Bloomberg TV: The sharp rise in the markets is not going to end anytime soon 17.08.2021

The sharp rise in the markets is not going to end anytime soon – Bloomberg (bloombergtv.bg)

The Dow Jones Industrial Average and the S&P 500 hit new record highs in late trading on Monday. The broad US gauge has doubled from the March 23 pandemic low. The 100% rally is the fastest bull market doubling from a bottom since World War II. Indices are economic indicators, and our task is to watch their development. For the time being, everything is looking good, with the bull market not expected to end anytime soon. This was commented by Yordan Micikulev, professional trader and founder of “Rodopa Capital”, on the air of the program “In Development” with presenter Veronika Denisova.

“Tech companies have done very well in an environment where people get money from home, so they don’t work, and later that money goes back into the capital markets. The main policy of the Fed is to inject money into the economy through credit and easy financing, rather than giving them directly to people”.

What investors see is not always a driving force. Big investors, hedge funds and institutional players are actually looking at very different data based on which we may see how the economy moves in the next 10-12 months. Retail is looking at the data for the previous period, and institutional players – for the future period, said Yordan Micikulev.

The guest is of the opinion that it cannot be said that the market in Asia lags behind the global optimism.

“At the moment, one of the good indicators is how much banks are lending to companies and businesses. In Asia, there haven’t been big increases in lending. The economic data in China is not bad, the declines in the indices are a sign that the market is stable and will keep going up”.

The sectors benefiting the most from investor optimism are technology and semiconductors.

Another topic of the conversation was what could derail the rally in the leading capital markets.

“If we look at the financial markets after 2010, the Fed started pouring a lot of money into the economy in order to stabilize the system and rapidly increase growth. Yesterday evening, the Fed came out with the view that all the factors that could cause the withdrawal of stimulus are in place. These are slow processes – they won’t stop putting money into the market, but they will reduce the amount. From that point of view, any big investor would think about whether it is right to invest now.”

Inflation has been accelerating recently, although central bankers say this will be temporary.

Inflation has been present since March last year. All economic growth is thanks to it. The problem is that people are afraid of inflation just when deflationary processes begin. Lumber prices fell from $1,200 to $400. Normalization of oil, gold and silver prices is observed. The acceleration of price growth will be a temporary phenomenon, Yordan Micikulev believes.