Moneycontrol
Last Updated : Jul 11, 2016 08:38 PM IST | Source: CNBC-TV18

'Bull market similar to 1980s, see big money flows in US assets'

Paul Schatz, President of Heritage Capital says that there can be a currency collapse around the world in 2017-18, which will lead to mass money flowing into US assets – first in treasury bills, followed by an enormous large cap rally in the US.


This rally is really the result of pent-up selling in the market after the Brexit and with that out of the way, one bit of uncertainty is gone, says Paul Schatz, President of Heritage Capital.


Commenting on the soaring rally in Wall Street, Schartz told CNBC-TV18 that equity remains the 'the only game in town’ and questions that after Japan and Europe having negative rates along with the US Fed on hold, where else someone is going to put their money?


He said that this bull market is similar to 1980s, where there was mass flows into the US dollar.

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Schartz opines that there can be a currency collapse around the world in 2017-18, which will lead to mass money flowing in US assets – first in treasury bills, followed by an enormous large cap rally in the US.


He sees this bull market to end in late 2017 or in the beginning of 2018.


The S&P 500 set a record high on Monday after a stunning monthly jobs report last week boosted confidence in the US economy.


The gains were broad-based, with seven of the 10 major S&P sectors higher. Financials led the gainers with a 0.62 percent rise. JPMorgan was up 1.3 percent and provided the biggest boost to the S&P.


Citigroup, Bank of America and Wells Fargo were also trading higher.


"Reaching a new high may see money moving from the sidelines of safety trades, like Treasury bonds and gold, back into the equity markets," said Robert Pavlik, chief market strategist at Boston Private Wealth.


"The emphasis of the markets will be on how fast and how long the S&P remains above the record today."


Much of how the indexes perform in the next few weeks will depend of the quality of second-quarter corporate earnings, which kick off with Alcoa reporting results after markets close on Monday.


Earnings of S&P 500 components are expected to fall 3.9 percent compared with the year-earlier quarter, according to Thomson Reuters data. First-quarter earnings had fallen 5 percent.


Investors will also watch out for comments from company executives, especially those of big banks later this week, on the impact of Britain's vote to leave the European Union.


While upbeat data in recent weeks has pointed to a recovery in the US economy, the US Federal Reserve is expected to remain cautious on raising interest rates as it gauges the fallout of the Brexit vote.


At 9:33 am ET, the Dow Jones Industrial Average was up 74.27 points, or 0.41 percent, at 18,221.01, the S&P 500 was up 7.11 points, or 0.33 percent, at 2,137.01 and the Nasdaq Composite index was up 25.42 points, or 0.51 percent, at 4,982.18.


Treasury yields hovered around record lows, indicating a weak appetite for riskier assets.


Oil prices fell on signs that US shale drillers have adapted to lower prices and renewed indications of economic weakness in Asia where refiners are trimming crude runs.


Traders are not betting on significant chances of a rate hike anytime this year, according to CME Group's FedWatch tool. The Fed next meets on July 26-27.


Kansas Fed President Esther George is scheduled to speak on the US economy at a conference in Missouri at 10:00 am ET.


Shares of electric car maker Tesla rose 1.3 percent to USD 219.60 after CEO Elon Musk on Sunday tweeted his intention to soon publish part two of his "top secret Tesla masterplan".


Alliance Data was up 2.5 percent after activist investor ValueAct Capital reported a 6.8 percent stake.


Twitter fell 1.9 percent to USD 17.71 after SunTrust Robinson lowered its rating to "neutral" from "buy".


Advancing issues outnumbered decliners on the NYSE by 2,100 to 526. On the Nasdaq, 1,698 issues rose and 538 fell.

The S&P 500 index showed 52 new 52-week highs and no new lows, while the Nasdaq recorded 80 new highs and one new low.

With inputs from Reuters.

First Published on Jul 11, 2016 08:37 pm
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