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Hedge fund manager Eric Jackson believes a “rebound of everything” in the stock market is possible.
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Jackson compared the current economic environment to the 1982 bull market, when rates fell and the economy grew.
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Interest rate cuts, economic growth and shifts in the yield curve are all supportive of risk assets, according to Jackson.
The stock market's relentless rise could turn into a “rally of everything,” according to hedge fund manager Eric Jackson of EMJ Capital.
In an interview Tuesday, Jackson told CNBC that the current environment of economic growth and interest rates is reminiscent of the early days of the 1982 bull market, which is one of the best-performing stock market rally of all time.
The first 10 months of the 1982 bull market saw Nasdaq soars 107%, according to Jackson.
“The last time the yield curve inverted for this long and then finally broke out to the upside like we've seen recently, in a benign economic environment where rates are coming down, was August 1982,” Jackson said.
He added: “And when that happened, there was a stock market rally that lasted 10 months. The Nasdaq went up 107% over those 10 months. So I think we could be looking at a rally of sorts.”
That means, according to Jackson, that all stocks, from small-cap to large-cap tech stocks, will rise in tandem.
The combination of interest rate cuts by the Fed, resilient economic growth and Yield Curve Divestment Overall, the environment is favorable for risk assets, especially if inflation remains moderate.
When a similar scenario occurred in the summer of 1982, the S&P 500 Index kicked off a five-year bull market that generated a total return of 229% and annualized gains of 26.7%, the second-highest annualized gain on record, according to FirstTrust data.
The inversion of the 2- and 10-year US Treasury yield curve is significant because it has been in negative territory for about 26 months, the longest period in history.
The yield curve He finally turned positive earlier this month.
The yield curve that oscillates between positive and negative and positive is considered a reliable indicator of recession, But with the economy still in good shape, this time seems to be different, as it was in 1982.
Read the original article at Business information