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Interactive Brokers' Thomas Peterffy Wary of Stock Rally

Interactive Brokers' Thomas Peterffy Wary of Stock Rally
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By    |   Thursday, 04 June 2020 04:10 PM

Billionaire Thomas Peterffy recently warned that he doesn’t trust the stock-market rally amid widespread unemployment and business closures.

Peterffy told CNBC that the surge in stocks over the last two months “competely counter-intuitive” and said he was worried about a sharp pullback.

The founder and chairman of Interactive Brokers, one of the nation’s leading digital brokers, estimated that there will be $10 trillion in stimulus by the end of the year and said that he expected that to lead to inflation, CNBC explained.

“The situation will inevitably result in rising interest rates which will increase the cost for financing the debt government, and therefore we will have to print even more money. The market is going up because stocks are viewed as a safe haven for inflation,” Peterffy said.

 “My fear is that the market goes up and up and up without any fundamental basis, I’m afraid that one day it will implode,” Peterffy said.

However, not everyone is as pessimistic about the market's future. 

Newsmax Finance Insider Peter Morici is an economist and business professor at the University of Maryland, and a national columnist, contends that the stock rally could last all summer long.

"The market is hardly overvalued and barring any unexpected bad non-economic news, is likely headed higher," he recently wrote for Newsmax Finance.

"Current stock prices should be sustained by the expected pace of economic recovery and should go higher through the summer," he explained.

"The market is reflecting optimism that some solution can be reached regarding the coronavirus — vaccine, treatment or a combination of effective testing and social distancing- — to fully open the economy, less perhaps huge gatherings at stadiums and theaters," he said. "Put another way: Investors are optimistic there won't be an uncontrolled second wave that forces another lockdown."

Meanwhile, while all three major indexes were modestly lower Thursday, they have shown remarkable resilience since their late March plunge, with the Nasdaq, the S&P 500 and the Dow now within 2%, 9% and 12% of their respective record highs reached in February.

The Nasdaq 100 briefly breached its record closing high earlier in the session, Reuters said.

"From the S&P 500 Index peak on February 19 to the bear market lows March 23, stocks lost 33.9%," noted Ryan Detrick, senior market strategist for LPL Financial in Charlotte, North Carolina. "Now, 50 trading days later, stocks have gained 39.6%, for the largest 50-day rally since the S&P 500 moved to 500 stocks in 1957."

"This amount of strength we've seen in the last 50 days doesn't happen in bear markets, they take place at the beginning of extended bull markets," Detrick added.

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Billionaire Thomas Peterffy recently warned that he doesn’t trust the stock-market rally amid widespread unemployment and business closures.
interactive brokers, thomas peterffy, stock, rally
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2020-10-04
Thursday, 04 June 2020 04:10 PM
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