Investors are looking for investment opportunities in Asian markets that exclude China. Fear of geopolitical risks surrounding China has created the demand for investment opportunities in countries deemed safer. Hudson Lockett and Leo Lewis report in the Financial Times: Global fund managers say they are rushing to meet client demand for new Asian investment products that exclude China, as investor appetite for the region’s largest economy is hit by slowing growth and mounting geopolitical risk. Fund managers said requests for “ex-China” products included the possibility of “Asian allies” … [Read more...]
Forbes Global 2000: The Bigger They Are, the Harder They Fall?
This from Forbes; "Every year since 2003, the Global 2000 has ranked the world’s publicly traded companies by sales, profit, assets and market value, with all four variables given equal weights. This year’s ranking looks far different from the list’s first installment 20 years ago, when Citigroup was No. 1 and AIG, Fannie Mae and IBM were among the 10 largest companies in America. None are in the top 20 today." These are the twenty-five largest publicly traded companies by sales, profit, assets, and market value [with all four variables given equal weights] in the world. JPMorgan … [Read more...]
ALLIGATOR MARKET: Calm Surface Hides Danger Below
The S&P 500 is a market cap-weighted index meaning the largest companies by market cap have the greatest impact on its direction. A handful of companies comprise a third of the index today. I explained this in-depth in my series, The Truth Behind the S&P 500. Caitlin McCabe explains in The Wall Street Journal that despite a rally in the overall index driven by a few star names, investors are worried about what lies beneath. She writes: Major indexes have overcome a series of challenges to power higher this year. But some investors are worried that this performance rests on just a … [Read more...]
Here Come the Adjustments to Earnings
Often when companies are experiencing troubling financial times, you'll see more adjustments to earnings. According to Ben Foldy in The Wall Street Journal, the use of that financial tool is increasing. He writes: Business slowed last year for Google’s parent, Alphabet GOOG -1.02%decrease; red down pointing triangle. The tech giant still beat earnings expectations in this year’s first quarter, in part because it said that its computer servers would last longer than expected. The shift reduced its depreciation expense by nearly $1 billion and helped push per-share earnings ahead of … [Read more...]
Is There Hope in Stocks?
In The Wall Street Journal, Jack Pitcher discusses the big outflows in stocks and the potential for a turnaround. He writes: Investors have a sour outlook on U.S. stocks. Contrarians say that is good news for the market. Turmoil in the banking sector has dragged fund managers’ enthusiasm for stocks to a 2023 ebb, according to Bank of America’s most recent monthly survey. The stress adds to worries including lingering inflation, higher interest rates and a slowing economy that have driven them to cut their stockholdings to their lowest levels relative to bonds since 2009. Institutions have … [Read more...]
Blank Check Company Boom Goes Bust
The Boom in blank check companies has turned into a bust. According to the WSJ, many blank check firms or SPACs, are down more 90% or more from their IPO price. The SPAC boom took hundreds of risky companies to the stock market. The next stop for many is bankruptcy court. Dozens of companies that merged with SPACs are running out of cash, joining at least 12 that have already gone bankrupt after combining with special-purpose acquisition companies. More than 100 companies, including electric-scooter firm Bird Global Inc., smart-sock baby-monitor maker Owlet Inc., and electric-car … [Read more...]
Global Liquidity Is Increasing Despite the Fed
Despite efforts by the Federal Reserve, European Central Bank, and the Bank of England to decrease global liquidity, it is increasing instead and driving investors into riskier assets. Joseph Adinolfi reports for MarketWatch: Gains for global equities have left many on Wall Street perplexed as stocks — especially high-risk growth names with little or no profits — have rebounded from last year’s punishing selloff, resisting both the pull of more attractive bond yields, and the threat of higher interest rates. But some Wall Street analysts say they’ve found an explanation that has little to … [Read more...]
Is That an Echo You Hear in the Market?
The recent rally in tech shares has given hope to investors who have made money in them for the last decade, but Ruchir Sharma suggests in the Financial Times that the rally is just an echo. He writes: The recent surge in tech stocks has true believers buzzing that the downturn of late last year is over and the boom of the past decade is back. But the opposite case is more likely. This surge had all the hallmarks of an echo bubble — a brief rebound of the kind that has punctuated the long decline of every major bubble in the past century. Over the past decade, driven by record-low interest … [Read more...]
Are Too Many People Betting on China?
Long positions on Chinese equities have become the "most crowded trade" amongst fund managers, according to a Bank of America survey. Chris Flood reports on the survey's findings in the Financial Times, writing: Global fund managers are becoming increasingly nervous about the durability of the rally in Chinese equities, with one in five of the view that it has become the market’s “most crowded trade”. Allocations by global fund managers to emerging market equities, including China, increased for a third straight month in February, according to a widely watched monthly Bank of America … [Read more...]
Do You Trust This Rally?
In the Financial Times, Robin Wigglesworth calls the recent market rally "trashy." He writes: Markets have started the year where they ended 2021, rallying on hopes that inflation has peaked, central banks are about to pivot and the global economy is doing a lot better than feared. This has lifted most boats, both in equities and fixed income. The MSCI All-Country World Index climbed 7 per cent in January, while the Bloomberg Global Aggregate bond index is up 3.3 per cent. In terms of breadth, this is the best start to a year since 2019, according to Deutsche Bank. And this is a proper … [Read more...]
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