Stock-markets often surprise, but the rebound of recent weeks has shocked many. From the pandemic panic low on March 23, the MSCI Index of global stocks is up over 25 per cent. Given the scale of economic and earnings contraction ahead, this seems unsustainable. Unsurprisingly, many have dismissed it as a temporary bounce which must give way to a renewed collapse. I disagree. Theoretically, there are at least two reasons for interest rates to be positive. First, the need to compensate creditors for postponing consumption i.e. the time value of money, and secondly, the need to compensate creditors for the…

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