International financial markets continue to defy all academic logic and operate in a bubble, of sorts, as if completely ignoring all the downside news of the last few weeks. Even now, when there is increasing talk of yet more diplomatic hostility between the US and China, and America is rocked by protests over the police killing of one black man in Minneapolis, Minnesota, the market is brimming with risk appetite, sending the dollar, along with other usual safe haven investments, crashing in the currency market. It’s quite a different matter, really, that at home the rupee still lost considerable ground to the greenback in early-week trading. It seems for quite a few weeks the market has been exhibiting a sort of desperation never seen before. For even as the worst economic news of the century was coming out of the US, EU, China and Japan – some of the world’s biggest economies – the markets barely batted an eye and continued with their strange bull run. Long time pundits, stunned by this sudden disregard for the usual stimuli to sell, feel the market is trying to grow its way out of the recession; if such a thing is possible. Hence the minor downward swings despite really bad news and the wild swings whenever something even remotely pleasant hits the headlines. That also explains why commodity currencies are doing so well despite little or no prospect of economic growth picking up practically anywhere in the world during this fiscal year. Yet, not to burst this particular balloon, but there’s only so long such a party can last. Euro hit an eleven-week high Tuesday night because of a truly remarkable relief package announced by the German government. But there’s only so many packages even economies the size of Germany can keep throwing into the market. Eventually all the excess space will make its way to Money Heaven. And let’s not forget that Berlin was among the first to formally announce a recession because of the pandemic. So the best bet on the euro, in the longer term, would still be a well-timed short position. And the only time institutional investors will really commit to lasting bullish bets, as opposed to what increasingly seems like a desperate attempt to manufacture an upside, is when a laboratory cure is found for Covid-19. Till then trading international markets, and taking cue from them about the health of the global economy, is just like riding wild waves that will take you some distance, but also throw you off the surf board sooner or later. *