Is the economy good news for recovering stocks? Abby’s strategist Joseph Cohen says the answer is yes, although stocks that have benefited “only because the rates were so low” may have problems. The economic recovery raises rates, which could increase the negative pressure on this segment of the stock market. However, Cohen says the market is full of other opportunities, with stocks and companies “feeling better and continuing the economic recovery”.
According to the strategist, there may be value stocks or stocks of small companies in the specified titles and market sectors. Improvements can also be seen in companies, which are attested to by higher rates. Lastly, not least, those who benefit from opening an economy like restaurants. At the same time, economists now expect the US economy to grow 7% this year, and four key factors contributing to this:
First, the economy will be taken over by very strong financial stimulus from the new US government. Second, “the central bank is essentially friendly.” Third, the epidemic will subside and it will free the severely affected areas. Fourth, housing balances are on average very strong, savings are high and the opening up of the economy will bring waves of hitherto unsatisfied demand. But what about the pessimists who claim that inflation will rise sharply?
Cohen believes inflation will actually rise, but this is the result of last year’s low base, and it will also be growth that reflects the economic recovery. In particular, bank economists expect US inflation to rise to 2.5 percent this year from 1.1 percent last year and the US Federal Reserve’s inflation target to fall to 2 percent again by 2022. This is not a “problem of inflation”. According to the strategist, no matter how much experience anyone has in the market, the current situation is unique in the recession caused by the epidemic and what happens after that. That is, with the impact of a policy aimed at easing the economy and getting it out of the slump.
Emerging Markets and the Dollar Rule
The strategist was also asked about the developments in emerging markets and further developments in the dollar. He responded that economists predict exchange rate growth based on factors similar to others. But now, according to him, the fact that the US currency serves as a safe haven in the world economy, the world’s reserve currency plays an important role. This situation has recently intensified as the United States has moved more aggressively than others in some areas.
Further improvements in the dollar and currency markets will be felt not only in the United States but also in other parts of the world. Some developing countries have come up with “some disappointments” so far, but the improvement in the US economic situation will eventually draw US trade partners, which, according to the strategist, will be a positive scenario.
More women
At the end of the interview, the strategist was asked about the number of women in the field of corporate management and finance. According to her, the number of women is growing at a low rate, but as we get, their share is declining. This is true in the United States, where the situation is even more serious in many countries around the world. Then they see America as a role model.
In addition, 2020 is the year when the first infectious women will face the biggest problems, for example those working in restaurants or schools. For men, the labor force share is now 70%, while for women it is only 57%.
Zdroj: Bloomberg Markets
