One Big Reason Why Stocks May Continue Higher

Aug 23, 2021 | Economy, Investing

While the stock market has been a little more volatile lately, it’s still near an all-time high and it could go higher. Karl Eggerss explains on the Trey Ware Show.

Trey Ware:

Then where does it all go from here? and Karl Eggers join me every Monday at this time to talk about the overall economy and of course the stock market and how it all comes together. And Karl, I have some leading indicators, if you will, of now that we’re here with the Delta variant, that people are getting skittish about things such as travel, going out, working from home becoming a thing. There’s a story of Fox Business Today, remote work may last for two years. Some bosses are worried about that at this point. Where do you see all of that right now as we are dealing with yet another variant?

Karl Eggerss:

It’s interesting. That’s definitely spiked up and we’ve seen the deaths starts to spike up. The good news is we’re supposed to get an FDA approval for the Pfizer vaccine, could come as early as today. And what’s really interesting, Trey is that everybody’s been worried the last probably month or so that the Federal Reserve was going to come in and start taking their foot off the gas and what they call tapering, meaning they’re not going to buy as many bonds, they’re going to perhaps raise interest rates down the road and they weren’t going to support, as much, the economy as they have been in the past.

With the Delta variant spiking up, that could be a reason why stocks continue higher because it may take the Fed out of play and Jerome Powell is going to be speaking at Jackson Hole and he’s supposed to give a clue whether they’re going to do that or not. And he may say, look with the Delta variant, now we’ve got a little more economic uncertainty up in the air therefore we’re not doing anything for the foreseeable future and the market could just keep going higher because of low interest rates and support from the Federal Reserve. In some ways the Delta variant could keep the Fed on the back burner.

Trey Ware:

Meanwhile, domestic carriers now being pressed into service with the Afghanistan situation. They won’t be flying to Afghanistan, but they will be flying to various places in Europe and the Middle East to ferry those people to the United States. That includes American and Delta and United and their crews now bidding to go over there and here locally in the states, you’ve got Sun Country and Southwest and others who will be flying them to the various bases throughout the United States. What effect does that have on their ability to do everyday business?

Karl Eggerss:

It’s pretty crazy. I’ve been managing money for 25 years for clients and some things always surprise me about the markets and with everything going on right now, the market’s been a little volatile the last few weeks, but we’re just barely off of the all-time highs. And when you think about Delta and you think about what’s going on in Afghanistan, and you think about just the uncertainty and costs of things going up and the wild volatility we’ve seen in things like lumber prices, all these things going on and yet the market just continues to bounce. And I think because of just what I said earlier, there’s too much liquidity in the market, there’s too much money sloshing around and therefore it has to find a home, whether it’s in real estate, whether it’s in commodities, whether it’s in stocks, mutual funds, ETFs, bonds, whatever. It continues to find a way in there, so I’m pretty amazed that we have not had any meaningful correction at all during 2021.

And by the way, the stock market last week is now up over 100% from its lows if you go back to just over a year ago. Pretty amazing and a great lesson for investors that sometimes you’ve got to dive into the deep end when the new seems so bad and the stock market has already fallen, that’s the time from a long-term perspective to jump in. It’s been a good lesson.

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