It’s time for investors to stop buying stocks that are ‘stunningly decoupled’ from reality, economist warns
“‘The investing challenge may well shift in the months ahead from riding an exceptional wave of liquidity, which lifted virtually all asset prices, to steering through a general correction in prices and complex individual nonpayments.’
That’s Mohamed El-Erian, Allianz’s chief economic adviser, talking about what investors should expect going forward, as “the financial stress caused by COVID-19 is far from over.”
El-Erian, the former Pimco CEO, pointed to several “worrying signs,” including a record-breaking pace for corporate bankruptcies, job losses moving from small and medium-size firms to larger ones, and more households falling behind on rents, to name a few.
“Investors are showing insufficient concern. Some continue to expect a sharp, V-shaped recovery in which a vaccine, or a buildup of immunity in the population, allows for a quick resumption of normal economic activity,” he wrote in the Financial Times. “Others are relying on more backstops from governments, central banks and international organisations.”
He explained in the op-ed that investors still have time to prepare for the tough times ahead and follow the lead of Wall Street pros by adjusting their portfolios accordingly.”
Charts suggest the S&P 500 climb will stall out at the end of July, Jim Cramer warns
“CNBC’s Jim Cramer warned investors Tuesday that the market uptrend could be running out of fuel near the end of the month.
The S&P 500 has gained 2.5% of value from the start of July, but there are strong odds that a reversal in the index’s trajectory is looming over the backend days, based on analysis from renowned trading expert Larry Williams.
“The charts, as interpreted by the legendary Larry Williams, suggest the S&P could climb another 4% or 5% over the next two weeks, but come July 28, he expects the market to start rolling over,” Cramer said on “Mad Money.” “Given that the expanded unemployment insurance benefits from Washington expire at the end of the month, well, I wouldn’t be surprised” if he’s right.”
Reuters/Lindsay Dunsmuir, Howard Schneider
Fed officials warn on ‘thick fog’ ahead for U.S. economy as recovery concerns deepen
“The U.S. economy will recover more slowly than expected amid a surge in novel coronavirus cases across the country, and a broad second wave of the disease could cause economic pain to deepen again, Federal Reserve officials warned on Tuesday.
One by one, Fed policymakers have become more downbeat in recent days, resetting expectations on the recovery and cautioning that recent improvements in economic data such as job gains may be fleeting.
“The pandemic remains the key driver of the economy’s course. A thick fog of uncertainty still surrounds us, and downside risks predominate,” Fed Governor Lael Brainard said in a speech to a virtual event hosted by the National Association for Business Economics.
She called on the U.S. central bank to commit to providing sustained accommodation through forward guidance and large-scale asset purchases, and said additional fiscal support would be “vital” to the strength of the recovery – particularly with the first round of pandemic economic support programs expiring soon.”
Yahoo Finance/Javier E. David
Wealthy just as worried about post-coronavirus future as everyone else: UBS survey
“The coronavirus pandemic has prompted wealthy investors to consider major lifestyle shifts that include less travel, fewer trips to the office, and moves away from big cities, according to newly-released UBS data that revealed 75% think that “life will never be the same again.”
The mounting human and economic costs of the worldwide COVID-19 outbreak have forced dramatic changes to daily life on people across all income levels. Conventional wisdom holds that the wealthy are insulated from the disruption caused by the novel coronavirus, yet UBS’s Investor Watch found that a clear majority of high net worth individuals are at least as worried about the future as average people.
The survey, which polled nearly 3800 investors across 15 different markets, said that many “are already planning to adjust their lifestyle” as the outbreak reshapes public life.
Meanwhile 66% of wealthy investors say COVID-19 has impacted how they think about money.
An independent study released in June found that billionaire wealth skyrocketed by over $500 billion since the onset of the crisis, but UBS found that over half are concerned about having enough saved if there’s another pandemic, and about having to work longer to compensate for damage to their retirement portfolios.
More tellingly, 60% are worried about being a “financial burden” to their families if they fall ill, while 54% are nervous about leaving enough money to their heirs.”