Economist: investors who are addicted to drugs in the US stock market may be disappointed

SMM News: July 1 news, TS Lombard said that before fully understanding the economic losses caused by the Xinguan epidemic, investors should remain bearish on US stocks. The company warned investors that they overestimated the rapid recovery in U. S. corporate earnings.

Charles Dumas (Charles Dumas), chief economist of TS Lombard, said on Tuesday, "the market is basically weighing what will not happen in 2021: in 2021, S & P corporate earnings will not only be higher than in 2019, but also return to the trend of long-term growth, which is highly unlikely. According to our forecast, the relationship between the economy and corporate income is likely to reduce the level of earnings in 2021 by about 20% compared with 2019. "

"basically what we are going to say is that the market is addicted to drugs in terms of corporate earnings," Dumas said. Moreover, in terms of price-to-earnings ratios, the situation is similar to the peak of the tech bubble in 1999-2000, even relative to the optimistic view of earnings. "

In a report released in mid-June, Mr Dumas warned that investors would be "disillusioned" with hopes of a rebound in earnings next year.

Throughout the new crown epidemic, the performance of the US stock market seems to have been out of touch with the economy. The s & p has rebounded nearly 32% since hitting an annual low on march 23.

Dumas, who claims to have warned of the 2008-2009 financial crisis, said the current level of stock valuations was not justified by the actual situation. "for the current price level to be reasonable, there must be an extreme upward trend, such as progress in medicine, that is, the new crown vaccine may be promoted this year, but this is almost impossible."

"in essence, the market is moving forward in accordance with these ideas. Without these, earnings will be disappointing and the market will decline again. " Dumas added.

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