Global Markets Recap
CNBC: “Record highs coming in the 2nd half of the year, says Marko Kolanovic of @JPMorgan.” One of the most widely watched Wall Street analysts, Marko Kolanovic, is telling clients – or anyone who watches television – to look for all-time highs later this year. Mr. Kolanovic is an expert in equity options pricing & theory. Maybe he sees what others do: with so much liquidity floating around, and the Vix well off highs from earlier in the year, stocks have only way to go: up. His formula: extraordinary stimulus + coronavirus gets under control + low market participation = new all-time highs by Christmas. I feel bad for shorts; I do. The old maxim “Don’t Fight the Fed” takes on a wholly new meaning in a global pandemic. The revised mantra should be: “Buy Whatever the Fed’s Buying”. It’s like that great line from “When Harry Met Sally”: “I’ll have what she’s having.”
Congress may go quiet with the election coming but the Fed won’t. They have permanently set the bar exceedingly high & there’s no indication they’ll let up soon. Inflation is not a concern for them but joblessness is – so they’ll keep cooking up an array of alphabet soup aimed at jimmying open employment any way they can until more people are back at work. Restoring confidence goes a long way in meeting this objective.