After the strange year of 2020, there is now a new run with new opportunities: Will we have another Christmas rally this year? Stephen Bell, economist at BMO Global Asset Management, thinks so.
“The stock markets will continue to do well and head towards the Christmas rally,” he says in his comment.fuel for santa claus raceHe notes that economic growth is improving and expectations of business results are improving, which is positive.
“The economic recovery continues around the world, despite all the supply problems and rising energy costs. The US is leading the way, the GDP of the Atlanta Federal Reserve, an indicator that includes all economic activity, rose sharply. Strong economic growth means business results better. “
Supply chain problems begin to recede
In addition, there are signs that supply chain problems are beginning to recede. “Exports from Korea and China are increasing again. It seems that traffic congestion for cargo ships waiting for the US West Coast is gradually decreasing in the coming weeks, which means that they can offload their cargo at the ports.”
According to Bell, this will give companies the opportunity to finally replenish and build up stocks. This is important, because these stocks are now at “dangerously low” levels.
savings and investments
Another reason for optimism is that consumers are still savings due to Covid-19, and that investments are increasing. Bell acknowledges that interest rates will rise in the US and UK, but “this is going slowly,” the economist said.
In addition, he concludes, “equities are usually not interested in rising interest rates as long as the economy is growing.” Plenty of room for the Christmas crowd.
Read also: “Terms remain favorable for equity investors”