On Wall Street, the biggest bull market in 20 years

Spark Trader Limited reports:

On Friday, data showed that US consumer confidence suddenly fell to its lowest level in a decade.

 

As fears grow over the spread of The Delta and Ramda viruses, large numbers of people are still refusing to be vaccinated against the coronavirus.

 

The stock market, however, was buoyant. On Friday, the S&P 500 closed at an all-time high of 4,468. The index is up 19% so far this year and 100% since its post-outbreak low last year.

Wall Street analysts, meanwhile, haven’t been this optimistic in 20 years.

About 56% of all s&p 500 recommendations are for shares, the highest since 2002.

 

This is not just the CASE in the US but also in Europe, where some 52 per cent of stoxx 600 companies are rated buy or flat, a 10-year high. In Asia, the share jumped to 75 per cent, the highest since at least 2010.

 

Despite worries about the Delta virus, the waning of federal Reserve stimulus and the current renewed geopolitical turmoil in Afghanistan, stocks have not been affected.

Edward Yardeni, president of Yardeni Research and a longtime Wall Street bull, noted that U.S. companies have accelerated the adoption of cutting-edge technology and increased productivity as a result of the pandemic. Edward says the economy is growing at 2 percent now and will grow at 4 percent in the next few years.

In his view, as long as the US avoids another massive economic blockade, the S&P 500 will rise 12 per cent from its current level, despite the challenges.

Todd Jablonski, chief investment officer at Global Asset Allocation, inc., said:

“It is not just financial conditions and low interest rates that are driving demand for risk assets, but fundamentals are expected to improve substantially by 2022.”

Optimism is growing on Wall Street, but desperation is growing on Main Street.

Data points to the Fed as the driving force behind the widening gap between rich and poor. Despite the massive expansion of the Fed’s balance sheet and the surge in asset prices, relatively little translated into wages or corporate after-tax profits, resulting in very little economic growth.

The surge in asset prices is still limited to people with “investable assets,” and about 90% of Americans have not benefited.