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A stock market record and a growing economic concern? Wall Street has a name for it



"You do not see party hats falling on the floor of the New York Stock Exchange," said JC O'Hara, director of the New York Stock Exchange. Chief Market Technician at MKM Partners. "The average investor has a healthy skepticism. They are very aware of the signs of an economic downturn. But in a TINA market, where will they put their money? "

The lack of exuberance surrounding the gathering may be reason to think that it can continue. Investor sentiment is often seen as a contrarian indicator: when optimism is high, this may indicate that investors are unaware of the risks and are investing money in stocks thinking that they can not than ride. Conversely, if investors become too pessimistic, this may indicate that the market has bottomed out.

At the moment, investors are more neutral. This means that lower rates, as well as better-than-expected business results and economic data, could inspire skeptics to buy and maintain the rebound.

"The market continues to believe that we have this situation of" Goldilocks ". Equities can continue to reach new heights and many assets can perform together, "said Andrew Sheets, Morgan Stanley's Strategist. "But we believe it's not 2013 or 2015, or even the late '90s, for another period of Fed cutoff and good market performance," he said.

First, Wall Street's earnings expectations remain too high, said Sheets.

When the companies released their first quarter results, they seemed reluctant to lower the financial outlook for the coming year. But since then trade talks aimed at an agreement between China and the United States, which many felt were imminent until the end of April, have failed and economic data has weakened. This means that when companies start reporting their second-quarter earnings, they will likely post forecasts reflecting the worst 12 months, said Sheets.

In addition, a number of economic measures appeared more tense than five years ago, as the labor market continued to strengthen and consumer confidence improved, said Sheets.

It is true that the US economy continues to create jobs, but at a slower pace than last year or earlier this year, and consumer confidence is high but not improving. .


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