Allen Sinai: The bullish market is back

A slightly more aggressive position by central banks and Chinese authorities to support economic growth will ensure the recovery of the US stock market to China. This is shared by the economist, veteran Allen Sinai. "Interest rates will remain fairly low until the level of inflation is also low - this is the surprising, low inflation everywhere - we have to be bullish." - says Sinai in an interview with Bloomberg. "The bulk market will return, he has never left." Last year's decline in stocks was actually driven by the fear of a recession. Investors have become too sensitive to the fact that the current economic expansion has been going on unusually long. The US economy in the middle of 2019 will record a record for the longest period of economic development. Sinai assumes that there is room for expansion.

China's attempt to lower taxes is a good move to boost economic growth and support consumption instead of fully relying on exports. Tax benefits work well wherever they are applied and always contribute to stimulating growth. Allen Sinai says he would definitely buy Chinese shares in the second half of this year.

As far as the US, investors seem to have experienced their worries about recession. The big threat to resume fears of recession will come if China reflects a sharp slowdown, so the decision on tax incentives is so important. A hypothetical decline of 2% in Chinese growth will hit the highly export-oriented countries like Germany, Japan and South Korea, which will also hurt US companies. And when they stop employing labor, consumption will suffer, and then we can worry about a recession. According to Sinai, at this point, what has been lost since last year will recover. Considering the possible economic maneuvers over the next six to 18 months, this will have a very positive impact on the markets.

Source: Bloomberg Finance L.P.

Graphs: Used with permission of Bloomberg Finance L.P.

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