The US economy could be entering a golden era of growth, however the coronavirus pandemic and higher prices still presented risks, CNN reported.
US Economy Poised For Golden Era Of Growth
According to JP Morgan Chase CEO Jamie Dimon who wrote a letter to shareholders this week, it was possible that the US economy would see a Goldilocks moment — sustained and fast growth, inflation that increased gently ( not too much though) and interest rates that rose (not too much though).
Dimon’s optimism was based on the observation of the International Monetary Fund that said the $1.9 trillion stimulus package of President Joe Biden would boost the US economy’s growth to 6.4% this year. It would be the fastest annual growth rate that the United States economy had clocked since 1984 under President Ronald Reagan.
The Institute for Supply Management, this week published its monthly report on the US services sector, which accounted for 88% of America’s gross domestic product. The services index of the group for March vaulted to 63.7, the highest level ever recorded.
According to Paul Ashworth, chief US economist at Capital Economics, there was clearly a big surge in activity underway.
The data had helped in keeping US stocks around record highs, but an undercurrent of anxiety remained, according to commentators. CNN Business’ Fear & Greed Index showed that market sentiment to be in “greedy” territory, up as against neutral reading of a week ago. However, investors continued to exercise caution.
Tobias Levkovich, chief U.S. equity strategist at Citigroup warned in a note to clients that the fear of missing out appeared to be dominating.
He added there was a 1999 perspective being noted with pressure for participation of fund managers in rising share prices even if there was a recognition of it ending badly, referring to the dot-com bubble that burst with the start of the new millennium.
He worried that investors were discounting the risk of the Federal Reserve changing course and withdrawing some stimulus measures as also the impact of plausible tax increases that the Biden administration had been proposing.
Lekovich noted all developments were being perceived as positive news.
According to commentators he was not the only one calling for caution.
Dr Anthony Fauci, the top US infectious disease expert on Wednesday told CNN’s Anderson Cooper that new Covid-19 case numbers had plateaued at a level that was disturbingly high and that yet another spike in infections could hit the US.
He added it was almost a race between vaccinating people and the surge that could increase.
The pace of vaccination in the US was picking up and a little over 33% of the population, or over 109 million people, had received at least one dose. However it needed to be accelerated now that that the virus variant that had been first identified in the United Kingdom and which was known to be highly transmissible and said to be more deadly was most common strain in the country.
Meanwhile, CNN reported that the biggest shareholder of Tencent had sold $14.7 billion worth of shares in the Chinese social media and gaming giant. The move would create a massive war chest for investing in other ventures, according to commentators.
Prosus sold a 2% stake in Tencent according to the Chinese tech giant’s Hong Kong Stock Exchange filing on Thursday. Prosus is a spin-off by South African internet investment and media firm Naspers.
Tencent, which reported a strong financial year during the pandemic, had been Nasper’s most successful investment, by far, according to Laura He of CNN Business.
Data provider Refinitiv said the deal was the biggest block trade ever. According to commentors, block trades typically involved direct arrangements between institutional investors outside the stock market.