Stimulus bill deadlock superimposed on giant performance, be wary of the sharp rise and fall of U.S. stocks

stimulus bill impasse superimposed giant soaring performance of US stocks plunge vigilance

Author: Fanzhi Jing

[Schwartz told CBN reporter, he believes the short term, or that the election The probability of a previous stimulus policy is not high. It can be seen that Republicans in the Senate are divided on the scale of the plan. Recent work has focused more on the appointment of Supreme Court justices. At the same time, he holds a cautious view on the effects of future stimulus policies and believes that the possibility of the economy continuing a V-shaped recovery is very small. ]

   The progress of the US Congress’s fiscal stimulus negotiations has not been recognized by the market. Last week, US stocks ended their rebound since early October amidst investor sentiment. With only one week left before the general election, US President Trump still hopes to use a relief bill to gain more support. As the third quarter US economic report card and the performance of the four star technology stocks are about to be announced, a new wave of turbulence is emerging. Brewing.

  When will the fiscal stimulus come?

   This week, the United States will announce the third quarter GDP data. After experiencing a historical contraction of 31.4% in the second quarter, institutions currently generally expect the US economy to usher in a strong rebound of more than 30% from July to September. After the economic restart, the stimulus policies of the U.S. government and the Federal Reserve have effectively guaranteed the engine of the U.S. economy—consumer spending recovered quickly in the early stages of the recovery. It took five months for the jobs affected by the epidemic to recover nearly half. However, as the number of new confirmed cases of new coronary pneumonia in the United States exceeded 80,000 in a single day last week, the potential threat of public health incidents to economic recovery cannot be ignored. The epidemic has also become the central issue of the US election debate last week, and the contest between the two candidates will gradually become fierce in the last week.

  According to the latest leading indicator data released by the American Consultative Council, the U.S. economic growth slowed down for the fourth consecutive month last month. The recovery process may lose momentum as it enters the last quarter of 2020. Oz Idrim, senior director of economic research at the Consultative Council, said that due to the continued spread of the epidemic and the continued weakness of the labor market, the downside risk of recovery is increasing.

   Officials from the Federal Reserve and the International Monetary Fund have recently used various occasions to call on the U.S. Congress to introduce stimulus policies as soon as possible. The change in the attitude of Speaker of the House of Representatives Pelosi during the negotiations has brought about the prospect of the introduction of related relief bills hope. A reporter from China Business News noted that the yield curve of U.S. Treasury bonds is gradually steepening. The 10-year U.S. Treasury yield has rebounded to the first line of 0.87%, which is a nearly four-month high. Investors’ expectations for the implementation of stimulus policies and inflation are suppressing. The attractiveness of US debt.

  Oxford Economic Research Institute economist Schwartz said in an interview with a reporter from China Business News that the new round of fiscal stimulus plan is vital to the US economy, which is in a critical stage of recovery. Judging from the current situation, it may take at least one year for the US economy to return to the level before the epidemic, and the timing of the introduction of the bill will directly affect the progress of the recovery.

   The re-emergence of the epidemic and pending relief bills are bringing uncertainty to the U.S. economic outlook at the end of the year and next year. CBN reporters noted that many institutions including Goldman Sachs and JPMorgan Chase have already Reduce the US GDP growth rate in the fourth quarter to below 5%. Fearing that the epidemic situation could not be quickly controlled, the IMF drastically lowered its expectations for the growth rate of the US economy next year.

   Schwartz told China Business News that he believes that in the short term, or before the general election, there is little probability that stimulus policies will be introduced. It can be seen that Senate Republicans have differences on the scale of the plan, and the recent focus of work Most of it is placed on the appointment of the Supreme Court justices. At the same time, he holds a cautious view on the effects of future stimulus policies. He believes that the possibility of the economy continuing a V-shaped recovery is very small. For the service industry, which plays an important role in GDP, there are no effective prevention and control measures or vaccines. Previously, the slow U-shaped recovery path was a high probability event.

  The performance of the four technology giants will be disclosed

   The recent fluctuations in the US stock market have not affected investor sentiment. The Global Capital Flow Report issued by Guotai Junan International to CBN reporters shows that recently In the past two weeks, global funds have continued to flow back into the stock and bond markets, among which US stocks recorded a net inflow of US$11.17 billion.

   The phenomenon of capital rotation is still continuing. Last week, US stocks did not favor technology stocks, and cyclical sectors related to the economic outlook, represented by banks, energy, and aviation, have gained more attention. Li Hengzhao, an investment strategist at Guotai Junan International, said in an interview with a reporter from China Business News that although there are certain economic uncertainties, cyclical stocks are expected to benefit from financial stimulus support and the expectation of economic rebound after the epidemic has become a reason for short-term investors to buy on dips. , While the high-tech stocks will face many realistic pressures.

   Since August, the volatility index of the Nasdaq has always been higher than the volatility of the S&P 500, showing the trend of high-level volatility in the strong technology sector this year. On the 29th of this month, Apple, Google, Amazon and Facebook will announce their financial reports on the same day. As to whether this can break the deadlock in the recent trend of the technology sector, there are obvious differences in institutional views.

   Li Hengzhao analyzed to a reporter from China Business News that the recent turbulence in technology stocks has not effectively alleviated the problem of high valuations. In fact, the gap between them and value stocks is still at a historical high. Although he maintains his mid-to-long-term strategy, he is optimistic about the potential for the development of the technology industry, but the pattern of shock consolidation in the short term will not change much.

   The latest report released by Bank of America on the 23rd believes that the general election is the biggest tail risk facing the Internet industry in the near future. Increased taxation and stricter supervision are undoubtedly potentially major negatives. On October 7, the U.S. Congress released an antitrust investigation report on the above-mentioned four major technology giants, which determined that they had “monopoly power” in key business areas and abused their dominant position. Antitrust investigations may be a key signal.

   TS Lombard chief economist Blitz is relatively optimistic, believing that the strong performance of growth stocks represented by technology stocks will reappear and “continue for a period of time” in the future. He said that investors’ reasons for turning to cyclical stocks are not so convincing. Buying value stocks is at best a defensive strategy. “Compared with the beginning of this century, many large technology companies today are huge, with good prospects and richness. Although there are signs of overestimation of the profits, considering the Fed’s fiscal policy, the bubble may last longer than market expectations.” He said.

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