US Federal Reserve Chair Janet Yellen signaled that rational exuberance is just fine.
That, at least, is how some of the US’ largest money managers interpreted her comments on Wednesday suggesting that interest rates will remain low through 2016.
It reinforced their views that easy money means the US stock-market rally has further to run, despite notching a series of record highs already this year. That could easily put the S&P 500 benchmark on track to surpass 2000 for the first time, and to do so well before the end of the year.
Such a gain for this year, after a 30 percent rise last year, would surprise those who worried that stocks might be getting overvalued and were due for a sizeable pullback.
One reason for increasing confidence is that the resilience of the market has been very strong in the face of various shocks this year. A combination of an improving economy, rising earnings and the cheap borrowing costs has made that possible.
Stock investors have shaken off last year’s budget uncertainty in Washington, a sharp drop in high-growth technology companies and biotech shares, the conflict in Ukraine, and more recently, the apparent tearing apart of Iraq that resulted in a spike in oil prices.
“What I have is a sweet combination of a self-sustaining, long-lasting economic expansion joined with a long-lasting monetary accommodation,” said Steven Einhorn, vice chairman of Leon Cooperman’s hedge fund Omega Advisors Inc, which has US$10.5 billion in assets under management.
“I don’t think this bull market is over,” he said, adding that he estimates stocks could rise another 3 to 5 percent this year.
That may sound modest, but when added to an average S&P 500 dividend yield of 2 percent, it looks pretty attractive against the 2.62 percent yield of a 10-year Treasury note.
Yellen on Wednesday said that interest rates could stay “well below longer-run normal values at the end of 2016,” leading to further gains in stock prices that on Thursday pushed the S&P 500 to gain 2.50 points, or 0.13 percent, to close at 1,959.48 — a record.
While the Fed lowered some of its economic forecasts, Yellen nonetheless cited reasons for optimism about the world’s biggest economy, including resilient household spending and an improving jobs market.
Even if the market closed the year at this level it would mark the best three-year run for US stocks since the 1997-1999 period.
That has driven greater household interest in equities. Retail investors have dropped US$61 billion into US-based stock funds this year, Lipper said.
Tom Nally, a president at TD Ameritrade Institutional, told the Reuters Global Wealth Management Summit on Wednesday that retail clients have an average of 19 percent of their assets in cash, slightly below the historical average of 20 to 25 percent. Advisers working with the firm are even more bullish — with 8 percent of their clients’ assets in cash.
“We still think we are in one of the biggest bull markets of our careers,” said Rich Bernstein, founder of Richard Bernstein Advisors LLC in New York, and a former top Merrill Lynch investment strategist.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained