Private credit crunch
It's often said that 'the stock market is not the economy'. But what about private markets? Regulators are trying to figure them out.
One of the great truisms of financial journalism is that ‘the stock market is not the economy’. It’s a phrase that is regularly wheeled out at times of market exuberance or turmoil, often to make a political point (usually absolving the party in power of responsibility for a particular outcome).
But it's a phrase that also has merit on a number of different levels.
For example, equity markets are forward looking and thus often out of sync with on the ground economic conditions. Or take the sector weightings of benchmark indexes, which often do not line up with the contributions of those industries to the economies they are portrayed as representing.
The ‘stock market is not the economy’ construct feels especially relevant at a time when the corporate regulator is examining the composition of our capital markets against the backdrop of a generational shift away from publicly traded securities and towards privately held assets.
