Jonathan Levin: The shares challenge the pessimists and can continue to rise

The Standard & Poor’s 500 index returned to record record levels, and the shock of customs announced in April, and the tension with Iran, and the gradual and ongoing increase in requests for unemployment subsidies in the United States. The pessimistic sounds that see that traders ignore the tomb risks around them, and it is not an exaggeration that believes it does. But on the other hand, the feeling of anxiety is often present when the indicators have recorded new levels. We remember what happened in August 2020, when the Kofid-19 was at its peak. The government’s data showed that the unemployment rate exceeded 10%, but the average price complications for the expected profits at the highest level in 20 years, or more than 99% of all the values ​​registered during that period. A state of optimism prevailed over the possibility of developing a vaccine, but clinical trials were still ongoing, while increasing injuries during the summer in the “Shams Belt” areas (southern and southern western states in America) led to the spread of the hope for a rapid solution to the pandemic interference. At the same time, accusing individual investors, a general belief that individual traders who do not have experience and adequate knowledge (stupid money) are what leads the wave of stocks. But what was the result in reality? Even after the summit was registered on August 18, the index achieved an additional return of 11.5% in 2020 and 28.7% in 2021. This is not a bad achievement at all. There were also many skeptics when the index reached new standard levels in early 2024. Fear of China and the Middle East were the fears associated with China, casting a shadow over global growth expectations, while tension in the midste reached their peak after Hamas attacks were on Israel in October 2023. However, ‘Standard & Poor’s 500’ closed on a new record on January 19 and rose to 23%during the rest of the year 2024. What can this time go in the positive direction so that the markets can challenge the pessimists again? The scenario for interest reductions explained the positive scenarios is to gradually lower interest rates. If it is proven that the impact of customs peppers on consumer prices was less than expected, the Federal Reserve could start lower interest rates by September, which could open the door for a new loan wave for companies and consumers. Keep in mind that the current interest rate range ranges between 4.25% and 4.5%, while 11 out of the 19 members of the open market committee see that the long -term neutral interest rate is 3% or less. In other words, the Federal Reserve has a great space to reduce interest if the data allows. It is true that part of the interest reduction has already taken into account in the markets, but traders can underestimate and possible movements by the manufacturers of monetary policy depth. The lowering of interest rates will boost housing, cars and labor markets that are having problems. Hundreds of thousands of potential buyers can eventually decide to enter the real estate market, while sales of new cars can easily be more than 16 million units. The markets await confidence and businesses can eventually end the freezer with long term. Of course, many of these developments will depend on the path of treasury bonds for ten years and mortgage prices, but these rates are expected to fall to suit the expectations of the Central Bank (Federal Reserve) if the markets gain the confidence that the risks and fluctuations are falling. To make it clear, this positive scenario can only be achieved if inflation rates are moderate. President Donald Trump has called on the reduction of interest rates and criticized the Federal Reserve President Jerome Powell for taking on the approach to peek and anticipation. Trump is studying the announcement of Khalifa Powell, The Wall Street Journal reported on Wednesday that President Donald Trump studied the early announcement to appoint an alternative to Powell for the purpose of reducing his influence on the markets during the last eleven months of his term. Trump’s campaign against the independence of the Federal Reserve does not serve the economy in any way. If investors believe that the Federal Reserve is reducing for the wrong reasons, it is certain that mortgage returns will rise for ten years and mortgage prices will rise instead of falling. To continue to think of optimism or stay optimistic, there is another attractive possibility, namely that the bet of artificial intelligence can surprise us with unexpected profits again. The success of “Invidia” is the source of astonishment, the most prominent reason US stocks have surprised the skeptics over the past year – whether in terms of returns or from the real financial performance perspective of companies, is that “Invidia” has significantly exceeded profit expectations. As for the shares of other businesses such as “Microsoft” and “Meta”, the potential flow of income from artificial intelligence is still theoretical expectations. Can this financial momentum be achieved soon? It’s hard to confirm. Despite investing billions of dollars to develop artificial intelligence, huge businesses in the Silicon Valley were eager not to exaggerate promises to investors regarding the schedule to achieve these profits. Zuckerberg explains the plans of Meta during a quarterly meeting with investors and analysts in January, said Mark Zuckerberg, CEO of Meta, said in 2024 he saw that he had introduced some products of artificial intelligence, and that this year would focus on improving tools, increased use figures and sustainable function. He added, “but that doesn’t mean it will make a big contribution to our business during this year,” he added. He explained that “the improvements will be the use of artificial intelligence techniques in advertising, recommendations, content and similar matters.” In all cases, investors will continue to extrapolate future indicators. If other artificial intelligence businesses can one day be surprised by the incredible performance or results in the same way that ‘invitation’ has done between 2022 and 2024, the entire market can be valued at less than its real value, and we can see the actual production advantage that contributes to the payment of the entire economy. (I don’t exclude the possibility that it all ends with disappointment, but I just try to make the possible positive scenario clear). Supporting factors at the level of sectors away from important economic factors, there are some factors or opportunities within specific sectors that can achieve positive results. The Federal Reserve announced on Wednesday that it will reduce the percentage of supplementary financial leverage (a rule that obliges banks to keep an extra security rate of their money against the loans and investments they do), giving banks greater flexibility in managing their public budgets. The banking sector analysts also show optimism on the opportunities for new mergers under the supervision of Michelle Bowman, the new deputy of the Federal Reserve chairman responsible for supervising supervision. The shares of the most important healthcare companies were one of the most withdrawal in the “Standard & Poor’s 500” index this year, despite their indirect advantage of the new revolutionary medicine to treat obesity, scientifically known as “GLP-1”, developed by Eli Lilly & Co, as recent concerns and prices may be a wide range. It is normal to feel anxious when you see that the “Standard & Poor’s 500” index is rising to the highest levels, in the light of very clear risks that can threaten the markets later. Customs are at their highest levels, even with all the postponement or a minor decrease in procedures, the actual customs lights are still at the highest levels in nearly eight decades. Although the markets await the results of major commercial investigations and the approaching date of “mutual customs duties”, it is possible that customs tariffs will rise again, and the economy may not be able to absorb their consequences completely until they terminate businesses from prior fees. Continuous geopolitical threats and as far as political geography is concerned, Iranian supreme leader Ayatollah Ali Khamenei delivered a provocative speech on Thursday, to a reminder that the threat in the East is the first he refused, but it did not completely disappear. This week’s report revealed that unemployment subsidies have reached its highest level since November 2021, reflecting the continuation of the sluggish rate of employment in a frustration way, despite the limited discharge. The stock market is a risky place, and the dangers will always threaten its course. However, there is a margin for the possibility that things will go in the right direction, and from now on we can come back to discover that it was not a completely inappropriate period to buy a few shares.