A lot of experts believe that the technology stocks were highly overvalued due to which we saw a massive sell off on Friday. How are you looking at where things are headed with respect to the tech stocks? Is valuation a big concern for you as well?
I think that is the most logical explanation for the big sell off we had on Friday. I think once the stocks that have risen this much look overvalued, they start to see some profit taking. That is essentially what we had and although the S&P and the Dow were also down, it was noticeable that it was the Dow and the S&P futures initially that started to rebound. So I still think you have got to assume that the tech looks a little overbought and we may see some further short term selling. But I do not think there is any reason to get particularly worried about this market as a whole.
We are seeing a mixed set of economic data every single day. The unemployment numbers coming in were much better than what the markets were really expecting. So how are you looking at the set of economic data that we are getting now and does it say anything about the road to recovery? Will the labour market also heal sooner rather than later?
Frankly I am stunned by the unemployment data and the macro data. The economy is recovering in the way that the data is suggesting. There are still lockdowns going on, there is still partial activity, a lot of people have been laid off and slowly coming back to the labour force. So I think we are going to eventually get a pullback again in prices within the economy because of all the money that has got pumped in. So I think gold looks a winner to me on a six to 12 month horizon whereas I think bond yields worldwide look way too low. There is a risk to the fixed income asset class which ultimately could give a risk to equities as well. But bonds I think look particularly overbought even more than equities. I think the dollar is still overpriced and will come down and break the 120 level against the Euro over the next month or so. I think equities will stabilise and will recover, but I am suspicious about the tech sector in the short term because it is just so expensive.
"Market" - Google News
September 06, 2020 at 07:02PM
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No particular reason to get worried about this stock market: Geoff Dennis - Economic Times
"Market" - Google News
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