This year as a whole can be seen as a prime example of the saying that “a bull market is climbing a wall of worry”. Photo: Erik McGregor/SIPA
Despite the often highlighted risks, the price of US stocks, if you evaluate the change in the Standard & Poor’s 500 securities index, has increased by 23% this year. It seems that this year as a whole can be seen as a prime example of the saying that “a bull market is going up against a wall of worry”.
The rally in stocks in recent weeks is largely due to the general assumption that the most influential central banks will move decisively away from their “higher, higher” setting on interest rates next year. It has already been mentioned that it is almost like a competition to see who will predict a bigger drop in interest rates for the coming year. A general assumption seems to have materialized that next year the US Federal Reserve System (FRS) will even be like an insurer with infinitely deep pockets against some worst-case scenarios for both the economy and the stock market. In other words, it is a delight that the FRS has switched from its main concern for controlling inflation to also insuring economic growth.
“The setting of higher and longer high rates is dead. Powell [ASV FRS vadītājs Džeroms Pauels] for that [pagājušajā nedēļā] wrote the epitaph,” the existing feeling about the policies of the world’s most powerful central bank Financial Times in summary Invesco analysts.
Crowding around one truth
Some worry, however, remain traditional, where this time they indicate that investors should be very careful now, because much of the profit associated with the same central banks reaching the highest point of monetary tightening (which means that the next step will be taken in the direction of softening this policy ), may already be exhausted. In other words, the price of shares and benchmark bonds has been able to rise, although the much-talked-about rate cut has not yet started.
2023-12-21 07:30:53
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