Tuesday , May 11 2021

Here's the hard-money call for why the boom in the economy and stock market will continue – MarketWatch, Marketwatch.com


                                                                                                                                                                                                                                                                                                                                                                                            

You might think the hard-money, recession-at-every-corner crowd would be predicting an imminent reversal in the stock market given the (*************************************************************************************************% gain for the Dow Jones Industrial Average this year.

Not necessarily.

Thorsten Polleit, the chief economist at Swiss metals trader Degussa, explains why he thinks aneconomic boom will continue, with stock prices also strong.

“As long as there is still room for pushing the market interest rate down further, the chances are reasonably good that the boom continues, and that the bust will be adjourned into the future. As per the charts below, current market interest rates in the U.S. have not reached rock bottom yet. Corporate and mortgage credit costs in particular still have some way to go before hitting zero, ”he writes in an article for the Alabama libertarian think tank, the Mises Institute.

                                                                                                                                                                                                                                                                                 

                                         

“The decline in market interest rates is only one factor among many others which explain why stock prices have gone up in recent years. But it is a significant factor, and it contributes to the build-up of a price bubble, ”he says.

To be sure, Polleit expects a very hard landing. “The severity of the crisis that must be expected to unfold at some point in the future – at the latest when all market interest rates have been pushed onto the zero line and investment returns have become negligible – is driven to ever-higher levels. This is something we do know from the Austrian business cycle theory. But it is certainly not enough to come up with a reliable forecast, ”he says.

The buzz

China’s exportsfell in November, the fourth straight decline.

French drugmaker Sanofi                                                                                                                                                                                                                      SNY,-0. 15%                                                                                                                                                          is going to buy biotech Synthorx                                                                                                                                                                                                                      THOR, 0. (%) **************                                                                                                                                                          for $ 2.5 billion, or $ a share – nearly triple the biotech’s $ 06 – a-share close on Friday. Merck                                                                                                                                                                                                                      MRK, ( 0.) ************************************************************************************%**********************,                                                                                                                                                           the U.S. drug giant, meanwhile said it’s buying ArQule                                                                                                                                                                                                                      ARQL,************** ( 1.) %********                                                                                                                                                          for $ 2.7 billion, or $ 15 a share – more than double Friday’s closing price for the biotech.

Diplomat Pharmacy shares                                                                                                                                                                                                                      ********************** (DPLO, 3. %********                                                                                                                                                          dropped as the company said it’s agreed to be bought out at a discount by UnitedHealth                                                                                                                                                                                                                      UNH,– 0. (%) ****************                                                                                                                                                          .

The stock price for Tullow Oil                                                                                                                                                                                                                      ******** (TLW,- (******************************************************************************************************%                                                                                                                                                          dived by nearly (%) ****************************** after the British oil and gas company cut its production outlook, which caused its chief executive to resign.

TheBank for International Settlementssaid the four leading US banks ’unwillingness to lend is what’s behind the spike in U.S. money-market rates that has prompted Federal Reserve intervention.

A New Zealand volcanic island erupted on Monday,killing five people and leaving many more missing.

The diary

Not much on the plate for Monday, but the Federal Reserve’s decision on whether to hold interest rates steady comes on Wednesday, and the latest consumer price index and retail sales reports are due this week as well. The Fed is expected to leave interest rates unchanged after three straight reductions. The European Central Bank also is expected to keep rates unchanged on Thursday when it meets for the first time since Christine Lagarde became president.

The markets

No news on the US-China trade front seems to be bad news, as stock futures                                                                                                                                                                                                                      ************************ (ES) ******************************************************************************************************,– 0 . 12%                                                                                                                                                          drifted lower ahead of the Dec. deadline for tariffs to be increased.

European stocks                                                                                                                                                                                                                      ******************** (SXXP,- 0. (%) *****************                                                                                                                                                           edged lower, while Asian stocks                                                                                                                                                                                                                      ************************ (ADOW,( 0.) ****************************************************************************************** (%) *****************                                                                                                                                                          were mostly higher following Friday’s rally on Wall Street.

Gold futures                                                                                                                                                                                                                      ************************** (GC) **************************************************************************************************, 0. (%) ************                                                                                                                                                           inched higher, and the yield on the 10 – year Treasury                                                                                                                                                                                                                       (*************************************** (TMUBMUSD) ************************************************************************************************ (Y,– 1. 59%                                                                                                                                                          fell by 1 basis point.

The tweet

) Innovative design for an extra-wide bun to accommodate two hot dogs simultaneously.

                                                                                                                                                                                                                                                                                                                                                               

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