Feb 11 (Reuters) – Geneva-based Pictet Group’s assetmanagement arm expects the S&P 500 to rise 10% from its currentlevels, with improving economic growth and easy monetary policyhelping to extend its rally. The S&P 500 has risen around 21% from its October lows, and closed on Wednesday at 3909.88 points.
“There is a risk of a melt up in a way, in the U.S.especially, and you don’t want to stand against it,” LucaPaolini, chief strategist at Pictet Asset Management, told theReuters Global Markets Forum on Wednesday.
But valuations were high at current levels, said Paolini,whose company manages more than $200 billion in assets. U.S. bond yields may rise in the next three-to-six monthsdue to an uptick in inflation expectations and possibly somepre-emptive Fed guidance on tapering its massive stimulusprogramme, Paolini said. He expected the 10-year treasury yield to end 2021 around1.25%, last seen in March 2020. It is currently at 1.14%. Paolini said global inflation levels are likely to remainlow this year, but accelerate in 2022 when the global economy isexpected to return to near-full potential. But there was still a risk of rising inflation, which shouldbe hedged with gold, some commodities and U.S. TIPS, or treasuryinflation protected securities, he added. Paolini called high-yielding corporate bonds an “incrediblymrisky” investment in the context of U.S. junk bonds fallingbelow 4% for the first time ever. To make a good return at this level (in junk bonds), hesaid, “you need to have … no rise in bond yields, no Fedtaper, decline in default rates, a strong economy, and I thinkit is quite unlikely that you’re going to get all of that.” Paolini said there was not a strong case for bitcoin pricesto rise in the long term, calling the meteoric rise ofcryptocurrencies a side effect of a long period of monetaryexpansion. “That’s a very speculative asset class, which I think is …incredibly dangerous.” Bitcoin powered to a record high earlier this week,nearing$50,000, following Elon Musk-led Tesla’s investment in the cryptocurrency that had investors believing it may become a main stream asset class.(This interview was conducted in the Reuters Global MarketsForum, a chat room hosted on the Refinitiv Messenger platform. Nick Note: Forget the Wall Street speak in the above report. The main takeaway is the FACT this stock market is about to go parabolic. And I do freaked out markets.And i especially do their demise. All i can tell the bulls is the condemned eat hearty!