Stocks reflect the early days of one of the biggest bull markets in history, hedge fund manager says

• Hedge fund manager Eric Jackson believes a “recovery of everything” may be happening in the stock market.

• Jackson compared the current economic environment to the bull market of 1982, when rates fell and the economy grew.

• Interest rate cuts, economic growth and yield curve shifts favor risk assets, according to Jackson.

The stock market’s relentless rally could turn into a “catch-all recovery,” according to hedge fund manager Eric Jackson of EMJ Capital.

In an interview on Tuesday, Jackson told CNBC that the current environment of economic growth and interest rates is reminiscent of the early days of the 1982 bull market, which is one of the most successful stock market advances of all time.

In the first 10 months of the 1982 bull market, the Nasdaq rose 107 percent, according to Jackson.

“The last time the yield curve was inverted for this long and then finally broke upward, as we’ve seen recently, in a favorable economic environment where rates are falling, was in August 1982,” Jackson said.

He added: “And when that happened, there was a stock market rally that lasted for 10 months. The Nasdaq rose 107% in those 10 months. So I think we could be facing an all-out rally.”

That means, according to Jackson, everything from small-cap tech stocks to mega-cap tech stocks will grow together.

The combination of Fed rate cuts, resilient economic growth and no yield curve inversion is generally a favorable environment for risk assets, especially if inflation remains low.

When a similar scenario occurred in the summer of 1982, the S&P 500 launched a five-year bull market that delivered a total return of 229% and annualized gains of 26.7%, the second-highest annual gain on record. according to data from FirstTrust.

The non-inversion of the 2-year and 10-year US Treasury yield curve is significant as it has been in negative territory for about 26 months, the longest on record.

The yield curve finally turned positive earlier this month.

The yield curve alternating between positive and negative and positive is considered a reliable recession indicator, but with the economy still in good shape, this time seems to be different, as it was in 1982.

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