Wall Street, because the US bag is not really pessimistic: those who blow on prices after the storm duties

« This is the Biden bag, not mine, » said Donald Trump, last Wednesday, April 30, in seeing the index collapse by 2.3% after the announcement of a GDP of the first quarter in red by 0.3%. Not a few must have accepted his invective, given that The S&P 500 quickly started reducing losses to close with a paradoxical rise. And it is not difficult to believe that there were several buns patrols small investors, attached by the downward and perhaps flattered by the umpteenth promise of resurrection uttered by the president: « The duties will soon begin to take effect and a record number of companies will begin to move to America ». It just takes a little « patience, » he added.
There are those who have attempted to explain the curious reaction of small investors, bringing up the Stockholm syndrome: In this case, the strange manifestation of confidence of those who, victim of a bear market, puts precisely in the artophic of that medium financial and economic disaster to which we are witnessing. It is more likely, however, that A generation of investors, formed in the year of the pandemic, the opportunity to make money after the strong discount of the bag, has been thrown instinctively to buy actions, derivatives and ETFs. It is perhaps not true that, five years ago, The sudden fall of Wall Street (-34%) was drawn in just five months by splendid rise and, 21 months later, the earnings measured in an amazing 113%?

The explanations

The threat of rates would therefore be a bit like the fury of Covid. E and sAnd then the vaccines were enough to raise morality, now the panacea would be in the alleged partial reverse of Trump on universal duties. In fact, the bag resumed on April 9 at the announcement of a moratorium on 90 -day rates and has even more reinforced on April 22 with a Trump appeared more conciliatory with the rest of the world And even with the president of the Fed.
In three weeks Wall Street grew by 13%rather than halving previous losses. This time the vaccine would consist in the momentary suspension of evil or, at least, in its reduction. But, for the good thing that things can go, reduced rates just above 10% are still four times higher than those applied 8 years ago by the first Trump administration.

Comparisons

As he observes Kevin Thozet by Carmignacif in 2018 an average rate grown from 1.5 to 2.5% had pushed the United States almost in recession, a generalized of 10% would have today a « significant economic impact, which we estimate equal to 0.7% of GDP ».
The most absurd thing circulating on the market is the idea of ​​a Trump-Putie of a protection exercised by the American president, consisting only in an attenuation of evil (rates): as if this could be equivalent to true put Created eight years ago by the Fed, with zero rates, Quantitative Easing And 5 thousand billion dollars of subsidies Given by the government (of which about a thousand during the first Trump administration) to repair the disasters of the pandemic.
But, now, Jerome Powell seems very unwilling to help a government Which, in addition to having shedged the economy, is making inflation grow and in the denar treasure coffers to spend they remain very few.

The strength of families

Of this Trump-Put You don’t only drink small investors, but also the great managers. In the three weeks following the announcement of a 90 -day moratorium on duties, funds and Hedge Fund (including foreign ones, according to State Street) have Bought actions in good quantity in the company of retail investors. To tell the truth, the latter They are accumulating securities from the beginning of the year at estimated pace around 50 billion per week especially through the ETFs, according to the data of JPM and Deutsche Bank, to the point that American families now hold shares for an estimated value in at least 35 thousand billion, 38% of the entire market (Fed and Goldman Sachs estimates), e represent the largest investor of the US stock exchange.
If you think that quantitative management, especially those operating based on volatility, have not yet started to increase positions, we can believe that The recovery of Wall Street is far from concluded. Even the pessimist JPM, while cutting the goal of the S&P index at 5,200, has declared himself « tactically bullish»(Little up). Yet, to read the surveys conducted between small and large investors, it would be said that pessimism is extreme. If we have to believe in the monthly one compiled by BOFA, The mood of international managers would be among the worst of the last 25 years, almost ugly as in 2009. That of the little ones (AAII) would have collapsed almost at the minimum of March 5, 2009, when the S&P marked a fall of 57%.

Pessimisms

This pessimism also echoes among the economists (especially those of the business banks) who now propose one probable recession 45% (Goldman) or 60% (Kairos). According to BOFA, the recession will probably arrive in the second half, while theInstitute of International Finance of Washington gives it instead for sure.
But it’s a pessimism of mannerbecause, in spite of the dark forecasts, both Goldman and BOFA fill a growing American GDP of 1.3-1.5% this year and the IMF even by 1.8%in line (as usual) with consent. Where it seems to have returned some distrust is if anything in Europe.
Growth estimates do not go beyond 0.6-0.7% and both Goldman and BOFA are expected to fall from the Stoxx index at 470-460 and a rise around 500-520 per end. In any case, under current levels (528 points).