Major US banks are booming

Their “Dow 36,000. That Prediction of a New Strategy to Profit from Future Growth in the Stock Market did not materialize. The Dot-com bubble appeared, diverting the markets. 2006 և The return in 2007 was stopped due to the global financial crisis և The Great Depression.

But after the Covid-19 epidemic, the rally finally came to fruition. On Tuesday, the Dow closed higher than 36,000 for the first time due to the stimulus of the government և unprecedented level of central banks խ enthusiasm for corporate earnings.

The response was sharp and fast. The Dow crossed the 35,000 mark for the first time in July.

“This is a reminder to investors of how far we have come in the last 20 months,” said Ryan Detrick, chief market strategist at LPL Financial. “In fact, 2021 is the only year in history that has reached the level of six separate 1,000 destinations.”

Hassett, who served as President Donald Trump’s top economic adviser, does not see the book as a predictor. Instead, he told me that his central thesis was well preserved.

We e-mailed about possible events and their reflections. The following conversation is a condensed “light” edited for simplicity.

Why did it take longer than you expected the Dow to cross the 36,000 mark?

KH: The book has always been about long-term stock retention to reduce risk. Our first article on this և book has always made it clear that no one can predict stock movement in the short term. But over time, prices rise. Many argued that the enormous achievements of the 1990s made it too late for ordinary investors to join the party. We said that is not the case if they can make a long-term commitment.

You wrote in 1999 that stocks were not as risky as investors thought they were undervalued. Do you still think that is true?

KH: The data from that time confirmed the patterns that were clear in the early 1800s. In the long run, the risks associated with holding stock are decreasing.

Which of the book’s arguments do you think best fits?

KH: The average return on equity since the book’s release is almost the same as we expected.

And the worst.

KH: We expected interest rates to be higher, we never expected a quantitative easing. In a way, this is good news for stock investors in the near future. The stock premium is still healthy, so the expected earnings per share for the next two decades are still higher than for bonds.

The Federal Reserve is making its move

After months of discussions over deadlines, the Federal Reserve is set to begin deferring bond purchases to help the economy during the epidemic.

Investors expect the central bank to announce on Wednesday that it will begin cutting asset purchases by $ 15 billion a month.

“We expect the Fed to announce a change in its asset purchase program in a statement, saying that the adjustment of asset purchases will begin immediately in November rather than wait until December,” said Bank of America analysts.

It has been almost 20 months since the Fed announced emergency measures to combat Covid-19’s economic woes. But the debate is ongoing, and now the focus is on when the Fed can start raising interest rates.

“Markets are gaining momentum sooner than most Fed officials expect,” Citi’s Andrew Hollenhorst and Veronica Clark recently told clients.

A quarter of investors now think interest rates will rise until May, according to CME Group’s FedWatch. In June, it rises by more than half. Not so long ago, the consensus was that interest rate hikes would not begin until 2023.

However, Hollenhorst and Clark do not think President Jerome Powell will use his press conference to push back market expectations.

On the radar. The Fed is still thinking about inflation, which is growing at the fastest pace in three decades, as a “transient” phenomenon. The language Powell uses to describe price increases will be closely watched as Wall Street tries to gauge how quickly the central bank can tighten its grip on money.

Zillow could not handle the household chores

The apartment market is hot. But: Zillow: (F:), worried about the instability, decided to watch from the side.
The company said on Tuesday it was closing its turnaround portion, known as Zillow Offers, citing “unpredictability in house price forecasts.” This step will lead to the reduction of about 2000 jobs.

Remember. Last month, the company announced it was suspending new real estate purchases as supply chain disruptions and labor shortages led to a build-up of homes being repaired and prepared for sale.

But Zillow just discovered one complication. he bought houses at a higher price than he could sell last quarter. After acquiring 9680 real estates during that period, the company unloaded only 3032.

CEO Rich Burton told analysts that since the launch of Zillow Offers in 2018, using home-based bidding algorithms, the company has faced “a global epidemic, a temporary freezing of the housing market, and then a supply-demand imbalance that has led to growth.” apartment prices at an unprecedented rate. “

He said that these events made it almost impossible to “accurately predict future house prices.” But he is not sure that business will be easier.

“Based on our experience so far, it would be naive to assume that there will be no unpredictable price forecasts or disruptions in the future,” he continued.

Investors’ perception. Wall Street punishes Zillow for making a strategic mistake. Shares fell 12% on Tuesday and 18% on Wednesday.

Next:

CVS: (CVS:), Marriott (MAR) և: Norwegian cruise line (NCLH:) The results of the reports before the opening of the US markets. Reservation Holdings, Atsi (ETSY:), Fox Corporation, Marathon oil (MRO:) և: Qualcomm: (QCOM:) after closing.

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  • The ISM Non-Manufacturing Index, which tracks the US services sector, is published at 10 a.m. ET.
  • The Federal Reserve announces its latest policy decision at 14:00 ET.

Tomorrow. OPEC ները allies will meet to discuss oil production. At prices above $ 83 per barrel, US President Joe Biden is pushing producers to increase supply.

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