Bull markets normally signify optimism about stock prices and the nation’s economic outlook, but many investors today are running scared, according to a speaker at the Insured Retirement Institute’s IRI Marketing Forum, held on Wednesday in New York City.
The presenter, Trish Regan, an anchor of Bloomberg Television, explored during the one-hour talk legislative priorities that will impact the insured retirement market, prospects for the global economy and implications of the nation’s growing debt burden.
“Stock prices are destined to go higher in the near-term, driven in part by the Federal Reserve’s easy monetary policy,” Regan said. “But many investors don’t want to believe that stock prices will continue to rise. This is the most hated bull market in recent history.”
The reasons for investor skepticism, Regan added, are varied. Many are concerned about economies globally, most notably Europe, where several countries—Spain, Greece, Italy and, most recently, France—are sinking back into recession.
There is concern, too, about whether emerging markets can sustain their current growth rates. China, which now boasts the world’s second largest economy, faces the prospects of rising wages, slowing growth and the bursting of a real estate bubble.
On the domestic front, Regan said, investors are alarmed about the rising budget deficits and gridlock in Washington, as a highly polarized Congress seems unable to make the tough political decisions needed to reign in run-away spending.
“Until we get the debt issue resolved, investors won’t have more confidence in the U.S. economy,” said Regan. “The big question now is how long can we continue to run deficits, given national debt that now exceeds $16 trillion and a public entitlement system that is ballooning out of control.”
The national debt on a per capita basis, she added, has risen from $13,000 in 2008 to $42,000 currently. And since 2010, the federal debt has risen to $16 trillion from $9 trillion. Given a current gross domestic product of $15 trillion, the debt-to-GDP ratio now stands at 93 percent; and, Regan said, it’s estimated to rise to 135 percent of GDP by 2030.