Is there a better time to invest in finance than when inflation is rampant and the Fed promises to raise rates 11 times over the next two years?
That is not the view of Deuterium Capital, which anticipates a sharp slowdown in the economy.
The Deuterium Global Dynamic Allocation Fund is driven primarily by a macroeconomic model that predicts 28 macroeconomic variables in 27 countries. The model is then combined with individual models of central bank policy, market valuations, and price trends.
Macromodels are now predicting a sharp slowdown in US factory orders over the next few months, even before the Fed catches up with tightening. A hint of that slowdown came on Thursday when the US Department of Commerce reported the first decline in durable consumer goods orders in five months.
Vijay Modhavdia, Managing Director of Deuterium Capital Advisors, points out that the yield curve is flat rather than steep. “Historically, it’s the steeper curve that brings more benefits to the financial services sector,” he said. “I don’t believe in the market [Fed tightening] It’s not a policy mistake. “
The fund has already cut its financial exposure in half and will probably cut it to zero by April, says John Richardy, head of global asset allocation for deuterium.
The fund began cutting tech stocks in December and withdrew completely by February. This reflects rising interest rates and rising inflation rates that have changed consumption patterns and valuations.
“They are really well-valued and valued for high growth,” Ricciardi said of tech stocks.Technology-dominated Nasdaq Composite Index, + 1.93% down 9% this year
It is in the healthcare sector that the fund has increased its equity exposure. Ricciardi said the sector is very attractive with standard metrics. In addition, healthcare earnings run for so long that when bond yields begin to level off, they are “revaluated very quickly.” He added that energy stocks are very cheap.
More broadly, the fund doesn’t like stocks very much at this time, and 50% of the stocks are allocated. But it also doesn’t like bonds, so 48% chunks of bond funds are very short-lived. “It’s still too early for bonds,” Ricciardi said.
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Russia’s invasion of Ukraine has brought many memories of World War II. This is another memory.
According to data compiled by Bank of America, government bond returns are on track for the worst year since 1949, the year after the Marshall Plan was enacted. BofA strategists say the class of negative-yielding bonds has quietly disappeared from about $ 18 trillion to less than $ 2 trillion. A strategist, led by Michael Hardtnet, says the third largest bear bond market is underway.
Buzz
President Joe Biden headed for Poland. Poland has accepted millions of Ukrainians exiled in the war. The United States and the European Union said they have formed a task force to reduce Europe’s dependence on Russian fossil fuels, including taking steps to increase the amount of liquefied natural gas and reduce its demand for natural gas. ..
The European Council and the European Council have reached a tentative agreement on digital market laws for high-tech giants, including Google’s parent Alphabet GOOGL, + 2.38%, Apple AAPL, + 2.27%, Facebook’s parent Meta Platforms FB, + 2.86%. Reached. Separately, the United States and the European Union have reached a tentative agreement on data privacy.
Alibaba 9988, -5.62% BABA, -1.78% shares fell 6% in Hong Kong trade, JD.com 9618, -5.30% JD, -4.31% fell 5%. It was close to an agreement with China to allow audit inspections of US-listed Chinese companies.
Chinese electric car maker NioNIO (+ 0.50%) reports that Q4 sales lost more than expected as Q1 sales are expected to reach 30%. did.
The Economic Calendar includes a release on the University of Michigan’s Consumer Psychology and Pending Home Sales Gauges. Germany’s Ifo Business Climate Index plummeted in March after a record collapse of expectations.
market
According to Charlie Bilello, CEO of Compound Capital Advisors, the S & P 500 SPX, + 1.43%, closed more than 1% in 6 of the last 8 days of trading, but this has only happened twice in the last 80 years. not.
Equity futures ES00, + 0.29% NQ00, + 0.26% rose. Oil futures CL.1, down 2.31%.
Top ticker
This was the most active stock market ticker as of 6am eastern.
Ticker | Security name |
GME, + 0.99% | GameStop |
TSLA, + 1.48% | Tesla |
AMC, -2.46% | AMC Entertainment |
NIO, + 0.50% | Nio |
TLRY, + 21.85% | Tilray brand |
SNDL, + 23.10% | Sundial grower |
MULN, -3.54% | Mullen Automotive |
AAPL, + 2.27% | Apple |
NVDA, + 9.82% | Nvidia |
AMZN, + 0.15% | Amazon.com |
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The Great Barrier Reef was hit by the sixth bleaching phenomenon.
A 16-year-old woman from Oxford, England, has been accused of being one of the leaders of Lapsus $, a hacking group targeting Okta OKTA (-2.73%) and Microsoft MSFT (+ 1.54%). increase.
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