Goldman Sachs turns bearish on stocks, while BlackRock says ‘shun most equities’ (2 min read)
Goldman Sachs downgraded equities to underweight just days after they revised the S&P 500 year-end forecast from 4,300 to 3,600. BlackRock, the world’s largest asset manager, also said they are avoiding most stocks as the markets haven’t priced in the damage needed to reduce inflation to the Fed’s target. Goldman and BlackRock have both said they prefer investment grade credit for the current market environment because the yields on it can compensate for the default risk and high quality credits are more recession protected than equities.
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S&P 500 ends Tuesday down after notching a fresh bear market low, Dow slips more than 100 points (1 min read)
The S&P 500 dropped further to 3,647.29 and at one point touched a new low for the year. The Dow also continued to slide and closed at 29,134.99. This puts the S&P 500 and the Dow in a bear market as they trade 24.3% and 21.2% respectively lower than its previous high and at their lowest since 2020. The Nasdaq went up by 0.25% but still 33% lower than its record high. Bond yields continue to go up with the 10-Year Treasury reaching another new peak. Experts are concerned that the Fed is raising rates too quickly and risk putting the economy into a recession.
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Is Apple Stock A 'Safe Haven' For Tech Investors? Here's What iPhone Demand Trends Show (2 min read)
Gene Munster of Loup Ventures, a frontier technology venture capital firm, referred to Apple as the safe haven for tech investors. Shares of Apple have held up relatively well compared to other major tech companies this year. The Nasdaq is down 31% year to date while Apple is only down 17%. Gene said Apple has been performing better because the company is fundamentally in a good place with its products. iPhone demand usually pulls back after the initial surge on new release, but looking at the demand over the last day in eight different countries shows it continues to increase.
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Cathie Wood’s new fund gives small investors access to the VC market for just $500 (1 min read)
Cathie Wood’s Ark Invest launched a new venture capital fund that only requires a minimum investment of $500. The new venture capital fund is actively managed and invests 70% into private firms and 30% into public companies that focus on technological innovations. It is available to investors on an investing app called Titan. Ark Invest’s flagship fund, the ARK Innovation ETF (ARKK), is managed by Cathie Wood and invests heavily in innovative tech companies. It was one of the best performing funds in 2020 and 2021, but has been underwater this year with rising rates affecting tech companies the most.
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China’s Rough Patch Won’t Last: KraneShares CIO (3 min read)
KraneShares is an ETF provider in the US that focuses on China’s markets. China focused ETFs have been underperforming this year, mostly driven by the Zero-Covid lockdowns in the country. However, KraneShares CIO said China still offers great investment opportunities for investors. There are a few positive news in the pipeline such as the potential relaxation of Covid restrictions, approval of new vaccines for Covid, and audits done on Chinese companies listed in the US. KraneShares’ largest ETF slid 30% this year but still managed to pull $1.7 billion in new assets, which suggests some investors agree with KraneShares' view on China.
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Gold: Should investors hold it in a bear market? Experts weigh in (3 min read)
Gold has always been labeled as an inflation hedge and seen as a safe haven. However, this article gathered thoughts from fund managers and strategists and the conclusion is holding gold may not be suitable in the current environment. The gold price now is 23% away from its peak in March and 10% lower year to date. The reason it hasn’t been performing well is because central banks around the world have been raising interest rates which made the yield on government bonds much more attractive than zero-yielding assets like gold. Strong dollar also discourages foreign investors from buying. Under these circumstances, experts generally do not recommend any allocation in gold. But you can have a small exposure, less than 10%, if you speculate the value of the dollar reversing or have a bull thesis that gold will appreciate. Holding physical gold brings up the concern of safety and storage so it’s not recommended by experts. Gaining exposure through an ETF is a viable option but pay attention to the spread when you trade.
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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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