{"id":29048,"date":"2021-02-15T08:50:34","date_gmt":"2021-02-15T14:50:34","guid":{"rendered":"https:\/\/www.ceo-na.com\/?p=29048"},"modified":"2021-02-15T08:50:34","modified_gmt":"2021-02-15T14:50:34","slug":"between-pandemic-optimism-and-bubbles","status":"publish","type":"post","link":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/opinion\/between-pandemic-optimism-and-bubbles\/","title":{"rendered":"Between pandemic optimism and bubbles"},"content":{"rendered":"

High optimism on recovery and warnings of potential bubbles are leaving investors wondering who to trust. <\/strong><\/p>\n

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Market analysis is not a science with clear answers\u2014although many appear to believe it is.<\/p>\n

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Even as markets are sensing that the COVID-19 pandemic\u00a0will be defeated and interest rates will stay low, clarity and certainty are notable by their absence.<\/p>\n

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Take Tesla and SpaceX\u00a0boss\u00a0Elon Musk, who in recent years has not only led the electric car revolution and taken the private sector into space, but also beat out Amazon CEO Jeff Bezos as the world\u2019s richest person.<\/p>\n

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The multibillionaire\u2019s market views are mostly limited to cryptic tweets and the actions of his companies\u2014this week, Tesla purchased $1.5 billion US in bitcoin\u2014but there are other voices who mirror his optimism.<\/p>\n

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James Mackintosh at the Wall Street Journal makes a rational case for why an expectation of more stimulus and little to fear in terms of inflation have\u00a0left market investors looking for further gains.<\/p>\n

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\u201cInvestors are predicting the sort of inflation they like, slightly higher in the next few years but moderating back down after that, and it\u2019s helping stocks and commodities while limiting the pain to bondholders from rising yields,\u201d\u00a0he wrote in Tuesday’s paper.<\/p>\n

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In the U.S., the Federal Reserve has said repeatedly that interest rates will stay near zero at least until the end of 2023. North of the border, as the Governor of the Bank of Canada,\u00a0insisted in his most recent news conference, even an extremely strong recovery will take years to use up the country\u2019s available surplus of workers and industrial capacity. That means the economy can continue to\u00a0grow without causing inflation or an interest rate hike.<\/p>\n

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The debate surrounds where markets are heading in the longer term. Can they keep rising like a SpaceX rocket ship? Can they settle gently to Earth? Or will they crash land?<\/p>\n

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In examining the Canadian housing market, for example, Canadian real estate economist John Pasalis expects home prices will\u00a0continue to rise this year<\/a>. And while governments and central banks know what they are doing\u2014stimulating the real estate economy and making Canadian homeowners feel rich\u2014some realism will be needed eventually.<\/p>\n

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\u201cI do agree that kicking the can down the road is actually a terrible plan and that the higher prices continue to rise, the harder the fall,\u201d\u00a0Pasalis tweeted.<\/p>\n

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Following Elon Musk\u2019s investment in bitcoin, a similar view has been widely expressed elsewhere as well.<\/p>\n

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For practical investors, Musk\u2019s move into bitcoin is seen as a move away from value based on earnings. Many conventional financial analysts see bitcoin, with its wild ups and downs and no clear intrinsic value, as not just optimistic speculation but gambling.<\/p>\n

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The question investors may want to ask first is how high markets can go. At what point does Musk\u2019s rational exuberance, founded on low interest rates and large government spending, become irrational?<\/p>\n","protected":false},"excerpt":{"rendered":"

High optimism on recovery and warnings of potential bubbles are […]<\/p>\n","protected":false},"author":21,"featured_media":29032,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[53],"tags":[],"class_list":["post-29048","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion"],"_links":{"self":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/29048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/comments?post=29048"}],"version-history":[{"count":1,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/29048\/revisions"}],"predecessor-version":[{"id":29050,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/29048\/revisions\/29050"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media\/29032"}],"wp:attachment":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media?parent=29048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/categories?post=29048"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/tags?post=29048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}