The market‘s large surface, made up of many categories, voices and opinions, is a generalization that is useful only in a large directional sense. It feels like the market is starting to shift its focus from liquidity to the underlying business asset that gets funded.
In this sense, if the early stages of the crisis saw investors rush to cash and the management of volatility, perhaps we are now entering a phase of reassessment and repositioning with respect to the investment itself.
If the former is at least symbolically predicated on market technicals and the management of capital sources, the latter is in the same way directed at business fundamentals and capital uses.
In a different way of looking at it, if the economy is represented by the asset side of the balance sheet, and the market represents the liability side, we’ve migrated from a reactive stage where liability holders look within to get their house in order…
to a proactive stage where capital structure and positioning are refashioned based on (economic) asset value.
Just as assets and liabilities relate, so also business economics and market flows. Where a cause begins and an effect ends in the circular reflexive dynamic is probably more interpretive than it is precise, but on the assumption that markets are analytically efficient for the short term and reflect generally comprehensive patterns, the sifting through the rubble has begun…
… which, regardless of individual business outcome, is a positive economic indicator.
Even if asset values are estimated to shrink on scrutiny and investors seek to climb up to more senior levels of the liability cascade, the movements show that, possibly, the capital lockdown is ending.