Shares closed a mixed week after Friday’s initial rise following Treasury Secretary Janet Yellen’s call for a large package of incentives to help accelerate the economic recovery.
Four experts discuss what their comments mean for the markets and how to invest while the pandemic continues.
Jim Stewart, a columnist for The New York Times, says the benefits of overspending far outweigh the risk.
“The question is whether there is a greater risk in over-spending than in under-spending? It’s pretty clear. I mean, what’s the risk of too much stimulus? Maybe higher interest rates, maybe a bit of inflation, but as Yellen pointed out, “We have the tools to deal with it. The risk of underspending is bigger and bigger unemployment, a downward spiral in the economy, possibly a recession. to eliminate, so I think your point of view on risk is quite indisputable … Of course, this is very good for the stock market.I mean just look at the current levels, which I think greatly anticipate this This is very bullish and ironically people who have stocks and benefit from them tend to be the ones who have not suffered so much from the pandemic.Specific elements designed to help people suffering from the pandemic, I think it is very forceful instrument.It is not very adapted to help those people co ncretes and I think it’s something that has worried some of the critics, but still, if what you’re trying to do is keep the economy thriving, you know it’s not going to be perfect. “
Liz Young, director of market strategy at BNY Mellon Investment Management, welcomes the rate hike.
“The real question here is if rates would go up and why do they go up? And I think yes, they should go up and they will go up because the economy is expanding, we expect a new expansion later this year, we expect a big improvement in the data and we expect some inflation.Inflation continues to have a bad tradition.Inflation means that there is a healthy demand in the economy, so it welcomes the increase in rates.And the question about what is the breaking point, when the market matters, I don’t know what the magic number is, I don’t know if there’s a magic number above the mental threshold of when it will actually become I think it’s more about how fast we get there. we are raising rates throughout the year, I think it’s okay and we can digest it, so I agree with this rise.I think there will be volatility in 2021 on the Treasury curve.I would lean on this volatility and use as an opportunity to buy if it causes a decline in ac ations “.
Katerina Simonetti, senior vice president of Morgan Stanley Private Wealth Management, looks forward to how consumer behavior could change markets.
“The market has been strongly supported. It’s strong. The profit season was a big surprise. And I think we’re definitely getting back into the reopening philosophy, leaving behind cyclical names and delaying the history of reopening and repositioning our wallets to reflect what will come in that post-vaccine era, after the Covid, which is really exciting.But that said, I think consumers have developed some really powerful habits over the last nine months and it shouldn’t be discount the names of stay at home. There’s a place for them in the portfolio. And, you know, we’re sure we’re paying attention and we own them. “
George Cipolloni, portfolio manager at Penn Mutual Asset Management, looks at how Federal Reserve policy has shaped investor behavior.
“When you think about the impact of the Fed, they’ve had two major impacts here: they’ve kept interest rates low, which has pushed up asset prices. And number two, they’ve stimulated some market behavior. where people tend to be a little more irresponsible.And we’ve seen it through certain examples of specific values like GameStop …. This is behavior that is driven by Fed action, so be careful .And then back to this thought-provoking trade, I think it’s important.We are investors in income, so today you have a dramatic impact on the bond market and I think that’s another thing that’s very, very important to watch out for.
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