— This is the script of CNBC's news report for China's CCTV on June 18, 2020, Thursday.
Both the Dow and the S&P 500 broke a three-session winning streak to end lower in overnight trading on Wednesday, but the Nasdaq composite index continued to rise.
The overall performance fluctuated, showing that the game between longs and shorts were intense.
on shorts side, the number of confirmed cases in several US states is still rising, which reinforces the fear of a rebound of the epidemic and limits the risk appetite to some extent. On longs side, Federal Reserve Chairman Colin Powell, in his second day of congressional testimony, said he would continue to provide liquidity to markets and called for more fiscal support.
Chair of the Federal Reserve
We at the Fed need to keep our foot on the gas until we are really sure we are through this
There is also an increasingly heated debate among Wall Street analysts about the current state of the stock market. U.S. stocks appear to under "immune protection", thanks to hopes for a vaccine and cash from the Federal Reserve, but on the other hand, the U.S. stock market has been increasingly exposed to red flags.
An analyst Shared a set of data of the total value of the U.S. stock market as a percentage of U.S. GDP with us, Last week, it was 152 per cent, it is usually between 50 to 75 per cent in recessions. That said, current stock valuations need strong GDP growth to support them, And if anything goes wrong with the US recovery, it will be hard to avoid a pullback.
You know we're not gonna see a massive task crash like we just saw in March. There's too much liquidity in the system. But we are definitely open to more sizable corrections here in the next few months. especially if we do not get the type of v shaped recovery that I think a lot of people are at the moment presuming.
Recently, the bearish camp on the U.S. stock market has been joined by another heavyweight investor, Jeremy Grantham.
He earned a reputation on Wall Street for accurately predicting several bubbles. In an interview with CNBC, he said it could be the fourth major bubble he has seen in his career.
GMO CO-FOUNDER AND CHIEF INVESTMENT STRATEGIST
We have now reached to a level where you buy bankrupt companies, issue stock in bankrupt companies, And you bet up bankrupt companies to ludicrous levels. My confidence is rising quite rapidly that this is the fourth 'Real McCoy's' bubble of my investment career, the great bubble can go on a long time and inflict a lot of pain. But at least, i think, now we know we are in one. And chutzpah involved in having a bubble at a time of massive economic and financial uncertainty is substantial.
The first three major bubbles Grantham mentions are the Japanese bubble around 1989, the Internet bubble in 2000, and the subprime crisis of 2008. This time, will his prediction come true? If that will, when? We will keep an eye on this issue.