The stock market is on the rise, given that, that the financial cycle remains first in the period.
The United States stock market is experiencing an unusual surge. Index S&P 500 doubled since March 2020 years to the present day – from 2200 points to 4400 points hence. According to Howard Marks, businessman and founder of oaktree capital management, in terms of industries, the highest dynamics is noted, but efficiency is at the lowest historical level.
Usually, market and financial cycles intersect, and the stock market is at its highest rise right away from the economy or there is a cooperative decline.. But at the moment, the stock market is at the top., and the financial cycle is only the first of the period.
Marx thinks, that it's especially and faster bad, as the revival of economic growth is just beginning, and the share price has already reached significant figures. So that interest rates can achieve characteristics, necessary for the economy and present in the market, but not for FED, the national agency must finish specifically supporting the market.
In addition, he emphasizes, that a national agency should do the right thing for the economy: its mission is not focused on making money for financiers. With the strengthening of the economy, the Fed will have to end critical support measures and allow rates to rise..
The income of pension funds and other monetary structures should be approximately 7% in year, that will allow you to embody their obligations to users. But in the criteria of zero rates, it is impossible to do this., Marx emphasizes.
According to the businessman, at the moment, the debt market can offer the financier extremely low efficiency, which has not been throughout history, and that makes it unpresentable..
Therefore, the National Reserve System is obliged to allow rates to rise., Marx believes.
Based on ProFinance
