Why stocks can keep soaring from record levels, regardless of how much more support the Fed offers, according to a Wall Street chief strategist
- David Zervos, the chief market strategist at
Jefferies, told CNBC on Monday the dollar's rise alongside the stock rallyindicates that a real economic recovery independent of the Fed is underway.
- The S&P 500 rose to a record intraday high on Monday, while the dollar index jumped as much as 0.8%, gaining against the euro, Swiss franc, and Japanese yen.
- "When you get a real recovery, the dollar starts to go up when stocks go up, as people start expecting higher real returns on capital in the economy," Zervos said.
- He added: "As opposed to the Fed being a driver, and driving real rates down, and the dollar weakening, and that pushing stocks up."
- Visit Business Insider's homepage for more stories.
While many investors have attributed the stock market's ongoing rally off multiyear pandemic lows to the Federal Reserve's low-interest-rate policy,
The chief market strategist explained his view, which is built around the dollar's movement relative to stocks. As major US indexes soared to record highs on Monday after positive vaccine news, the dollar also rose.
"When you get a real recovery, the dollar starts to go up when stocks go up, as people start expecting higher real returns on capital in the economy," Zervos said, "As opposed to the Fed being a driver, and driving real rates down, and the dollar weakening, and that pushing stocks up."Read more: Morgan Stanley says to load up on these 10 stocks featured on the firm's 'buy list,' which has dominated the broader market this year
The dollar index jumped up 0.8% on Monday, gaining against the euro, Swiss franc, and the Japanese yen. The gain marks an increase from a more than two-month low seen on Friday. Meanwhile, the S&P 500 rose as much as 3.9%, to an intraday record high of 3,645.99 as gold fell more than 4%."I think that's an important thing to watch today and very encouraging that we're really turning the corner," Zervos said about the relationship between stocks and the
Read more: Morgan Stanley's top cross-asset strategist pinpoints 3 areas of the market set to directly benefit from a successful COVID-19 vaccine — and explains why investors will be 'surprised' by the normalcy we achieve
- The decision not to have a kid is personal — but the social pressure against the choice is all-pervasive
- K'taka budget will focus on welfare of women & their development: CM
- Global consumer spending on apps to reach $270 billion annually by 2025
- Farmers announce series of Mahapanchayats in March
- Huawei aims to make electric cars later this year