— This is the script of CNBC's news report for China's CCTV on June 9, 2020, Tuesday.
The recent relentless rise of the US stock market can be described as a "carnival". Given Monday's performance, there was little selling to be seen. Seems that capital wouldn't miss this round of rally, under this "revelry", we see some of the stock performance can be said to be quite crazy.
For example, you may remember that Hertz, an American car-rental company, filed for bankruptcy protection on May 22nd. But its share price has recovered all its losses in less than a month.
In the recent three days, it rebounded 7 times, a cumulative rise of 888%.
The US Securities and Exchange Commission documents show that at least three executives of the company sold a lot of shares on June 4 and 5.in general, executives selling shares a lot to get cash is a warning sign. Chesapeake Energy, for example, which we've already reported on, has repeatedly gone bankrupt during the energy crisis.
But the company's shares surged more than 180 percent in trading on Monday. As the bankruptcy news came out again, it plunged more than 40% after hours.
Bankruptcies in America rose 48% in May from a year earlier, but the stock market is now acting as if the impact of the epidemic has completely disappeared, to this, still have a lot of market personage to express uneasiness.
chief economic advisor at Allianz
for me personally, it's an uncomfortable bet to continue to bet on a huge recovery or to bet on moral hazard. I don't like doing this, but I respect and admire those who can.
We've explained the logic behind the rally before, such as the positive outlook after the US restart, and the large amount of money from the Federal Reserve and the US Treasury to support the market, these 2 factors seem to have created a so-called win-win scenario for the American stock market. If the recovery is strong, the bet is on it, and if it is not, the Fed and the government will bail it out.
We have a Fed that is completely on the side of the bulls. We have a president who wants new highs. We have stocks that are recovering well ahead of the fundamentals, but some people could say, "That's what should happen." ... It's almost as if people decided Covid is over. It's a V-shaped rally. And you better get on board."
And once such expectations are in place, it may take a big surprise to turn sentiment around. Such a surprise is likely to come from the us economic recovery, which is what markets are focused on. We note that on the same day that Nasdaq hit a new high, the United States officially declared a recession.
The National Bureau of Economic Research says the US economy ended expansion and entered recession in February. That would mark the end of a 128-month expansion. It is also the longest period of economic growth since 1854. The next focus is on the path of recovery. More recently, America's V-shaped recovery has been reviewed many times. Much of that came from some unexpected economic data that beat market expectations, for example, the employment data from the Labor Department. That has been the main driver of the stock market's recent rally, but the Labor Department has acknowledged that the data were statistically incorrect.
So, we need to wait for more data on the true state of the US recovery. We will keep an eye on this issue.