Lack of market turbulence is the key factor preventing Congress from forging a stimulus deal, global strategy chief at world's largest investment firm says
BlackRock's Mike Pyletold Bloomberg that a "chicken and egg problem" could be to blame for why Congress hasn't reached a deal for a new stimulus.
- The problem:
Marketshave already priced in that a deal will be reached, and their lack of turbulence has gotten rid of any urgency Congress has to reach a deal.
- The global chief investment
strategistsaid he believes a stimulus package sized upward of $2 trillion will be released in September, but he also acknowledged the risk of no deal.
Congress has continued to stall a deal on the next stimulus bill, and investors are left questioning what it will take for the government to finally reach a conclusion.
BlackRock's Mike Pyle told Bloomberg on Friday that the
"Markets are looking through this fiscal turbulence to the end point of the deal, but the fact of the lack of market turbulence is in fact what's preventing a deal," Pyle said.
The global chief investment strategist said a downturn in stocks would "certainly be a forcing mechanism to drive a deal in Washington."
However, Pyle said he still believes that by the end of September a deal will be reached and a package with up to $2 trillion in aid will be released. But he also said that "risks are rising that no deal at all is a material risk out there."
The strategist added that "the stimulus on both the monetary side and fiscal side has been just a tremendously key ingredient in terms of describing why markets have responded the way they have." The S&P 500 is up almost 5% year-to-date and is up 46% from its March 23 low.
- White collar roles more at threat from AI
- Market cap of BSE-listed firms hits record high of Rs 331 lakh crore; just shy of entering $4-trillion club
- 10 Best honeymoon places near Delhi
- Samsung launches new smartphone with 50 MP camera in India
- Unveiling the sweet side of corn: 7 mouthwatering recipes