According to Dubravko Lakos-Bujas from JPMorgan the stock markets could regain strength and get back to breaking record highs by as early as Q1 of 2021 if the US can put a stop to the rapidly spreading coronavirus pandemic.
The stomach-churning pace at which the stock markets are plunging is often hard to look at. From the severe oil price war, US-China trade war to the now crippling coronavirus outburst, the markets have stood up to all the hardships.
From historic highs to rock bottoms, if one studies the index carefully, it can help in determining the damage the coronavirus outbreak is inflicting on financial markets across the globe. So, unless we have a crystal ball, it would be practically impossible to forecast how long the bear markets will last.
Will stock markets recuperate by next year?
However, a chief equity strategist from JPMorgan US told CNBC on Friday that the US could potentially turn the tables on their side if they are able to contain the spread effectively. According to Lakos-Bujas, if the US can curb the spread and quickly get hold of the fiscal stimulus in its efforts to put a stop to the imminent economic blow, the S&P 500 will witness all-time highs by early 2021.
The S&P 500 could very well peak 3400 points by the first half of 2021 if things get under control. This would not only surpass the all-time high of 3386, achieved on 19th February 2020 but also be forty-seven percent (47%) higher than the overall market average, Lakos-Bujas ascertained his clients.
It all started on the 12th March 2020, when the prolonged bull run met an abrupt end with the coronavirus crisis unfurling on every TV screen in the US. Since then, the bears haven’t let go of their grasp over the stock markets. There has been a non-stop selling pressure ever since the outbreak hit the US cities, Lakos-Bujas added, which also implies that there is a room for recovery here.
The US government’s fiscal policy could play a critical role
However, for the predicted outcome to play out, the US government must pass the extensive fiscal impetus promptly. According to the proposed stimulus package worth a whopping one trillion US dollars, the citizens of the US are entitled to receive a monthly payout of two thousand US dollars ($2000) per adult and one thousand US dollars ($1000) per kid.
Unless this comprehensive fiscal policy is undertaken, stock markets wouldn’t have a chance for recovery as it could result in the widespread surrendering of equities, Lakos-Bujas explained.
Will Bitcoin follow?
Meanwhile, experts claim that this argument could also be applied to alternative investment assets such as Bitcoin. Although the overall market sentiments could be gloomy and ominous right now, thanks to the rising unemployment rate and economic slowdown, however, the forward-thinking Bitcoin investors who purchased the drop when it was below four thousand US dollars ($4000) were, after all, rewarded with significant returns when the Bitcoin price reached above six thousand US dollars ($6000).
All in all, should the future scenarios play out as per Lakos-Bujas’ predictions, there will, no doubt, be an intense buying pressure, resulting in increased prices in stock markets as well as digital assets markets.