Companies get away with fraud until the economy goes down, and when that tide recedes, you see who has no clothes on, Ed Harrison told Real Vision during today’s Daily Briefing.

Harrison made the remark during a conversation about disgraced German financial services provider Wirecard, which is embroiled in a $2.1 billion scandal. He said the recent fraud revelation is the perfect example of how it works every cycle; when we’re in a bull market all is well, but when the economy weakens, people start to ask questions.

As for Wirecard’s long-term outlook, Harrison thinks they’re facing a long road ahead and we’ll likely see the company go insolvent.

Turning to markets, we saw the NASDAQ hit new all-time highs today, which Harrison said has nothing to do with the narrative but everything to do with the people piling into markets as a result of the Fed’s massive injection of liquidity. Nothing can stop the market, he said, while warning investors that there’s no justification for these levels based on earnings.

“It is a bubble driven by the Fed and liquidity, pure and simple, and it will end badly,” he said.

One scenario he envisions is a W-shaped recovery. When the pandemic started, we had a terrifying drop, then a surge up as places began releasing out of lockdown, but now as we’re seeing dramatic rises in cases, hospitalizations, and soon, deaths, Harrison said there will be a consumer reaction.

Despite the wall of liquidity and bullish equities, consumers will pull back, the data will roll over, and it will have a pernicious effect on economic growth and therefore shares, he said. This second leg down will only begin to reverse once people feel the virus is under control again.

Because the current snapback has been so large the recession that began in February is technically over. If there’s a secondary relapse and we go back into recession, it will likely be longer and more pronounced than the first, Harrison said.