— This is the script of CNBC's news report for China's CCTV on September 3, 2020, Thursday.
Strategists interviewed on CNBC tell us that the S&P 500 is now up nearly 60 points since its low on March 23. It was the biggest rally in the first six months after a bear market hit bottom since 1932. In such circumstances, even analysts who remain bullish are becoming more cautious.
chief investment strategist at CFRA Research
The feeling is that, gee, maybe this rubber band is being stretched a bit too much. And while I don't anticipate a new bear market, I do think we're ready to digest some of these gains.
chief investment officer of passive equities and multi-asset strategies for Charles Schwab
clients continue to ask a lot of questions about protection
It is very unusual to see These levels of a bull market when some of the issues related to a crisis or recession sources haven't been fully resolved.
Given the current market situation, Wall Street's expectations are also somewhat polarized, with the main support for the bears being that the strong growth of the US stock market has decoupled from the performance of the real economy. In its latest Beige Book report, the Fed noted that us economic activity generally expanded at a moderate pace in August but was well below pre-outbreak levels and pessimistic about the future.
And the co-chief investment officer of Bridgewater, the world's largest hedge fund, told us he thinks the US economy needs another $1.3tn - $1.7tn of stimulus to help with recovery.
Bridgewater Associates co-CIO
And it depends what it's used for. There are different types of policy, the policy that gets directly spent in the economy is much more effective per dollar than the dollar that's preventing more bad things from happening.
U.S. Treasury Secretary Steven Mnuchin is also making a public case for more stimulus, saying in congressional testimony Tuesday that a bipartisan stimulus deal is needed to provide more help for economic growth. The us federal budget deficit and debt have ballooned as a result of several rounds of government stimulus measures to combat the impact of the pandemic. The Congressional Budget Office said Wednesday that the federal budget deficit for the current fiscal year will reach $3.3 trillion, more than three times the level of the previous fiscal year, or 16% of gross domestic product.
Meanwhile, federal debt held by the public as a percentage of GDP is projected at 98 percent in the current fiscal year, the highest since World War II, and will rise to 104.4 percent in 2021, which begins Oct. 1.
For the first time since World War II, the U.S. federal debt will exceed the size of the economy, that puts more pressure on US dollar index. If there is more stimulus pkgs, then this figure may increase again. We will keep an eye on this issue.