The tussle playing out between hedge fund short-sellers and day-traders mobilizing on Reddit to drive up stocks such as GameStop may be entertaining, comparable to watching a bitter argument play out on Twitter between two people you don’t like.
However, the spectacle once again raises the question whether or not broader markets are in bubble territory and, assuming they are, what the impact of the burst will be.
As Paul Donovan, chief economist at UBS Global Wealth Management, points out, the most damaging bubbles are ones that banks get caught up in because their losses impede the flow of credit to the real economy.
Thanks for your interest in Euromoney!
To unlock this article:
