Gold 1752,635
|
EURUSD 1,1743
|
DJIA 35383,50
|
OIL.WTI 69,285
|
DAX 15848,50
|
|---|
The US stock market continues to post new all-time highs. The bears are constantly trying to short them. And they keep closing positions at a loss. When will it all finally end?
S&P 500
That is, when will the market start to react to fundamental and technical factors? For example, will it start paying attention to the extremely inflated P/E? The correct answer would be this. Irrationality can last much longer than you have enough money by shorting the trend. You may think you are right, but the market is not interested in your opinion at all. The S&P 500 has not fallen by 5% for more than half a year. And all smaller declines are quickly redeemed, leading to new highs. Yes, we can see that a very large bubble is being inflated. Its scale is approaching what we saw in 2000, before the dot-com crash.
But there is a significant difference. The 2008-2009 crisis taught the US government and the Fed how to “solve all problems”. All it takes is printing and handing out a bunch of unsecured money. If that is not enough, no problem. You can also print money and buy assets off the market, which in a normal market economy shouldn’t be worth anything at all. We are talking about companies that only avoided bankruptcy thanks to the US Federal Reserve.
There was no such help in 2000. And the massive drop in stock indices, especially the Nasdaq, was the logical result of the bubble bursting.
Now at every sneeze, the White House announces new programs to help people and businesses. And the Fed is talking about easing monetary policy.
And what is the problem? Americans love it. People get cheques from the government. And companies don’t have to stress too much, they will still get help, even if they perform worse than their competitors.
Of course, it’s bad enough that inflation is accelerating. But there is a huge plus for the American government. What is the upside? We will talk about that in one of our next newsletters.
08.00 UK Q2 GDP
11.00 EU industrial production in June
14.30 Initial weekly jobless claims in USA
Important Notes on This Publication:
The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.