Economy seeing “pent up demand” but stock rally is “crazy stuff”

Markets were mixed on Wednesday.

The S&P 500 fell 0.4 percent and the Nikkei 225 fell 0.5 percent but the STOXX Europe 600 rose 0.7 percent.

A resurgence in COVID-19 cases in the US and China kept investor sentiment down but James Meyer, chief investment officer at Tower Bridge Advisors, said that “the general consensus is that the economy won’t completely shut down again”.

John Cunnison, chief investment officer at Baker Boyer, said that fresh economic data points to “an economy that’s creating all sorts of pent up demand”.

“If we get on the other side of this virus, there are reasons for being fairly bullish,” he said.

In contrast, Jeremy Grantham, co-founder and chief investment strategist at GMO, called the current rally a bubble.

“This is really the real McCoy, this is crazy stuff,” said Grantham.

He suggested that the level of exposure investors should have to US equities now “is zero and less than zero might not be a bad idea if you can stand that”.