Morgan Stanley stiller det helt afgørende spørgsmål: Hvad sker der på markedet, hvis der ikke kommer en ny gigantisk amerikansk stimuli-pakke på mindst 1000 milliarder dollar? Det seneste kursfald på high-tech aktier vil være småting i forhold til udeblivelsen af en ny støttepakke. Den nuværende støttepakke udløber i september. Kommer der en ny på 1000 milliarder dollar, som der er forventninger om? Eller 2000? Eller intet? Det vil have en langt større virkning på markedet end high-tech selskabernes udvikling. Analysen handler om USA. Men den indikerer måske, hvad der kan ske i Europa, hvis der bliver behov for flere stimuli.
Markets Ponder a Trillion-Dollar Question
A downward adjustment in some high-flying U.S. tech stocks has put investors on edge this month, but an impasse on fiscal stimulus negotiations may be the real issue to watch.
In September the NASDAQ has come back down to earth, so to speak, declining about 10% from its peak. This move has certainly been uncomfortable for investors and driven overall market volatility, given the size of that index.
But as far as problems go, it feels like a relatively minor one. Taking one of the most popular, most expensive segments of the market “off the boil”, so to speak, might be a good thing from the perspective of long term sustainability of this rally. And the NASDAQ is still up about 20% for this year, suggesting that investors have some ability to withstand volatility at these levels.
So that brings us to the second issue, which has been circulating alongside the big swings in the tech sector. Since April, the U.S. economy has been supported by the largest domestic stimulus package in history, dubbed CARES. At the end of July, most of the provisions in this support package ran out.
Now, you might think that the expiration of a very important economic support package will be taken by the stock market as a bad thing. And indeed, this was my view, and one of the reasons why we reduced some of our exposure at the end of July.
But ironically, the markets decided to view this situation as glass “half full”: the market now assumes that further fiscal support will ultimately be approved, and in order for that to happen, what will get passed will end up being larger than it would have been otherwise.
It’s hard to overstate just how much additional fiscal stimulus matters to our economic forecasts. We’ve been assuming that the U.S. Congress will eventually pass a further $1T stimulus package by the end of September. But passing a $2T deal would mean an extra $1T of stimulus relative to those expectations. On the other hand, the failure to pass any deal, would mean a $1T shortfall relative to those expectations. These are big numbers.
As the calendar has flipped to September, these negotiations are entering crunch time. The clock is ticking, and it appears that a deal is still elusive. While more of the market’s attention has been on the NASDAQ, we think outcomes on fiscal policy could ultimately have a larger impact on our economic forecasts, and the longer run outlook for markets. Stay tuned.
