S&P, Nasdaq weak as manufacturing stokes Fed concerns (3 min read)
The Institute for Supply Management's (ISM) survey showed US manufacturing contracted in February and prices for raw materials increased last month. The ISM's latest data suggests that inflation remains stickier than anticipated and the Fed will likely stay in a hawkish stance. The S&P 500 and Nasdaq fell for a second straight day as a result, while Treasury yields jumped, with the 10-year notes above 4% for the first time since November. The market is also pricing in a higher chance of the Fed’s terminal rate somewhere close to 6%.
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Institutional Investors Are Using Reddit to Make Investment Decisions (3 min read)
A recent survey of 257 institutional investors shows that 58% of respondents have made investment decisions based on information they found on Reddit. Popular investor subreddits include r/investing and r/cryptocurrency, with over half of the respondents saying that they follow those forums. The survey also revealed that investors are turning their focus from traditional mediums to newsletters and podcasts, with 61% planning to increase their use of email newsletters for equity evaluation in the coming year.
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Apple Suppliers Are Racing to Exit China (4 min read)
Apple suppliers in China are likely to move their capacity out of the country faster than expected as tensions escalate between Beijing and Washington, according to one of Apple’s major Chinese suppliers, GoerTek. The company is investing $280 million in a new plant in Vietnam while considering expansion into India as US tech companies have added pressure for them to move location. Apple has not commented on its plans to diversify out of China, but behind the scenes, the majority of its key suppliers may be preparing to move to countries like India.
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Lowe’s offers soft sales outlook, warning of a ‘cautious consumer’ (4 min read)
Lowe's latest quarterly report shows that its sales fell short of analysts’ expectations. The company cited lower lumber prices as the reason for the drop in sales, which also hit Home Depot's results. For 2023, Lowe's expects total sales to be between $88 billion and $90 billion, lower than analysts’ projection of $90.48 billion, and same-store sales to be flat or down 2% compared to the previous year. Lowe's CEO said consumers are concerned about a potential recession, leading to discretionary spending pullbacks.
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Is ChatGPT a Wealth Manager Killer? (5 min read)
An investment publication asked ChatGPT to create an ETF portfolio as a wealth manager to see how it would perform. Backdating the portfolio, it underperformed major US benchmarks, but did compared well against other funds from discretionary portfolio managers. However, there are still a few flaws to ChatGPT if it were to replace wealth managers. It relies on historical performance data, tends to select sub-optimal ETFs, and still requires human input to moderate suggestions.
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Investors Searching for Safe Havens Flock to T-Bill ETFs (3 min read)
Investors seeking safety amid concerns that the Fed will keep interest rates higher are pouring money into short-term bond ETFs, which are attracting their highest inflows in years. ETFs focused on short-duration Treasuries such as iShares Short Treasury Bond ETF (SHV), SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), and iShares 0-3 Month Treasury Bond ETF (SGOV) saw inflows of almost $6 billion last week. Investors are also shying away from riskier fixed income assets such as junk bonds and investment-grade ETFs, despite their higher yields.
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That's it for today! You can reply to this email if you have any comments or feedback.
Thanks,
Thomas
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