Three pros share what’s next for the market.
Rick Rieder, global CIO of fixed income at BlackRock, sees more upside for equities.
“I think people underestimate the amount of stimulus that goes in. We can debate how much is coming in and when it’s coming in. But I think from the beginning, people underestimate. … When we got the first stimulus bill, it was 10% of GDP. We may get another 5% to 10% of GDP into the system. In our lives, we’ve never seen anything close to this so it’ll continue to promote the economy higher and if you think about how life will be six months hence, I think there’s more room. By the way, I think there’s more room for the equity market, not just because I think the economy is going to be buoyant. … And then, by the way, when we look at the other alternatives, the alternatives we have in the fixed income market and the incredible benefits that it’s creating for companies, it’s a pretty unbelievable point in time as we enter 2021.”
Glenn Hutchins, chairman of North Island, said more stimulus will be needed even if Congress passes the next package.
“I think we need to make a distinction between … the effect of economic policy on the markets and the people whose livelihood and net worth is denominated in market activity, and the people who work in the kind of jobs and industries that have been hit by the pandemic. And so yes, the market prognosis is kind of very good … [because of] the notion that we’re going to have long-term low interest rates which means alternatives to market activity, alternatives to stocks are going to be very poor. This package right now that’s going to come out of this Congress will be good [but] it will be insufficient. And I think you’ll see a Biden administration come forward with something much bigger after the inauguration.”
Jim Cramer, host of CNBC’s “Mad Money,” sees stimulus as an imperative.
“Sen. Mitch McConnell basically said ‘Listen, we’re going to get a deal.’ I don’t know how big that deal will be but I do take it, let’s say, seriously when the one person in the room who has stood against … stimulus now realizes that we have to have it. These unemployment benefits are going away, the evictions going to start in January, this retail sales number says ‘you know what, you may think that we’re going to get to the promised land, but holy cow we got to do some swimming for that and not everybody’s going to get through the Red Sea here.’ Everybody wants to be very bullish because it’s the holiday time, this is a Santa Claus rally, but what I want I’m looking at is again with the charts that I see is the destruction of the way … the country worked a year ago and a whole new way. I call it the hybrid economy.”
SOURCE : https://www.cnbc.com/2020/12/16/congress-nears-900-billion-relief-deal-three-pros-on-market-impact.html