Sell ??in May and leave? On the contrary! The old saying of the stock markets to get rid of titles with the arrival of spring is not being fulfilled. This month may even be the best of the year.
The stock markets are blowing smoke, despite the threats of nuclear war hovering over the situation. Wall Street, which has been rising for four consecutive weeks, has recently broken another barrier. Never in history had the Dow Jones index reached 40,000 points. And in record time: during the epicenter of the 2020 pandemic, it fell below 19,000.
And he’s in good company: the German Dax is flirting with all-time highs, even if the German economy is stagnant. And the Spanish stock market, beyond the turmoil and political turmoil, has already been at the top since 2015. Also, risk premiums in Europe do not move, even with interest rates that continue being adalat of everything since the birth of the euro.
In the United States, the decoupling between the price of money and the stock market return is even more evident: it is enough to think that today the index S
“Think about how many people were talking about recessions and bear markets all last year, and now we’re hitting new highs again,” laughed Ryan Detrick of the Carson Group to Bloomberg.
How can this resilience be explained? As is often the case in these cases, there is no single factor. Xavier Brun, director of variable income at Trea Asset Management and assistant professor at the UPF, sums it up: “We are living the last chapter of covid”.
Yes, although the pandemic broke out four years ago, this expert explains that the economy is still under the consequences of the so-called “whiplash effect”, that is to say, from the fallout from the drop in demand in 2020.
Indeed, for a long period, faced with the drop in consumption and the confinements, companies were forced to accumulate inventories. The breakdown of supply chains caused inflation. Over time, as the economy got back on track, companies were able to get rid of stocks.
And it is now, explains Xavier Brun, years later, when firms start selling new products, inflate balance sheets and offer good results. The companies of S
Likewise, the labor market is robust (and there is even a shortage of labor in certain sectors). Both the United States and the Eurozone have an unemployment rate close to historic lows (less than 4% and just over 6%, respectively), a sign that consumption still has a long way to go beyond the post-covid rebound.
Then you have to discount the emergence of artificial intelligence, which has attracted capital towards technological values ??in a way not seen since the beginning of this century (in one year, the value of Nvidia has risen by 100%).
And ultimately, the forecasts of a drop in interest rates, which the markets are already discounting. Although they are less than first thought, the slight reduction in inflation in April in the US (to 3.4%) means that this moment is getting closer (seven out of ten analysts predict it in September). In turn, on June 6 the European Central Bank should opt for the first reduction.
And geopolitics? Does it not count? “The data says that it has less and less effect on the markets. Since the attacks on the Twin Towers in 2001, their impact has been less and less”, concludes Brun. As Bob Moritz, CEO of PWC, said, “I care relatively little about politics. I’m only interested in what the Federal Reserve does.”
