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6 reasons why stocks are 'divorced from reality,' according to BofA

6 reasons why stocks are 'divorced from reality,' according to BofA
Lucas Jackson/Reuters



Bank of America chief investment strategist Michael Hartnett outlined six reasons why the stock market continues to rally amid dismal economic data in a note Thursday.




One reason could be "fake markets," according to Hartnett.




"Government and corporate bond prices have been fixed by central banks...why would anyone expect stocks to price rationally?" he wrote in the note Thursday.




While investors are still positioned bearish, Hartnett said policy makers are causing "immoral hazard" forcing investors to buy, banks to lend, and corporate zombies to issue debt this year.




Read more on Business Insider.




Since the most recent market lows, Bank of America has been fielding a number of questions about stock performance, such as "who is going bust?", "when will we retest the lows?", and "why is the stock market so divorced from reality?"
For the last question, there are six reasons (each bolded below) that chief investment strategist Michael Hartnett outlined in a Thursday note. Economic data has continued to deteriorate — this week, initial jobless claims showed that in nine weeks, nearly 39 million Americans have filed for unemployment insurance.
Still, risk assets have rallied. The S&P 500 and the Dow Jones industrial average have each gained more than 30% from March lows, while the Nasdaq erased all losses for 2020 in early May.
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