What John Studzinski of PIMCO thinks of markets


Traders on the floor of the New York Stock Exchange.

Source: New York Stock Exchange.

LONDON – Market valuations are strong but we are “comfortable,” John Studzinski, vice chairman of wealth management firm Pimco told CNBC as they reflect expectations for an economic recovery in the second half of the year.

“There is no question that the current market reflects what people think is appropriate support for the fiscal and monetary shopping program,” Studzinski told CNBC’s “Squawk Box Europe” on Monday.

“The problem will be whether the fiscal support continues well beyond this year – the impact that could affect things like inflation or asset valuations. But I think we are convinced right now that valuations in the market are making that are strong, reflected The recovery certainly in the third and fourth quarters of this year in the United States, led by China of course worldwide. “

There have been some concerns that stock market valuations are currently too high and are being inflated by ongoing fiscal and monetary stimulus measures. Governments and central banks have been desperate to mitigate the effects of the coronavirus pandemic, which has disrupted world trade and closed businesses for long periods.

However, others believe the market rallies reflect optimism that the global economy will soon recover once restrictive measures are lifted and the pandemic brought under control, especially if coronavirus vaccines are introduced.

US stocks ended Friday mixed, although all three posted gains for the week. The Dow recorded its fifth positive week in six while the S&P recorded its third positive week in four. The Nasdaq was up 4.19% last week for its best week since November as stocks of big tech names drove the index to a new all-time high.

Even so, there has been an increase in coronavirus cases in recent months. This was expected due in part to the winter season, but has also been attributed to more virulent strains of the virus that have emerged in the UK and Europe, South America and South Africa.

Although Studzinski highlighted expectations of a recovery later this year, he acknowledged that “it will be an uneven recovery, it will be fraught with uncertainty … about mutations (in the coronavirus) and uneven distribution of vaccines around the world . “”

His comments come as the World Economic Forum kicks off this week. The annual event usually takes place in the Swiss Alpine town of Davos and brings political leaders and business leaders together to discuss global challenges and find solutions. This year, however, the event has become virtual. A central theme of the forum in 2021 is the fairer reconstruction of the world economy.

Studzinski said there has been a lack of global cooperation in fighting the pandemic, but US President Joe Biden could renew multilateralism.

– CNBC’s Pippa Stevens contributed to this story.