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Although the US non-farm employment population. USA It decreased by 20.5 million in April, setting a record after World War II, US stocks. USA They went up from the opening on Friday (8). Some people on Wall Street believe this shows that US stocks. USA There are believed to be six clear reasons why US stocks are recovering and may continue to rise.
First: the market is paying attention to the situation in the next six months.
Dow, S&P and Nasdaq have recovered by more than 30% from the lows of March 23, and investors are betting more. The worst of the epidemic has passed.
Wall Street strategists noted that economic losses are concentrated to some extent in the leisure and hospitality industries, and the poor performance of these industries has masked the strong performance in other areas of the market. With stimulus actions from the Federal Reserve Board and the government, some people believe that once companies resume work, the economic recovery will be swift and obvious.
Second: the market has long-term pessimistic economic data
United States President Trump said there is no suspense, that nonfarm employment data is fully expected, that lost jobs will return soon, and that economic activities are artificially suspended.
The unemployment rate shot up to 14.7% in April. Of these unemployed people, 78% said they were temporarily unemployed and are expected to return to work within 6 months, which may be a good sign for the economy. Goldman Sachs strategist Jan Hatzius said this is an important distinction because it implies that the economic recovery will be faster.
Third: large stocks are strong
The New Crown Pneumonia epidemic has affected the global tourism industry chain, and the catering, cruise, aviation and service industries have been hit hard. Actions affected by the epidemic continue to decline. By contrast, tech stocks like Netflix and Amazon have reached record levels.
Peter Orszag, managing director of Lazard and former director of the Congressional Budget Office, said: “Large caps have fallen much smaller than smaller stocks. This crisis is likely to have strengthened the strong.”
Shannon Saccocia, chief investment officer at Boston Private, said: “American consumers have been proven to be the economic engine of the past 10 years, and investors who have bought a lot believe that changes in behavior are unlikely to cause misalignment of the demand for more than a few quarters. ” “
Fourth: the stimulus policy continues
The New Crown epidemic has destroyed the global economy, and governments and central banks around the world have rescued the market. In March of this year, the President of the United States, Trump, signed a record $ 2 trillion federal stimulus plan. At the same time, the Federal Reserve (Fed) announced unlimited quantitative easing (QE). President Bauer also promised to use “all the Tools” available “to keep the economy running smoothly.
Marko Kolanovic, global derivatives and quantitative strategist at JPMorgan Chase, said: “Although the avalanche of economic activity is historic, the global policy response to dampening shocks and the recovery of support is also setting a record.”
Marko Kolanovic estimates: “The impact of the Fed’s flexible policy on interest rates and credit will be enough to offset the temporary impact on companies and markets.”
Fifth: fermentation of zero interest rate policy
In March, the Federal Reserve Board lowered the interest rate to a new low of almost 10 years and stimulated the economy on a large scale. At the interest rate meeting in April, the Federal Reserve Board promised to keep interest rates at record lows until it was determined that the United States economy had withstood the epidemic. Try, and can achieve, the goal of maximizing employment and price stability.
Peter Orszag, managing director of Lazard Investment Bank and former director of the Congressional Budget Office, said: “Interest rates will be at a very low level for a long time, almost zero, so this will provide some support to the market.” . “
Sixth: Wall Street is full of confidence
Kate Moore, chief equity analyst at BlackRock, the world’s largest asset management company, said: “In today’s uncertainty, it is important for investors to choose the right side.”
Kate Moore judged that there are three main factors in the growth of the market: the decrease in the rate of new diagnoses in the new crown, the gradual recovery of the economies of the US states. USA And the improvement of the relations between EE. USA And China (representatives from the US and China just called the hotline on Friday).
Kate Moore said: “We need to continue to receive government and policy support to move the market forward, allowing us to not only respond to some better news, but also respond to some more fundamental factors.”
Wall Street is currently full of confidence in the market outlook, and even equity god Buffett is bullish on the long-term U.S. stock market. At last year’s annual shareholder meeting, Buffett called on investors not to go against the United States. Everyone must be prepared.
The god of actions said, “Nothing can fundamentally stop the United States … American miracles, American magic can overcome everything, and this time is no exception.”
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