Why is the stock market up if the economy is getting crushed? With so many people out of work, how is it that the market is soaring, by some estimates, to its highest point ever?

Spencer Rascoff, executive chairman at dot.LA, spoke with senior tech-focused executives at investment firm Evercore to discuss what's behind the trends. John Scuorzo, Evercore's senior managing director joined Zaheed Kajani, senior managing director at Evercore to break down Wall Street's perspective on what's happening in the current tech capital markets.

The two say there are several factors contributing to Wall Street's optimism. First, the enormous stimulus coming from governments.

"I think that the biggest and probably the most important driver of this is just the massive stimulus that all the central banks globally have put into the economy," Kajani said. "There is somewhere where this money has to go. If you've got more money chasing fewer assets, that drives price up."

Copy of dot.LA Strategy Session: Wall Street's Perspective

Also contributing, the two said, are several other factors, including low interest rates, international investment, and optimism for what cutbacks and introduction of new technology will mean for many companies' future profits.

"People generally have an allocation towards equities and bonds," said Kajani. "And because the rates are so low, your bonds just don't give you the same return. And that's driven even more capital into the equity markets."

That's been true overseas as well, where investors are looking for safe places to put their money, and the U.S. market appears like a good bet.

"If you have capital in Europe, or in Asia, which other market do you feel is the most stable in the safest market?" Kajani said, "And so, many people who follow the market closely often see the futures up every morning when you wake up. A lot of that money is coming from overseas capital that's entering the U.S. market."

Companies who have made cuts and had to incorporate new technology into their workflow as part after the lockdowns, may also be finding themselves becoming more productive as a result, even with a (temporary or permanent) reduction in staff.

"I think a lot of companies have realized they're being as productive with fewer people and using technology," Kajani said. "I think that actually may increase profits."

All that together, along with optimism that a vaccine will eventually solve many of the problems the world is currently facing, is helping to create the frenzy that the world is seeing on Wall Street, the two said.

Scourzo said that Evercore's projections point in that direction as well.

"Our data suggests that we exited the recession in May, and we're back to an expansionary period, though the cut was deep," he said. "We think we think we're moving in the right direction with the economy only, we estimate, 35% reopened,"

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About the Speakers

Senior Managing Director of Evercore John Scuorzo

Zaheed Kajani, Senior Managing Director of Evercore

Spencer Rascoff, Executive Chairman of dot.LA