Is this a bubble already? What will the week bring?

Last week was associated not only with the publication of reports by subsequent Wall Street giants, but also with historic highs achieved by the main American stock indices. Although Friday's session may raise hopes for a correction of the recent increases, the question is being asked more and more often in conversations about the American stock exchange - is it already a bubble?

Indices are breaking records on Wall Street

However, it is worth starting a discussion of the situation on Wall Street with a broader look at the American economy. And this one is positively surprising. The US GDP data published last week turned out to be better than expected, resulting in another, sixth quarter of solid growth of the American economy. The latest PMI calculations also do not reflect the December pessimism of the ISM indices and record a strong rebound. So, after a period of slower growth (but not recession), are we entering a phase of stronger recovery?

Unfortunately, regional indicators paint a completely different picture, suggesting the worst situation - apart from the pandemic period - in the American economy in over a decade. The risk of a recession still cannot be ruled out, and February's publications and the further shape of the Fed's monetary policy will prove crucial.

The record highs in Wall Street indexes are still largely related to the "AI craze", which many believe is reminiscent of the situation from the dot.com bubble era. Are we going to see a repeat of history and deep declines? Just like at the beginning of the century, the US stock market was extremely overvalued in 2020-2021, which resulted from a temporary deterioration in company results accompanied by a massive printing by the Fed. However, when comparing the price/earnings ratio for S & P 500 – this one is noticeably lower than at the height of the dot-com bubble. However, as usual in the case of ratio analysis, details are key.

In today's webinar:

• Is this a bubble on Wall Street?
• What's next for the WSE?
• Is this already a crisis on the EV market?

About the host

Dr Przemysław Kwiecień - Chief economist X-Trade Brokers. Doctor of Economics at the University of Warsaw, graduate of the University of Warsaw and London Metropolitan University (MSc). Holder of the prestigious CFA certificate. He has been working for XTB since 2007, previously he gained experience as an advisor to the Minister of Finance, Mirosław Gronicki, and an economist at Bank Millennium. At XTB, he manages the Analysis Department.

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