“Let's stop criticizing our banks!”

More than ten years after the subprime mortgage crisis, all the light has not been shed, and yet the idea of ​​the guilt of the banks has taken hold firmly in people's minds. They are even blamed for the double fault, since after playing with fire and triggering the crisis, they allegedly asked for help from the States. This unanimous condemnation, the result of incomplete analyzes, is a heavy component of the bank bashing that has raged since then and unfortunately works against our interests. We are indeed at a critical moment when Europe, faced with the domination of American finance and the dollar, must develop its own financial capacities. The development of a strong pan-European financial sector is therefore essential if we particularly want to foster the emergence of future European gafas. 
If it is vain to hope for the complete disappearance of this bank bashing and, one might say, of the bashing market whose roots plunge both in history and in ignor…

Why does the stock market laugh when the economy cries?

 It has once again become the favorite curve of Donald Trump and his Vice President Mike Pence: Wall Street broke historic records this week as the US and global economies are in tatters in the midst of the COVID-19 pandemic.

Why does the stock market laugh when the economy cries?

"This is the great comeback of the United States! Mike Pence tweeted on Tuesday, citing the all-time high on the S&P 500 Index, which includes the 500 largest listed companies in the United States. The Nasdaq has been setting records for weeks.

Far from the self-righteousness of the leaders, why, while every day still brings its share of recessions, double-digit unemployment rate and social plans, does the American stock market smile so much?

 The traditional maxim "the stock market is not the economy", used during stock market surges and dips, resonates in people's minds as such a gap seems to highlight a form of indecency in the financial markets.

"It is indecent at a moment T because there is a misunderstanding about this disconnection. But this reflects the operation of investors who place bets over the long term, ”analyzes Christopher Dembik, head of economic research at Saxo Bank.

This long term looks brighter for US companies: Profit forecasts for companies making up the S&P 500 index have been revised upwards for 2020 after falling sharply, according to Factset, and could be further again in 2021.



Technology companies

Many of them have already posted higher than expected figures in the second quarter, marked by containment.

But in the era of teleworking, streaming and excessive social media, the thinning is not radiating everywhere: it is the international technology stars who are catching all the light, leaving crumbs in other disaster-stricken sectors.

Apple for example presented a net profit of 11 billion dollars between April and June. The price of its share has doubled since March and the firm at the apple on Wednesday exceeded the 2000 billion dollars in value on the stock market, unheard of on Wall Street.

Logically, the distortion is widening: technology companies represented nearly 20% of the S&P 500 index in 2016, they now weigh a third, calculates Nicholas Colas, co-founder of the American company DataTrek Research.

"Whether these tech companies are at their peak is the multi-billion question," said Richard Hunter of Interactive Investor. 



It is permissible to doubt it. Because these companies have not only passed between the drops of the crisis, but investors are tempted to continue betting on them, protected by the benevolent umbrella of the American Central Bank, with its rates close to 0% and loan programs for help businesses and communities.

They "remain convinced that the Fed is never going to let a worst-case scenario happen," said Patrick O’Hare, chief analyst for Briefing.

Risky assets

In its wake, Congress passed a massive $ 2.2 trillion aid plan in March, supplemented in April by another nearly $ 500 billion plan. A new one is under discussion.

This will encourage investors to bet on increasingly risky assets in order to obtain a return.

Elsewhere in the world, no financial center can compete with Wall Street. "All the surpluses are systematically channeled to go to the American market in times of crisis, they do not go to Asia or Europe", explains Christopher Dembik.



Two indices stand out, however: the Nikkei in Japan, very technological, and the German Dax, both approaching their historic highs. Europe is also "lagging behind" because of the sharp rise in the euro, which has reached a two-year high in recent days against the US dollar and therefore handicaps European exporting companies, underlines Daniel Larrouturou, manager. actions for Dôm Finance.

Will Wall Street end up making Americans smile? A Fed study shows that just over half of them own stocks, and those stocks are mostly concentrated in the hands of the richest 10%.

 

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