairman Channels FDR

The Great Depression, which started in the USA, lasted from 1929 until the outbreak of the Second World War in 1939. The Global Financial Crisis has been the world’s deepest recessionary cycle since then – hopefully, it will not take a third World War to restore normal growth to global markets, but the duration is already similar.

In 1933, Franklin D. Roosevelt was inaugurated as President of the United States; his inaugural speech (in the depths of the Great Depression) contained the memorable line “the only thing we have to fear is fear itself…” The sentiment was echoed recently by Bob Greifeld, the boss of the Nasdaq stock exchange, in reflecting on the tumultuous start to trading in 2016 which has seen billions wiped of stock values around the world as jitters about the Chinese economy and, perversely, the oil price as nervous investors sell stocks.

Mr Greifeld summed up the situation with aplomb: “Once the emotion has left the market, you’re left with businesses doing reasonably well. How did the low oil price turn into bad news? Better to have it at $26 per barrel than $126. And China’s 6.9% growth may be disappointing, but it’s still growing. There’s always a psychology about [the markets], you can’t underestimate where the animal spirits are… and if people want to believe in a certain direction they will. We’ve had a very good three-year long run, but after seeing the markets over the last week, I would think listings could be down this year.”

He believes that recent market turmoil is clearly an over-reaction to the underlying economic trends, but may slow the rate of new listings on stock markets. His remarks were made at the World Economic Forum which is currently underway in Davos, Switzerland.

Last Thursday saw an upturn in market fortunes, but it was only modest in comparison to the losses endured this month. Time will tell if it is the start of a rally or not.