Not so long ago the US economy was among the main outsiders in terms of economic recovery after the pandemic. However, the situation is changing drastically. Week by week, the country releases strong economic results. A huge stimulus bill helps maintain purchasing power. It is hardly surprising that many economists have upwardly revised their forecasts for the US economy. On top of that, leading investment banks and companies, whose headquarters are located on Wall Street, also turned bullish.
The volume of long positions opened by hedge funds has almost reached multi-year highs. Optimism in the markets is really contagious. Many reputable agencies and analysts have shrugged off their fears and joined the ranks of those who believe in the bright future of the US economy. The main reason for euphoria was a stimulus package proposed by the government. In early April, US President Joe Biden signed into law a record $1.9 trillion stimulus bill to support citizens, banks, and companies.
Another reason for the bullish sentiment was the January collapse of hedge funds when they feverishly opened short positions on GameStop shares, the computer game store chain. This took place after Reddit users decided to somehow punish investment banks and jointly bought back GameStop shares. As a result, banks and hedge funds urgently closed short positions and bought back stocks to compensate for possible losses on issued options. Analysts believe that this event has determined the behavior of investors for the near future.
