Original title: double bet on reflation trading! Us stocks are expected to maintain a bull market

Judging from the weak non-farm data, the economy is not strong enough for the Fed to scale back its stimulus measures, so "home" concept technology stocks will continue to rise. Any effort to revive the economy is likely to fuel inflation, meaning banks and airlines will benefit.

This is the logic behind the indestructibility of US stocks in May 2021, nearly 14 months after the outbreak led to the collapse of the market and the loss of 8 million jobs in the US labor market. At JPMorgan ChaseStrategists believe that as long as Federal Reserve Chairman Colin Powell and President Joe Biden preside over the overall recovery, there is no need to doubt the stock market.

Anyone who wants to reconfirm need only review the market reaction after Friday's non-farm payrolls data was much lower than expected. Small-cap stocks soared as Biden used the figure as proof that the United States needed its trillion-dollar financial aid package. NASDAQThe 100 index also rose as investors saw the jobs report as a sign that the Fed would not scale back its stimulus policy in the short term and would keep interest rates low, supporting sky-high valuations of technology stocks.

Ryan Detrick, chief market strategist at LPL Financial, said: "knowing that the Fed will still keep interest rates low for a longer period of time will not hurt the stock market."

Neel Kashkari, president of the Minneapolis Fed, expressed a similar view, with Friday's jobs report confirming the Fed's new results-based approach-policy makers will not make any policy adjustments based on economic forecasts, but based on actual data.

After the data are released

S & P 500

Every sector of the index rose, with technology stocks vying for the top spot with cyclical energy and industrial stocks. The Russell 1000 value stock index and the growth stock index were neck and neck on Friday, closing up 0.8%, having outperformed value stocks in the previous four days.

The Dow and S & P 500 closed at record highs, and the weekly line closed higher, as the NASDAQ regained its losses. On Friday (may 7), the Dow closed up 0.66%, the s & p 500 rose 0.74%, and the Nasdaq rose 0.88%.

Meanwhile, JPMorgan strategists such as, Marko Kolanovic are doubling their bets on reflation trading. Fund managers profiting from the deflationary trend need to change direction quickly, or their portfolios will face an "inflationary shock". Kolanovic advises clients to increase their holdings of cyclical assets and value assets. He advised investors to reduce their cash and credit holdings.To buy commodities and stocks.

"We expect inflation to rise sharply this year, which the market may be slow to recognize and unprepared for," Kolanovic and colleagues wrote in a report on Friday. "the combination of a strong global economic recovery and huge bottleneck price pressures will keep inflation on an upward trend, while most central banks remain fairly loose and watch inflation rise."

For all the speculation about inflation, the latest quarterly reports also show that it has come. Faced with rising prices for everything from wood and oil to artificial and computer chips, chief executives have cut costs and raised prices.

Revenue for S & P 500 companies grew five times faster than sales in the first quarter, according to the data. Based on actual results and analysts' estimates, profits could soar to an all-time high of $48.21 a share. That is 13% higher than the record high of $42.79 set in 2018.

The next test for the stock market is Wednesday's inflation data, which will show the biggest annual increase in price pressures since 2011. But given that Federal Reserve Chairman Colin Powell said the Fed will need to see a "series" of strong data before changing its stance, it is likely that April's salary levels hit them hard and kept them on the sidelines.

Ross Mayfield (Ross Mayfield), an investment strategist at Robert W. Baird&Co., said: "this defends the Fed and allows them to avoid sharp discussions or consider raising interest rates. This supports the stock market to a large extent. "