Investors, don’t fret. Credit Suisse says stock market exuberance is here to stay. Why over here


After the ups and downs of the first week of 2021, the second week of the year begins in a slightly calmer fashion.

House Speaker Nancy Pelosi said markets were once again watching US politics closely, adding that the House would move to impeach President Donald Trump if it did not implement the 25th Amendment.

Despite a report showing the first monthly job loss since April, an increase in COVID-19 cases, all three major US benchmark stock indices closed at record highs on Friday. Investors focused on the promise of more financial aid for Americans rather than focusing on the presidential election, at the end of a week in which Democrats won both Senate runoff elections, changing the balance of power in Congress. US stock futures were at a low early Monday, suggesting a slight stretch from the record high in the open.

However, in us Phone of the day, Credit Suisse strategists said the exaggeration was likely to continue, raising its target for global stocks and S&P SP SPXXX,
-0.85%.
Investment bank analysts led by Andrew Garthwaite raised their final-year MSCI World X-US target from 362 to 375, yielding a potential return of 12.3% from here. He said this was in line with the bank’s US strategists, who raised the S&P 500 target to 4,200 at the end of the year.

He said that three key critical components – the put-call ratio, the bull-bear ratio and the risk appetite – were slightly increased, but “not on the signs.”

“Bullish sentiment is high, but markets at these levels continue to rise two-thirds of the time over the next month and we think the bullish sentiment is not reflected in retail or institutional positions – in fact the pure speculation on S&P. The average is below average. ” They said.

The only concern of the strategists was that 80% of the stocks are currently sitting above their 200-day moving average, which typically sees a two-thirds drop in the markets over the next month. However, he said: “But in the very early cycle, as we are, this is not a short-term sell signal.

“We think Democratic clean sweeps and vaccine rollouts are reducing global GDP growth by 5% this year.”

In the near term, there were a number of strategic reasons to remain positive, he said, with an “ultralose” policy and an additional US fiscal boost of 2% of GDP. He also saw the beginning of the bond-to-equity switch, as institutions began to realize that bonds were becoming increasingly diversified, with return-less risk. Analysts said excess liquidity was continuing as well as more liquidity and supported the revision in earnings.

Finally, there was the possibility of a “fund-flow squeeze”, a spurt in corporate purchases of shares and a return to retail purchases, while pension funds – with lower equity weighting in Europe and neutral weights in the US – would not be sellers.

Chart

Blackrock’s chart shows the performance of US megacap and small cap stocks over the past year. Megacap shares are represented by the S&P 100 index, and small-cap shares are represented by the S&P 600. The performance is rebated to 100 on 6 November – the last business day before Biden won the presidential election and the American drug company Pfizer PFE by news organizations.
+ 1.02%
And its German partner BioNTech BNTX,
+ 3.22%
Announced preliminary efficacy data for their COVID-19 vaccine candidate.

Source: Blackrock Investment Institute, with data from Refinitive

market

US stock futures YM00,
-0.87%

ES00,
-0.88%

NQ00,
-1.03%
After closing at a fresh all-time high on Friday, Monday was reported low ahead of the open. European stocks also fell in early trading, as investors assessed COVID-19 cases and difficult lockdowns across the continent. Bond yields TMUBMUSD10Y,
1.126%
On concerns Rose rose the Federal Reserve would be less interested in maintaining their rate of purchases.

The buzz

After the start of the 2021 boom, bitcoin prices rose sharply on Sunday and again on Monday. Bitcoin BTCUSD,
-16.56%
Sunday was down 10% to $ 34,151, according to prices quoted by CoinDesk, from around $ 41,000.

TWTR of Twitter,
-10.69%
Stocks in prepaid trading fell close to 7% following the social-media company’s decision to permanently suspend Trump’s account.

Elle lily in stock,
+ 12.98%
The US drugmaker said its experimental Alzheimer’s disease drug jumped more than 14% after helping patients slow down cognition and daily functioning in patients with early forms of the disease.

Former Republican California Governor Arnold Schwarzenegger compared last week’s events in the Capitol to Nazi Germany, which was blamed for violence at the president’s feet in a tweet that went viral on Sunday.

Marriott International March,
-1.50%
The hotel chain said it would give political donations to those who voted against the certification of the election. Health-insurance federation Blue Cross Blue Shield and bank-holding company Commerce Bancsher also said they would suspend the donation.

Private jet company Signature Aviation SIG,
+ 8.35%
After accepting a bid of $ 4.63 billion from Global Infrastructure Partners, it rose 9% to 443 pence, accounting for the company’s 405 pence per share. Rival private-equity conglomerates Carlyle Investment Group and Blackstone have also indicated interest.

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