Stocks closed a mixed week after rising first Friday after Finance Secretary Janet Yellen called for a major stimulus package to help accelerate economic recovery.
Four experts will discuss what her ideas mean for markets and how they will invest as the pandemic continues.
Jim Stewart, a columnist for the New York Times, says the benefits of spending far outweigh the risks.
“The question is is there more risk in making too much money than in spending money? It’s pretty obvious. I mean, what is the risk of too much incentive? Maybe higher interest rates down the road, maybe some inflation, but as Yellen said, we have the tools to deal with this.The risk of spending longer and more unemployment, the decline in the economy, maybe a recession.That’s a lot harder to find out, so I think his point about the risk is pretty inevitable …. In fact this is very good for the stock market I mean just look at the current levels, which I think are expected for this important stimulus.That is very bullish, and ironically, the people who own stock and who benefit from this tend to be like those who were not so badly injured with the pandemic. There are certain elements that aim to hurt people with the pandemic, I think it is a very grim instrument. It’s not closely designed to help those special people, and I think th at something that has bothered some critics, but nonetheless, if you trying to do it to keep the economy thriving, you know it won’t be perfect. “
Liz Young, director of market strategy at BNY Mellon Investment Management, welcomes the rise in rates.
“The real question here is whether levels should be going up and why are they going up? And I think they should, they should be going up, and they are going up as the economy expands, we expect further expansion later in the year, we expect a big improvement in corporate data, and we expect some inflation .Inflation continues to get a kind of bad rap.Inflation means healthy demand in the economy, so I welcome the rise in rates.And the question of what the breaking point is, when is it important to the market, I do not know what the magic number is, I do not know the magic number is about the mental threshold as to when it is going to I think it ‘s more about the speed at which we can get there and if we go up gradually in stages over the year I think that is ok and we can digest it, so i am ok with this rate increase. I think there is going to be a variable in 2021 in the Treasury curve. I would follow through on the volatility and use that as a buying opportunity if it causes a pullback in stocks. “
Katerina Simonetti, senior vice president at Morgan Stanley Private Wealth Management, looks forward to how changes in consumer behavior could affect markets.
“The market has received a lot of support. It’s strong. The employment season gave us a big surprise. And I think we’re definitely getting on with the philosophy of reopening and getting behind. circular names and retrieving the story of the reopening and resetting of our portfolios to reflect what is to come in the aftermath of the post-Covid vaccine, a But that being said, I think consumers have developed some really powerful practices over the last nine months and certainly names should not be discounted. There’s a place for them in the package. And, you know, we definitely care about them and we own them. “
George Cipolloni, portfolio manager at Penn Mutual Asset Management, will look at how Federal Reserve policy has shaped investor behavior.
“When you think about the impact of the Fed, they have had two main effects here – they have kept interest rates low, which has raised asset prices. And number two, they have encouraged certain behaviors in the a market where people tend to be a little more reckless.And we’ve seen that through specific examples of certain stocks like GameStop …. That’s behavior driven by Fed action, and so on that’s something to be careful about and then just going back to this reflational trade, I think it matters.We are income investors, so you are seeing an amazing impact in the link market today, and I think that’s another very, very important thing to keep an eye on. “
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