Focus: The resilient retail investor
Retail investors are more important than ever. Our Q3 12-country survey shows inflation leads the perceived risks, but investors are sitting tight — a big positive. Their focus is on equities and US, but crypto adoption is significant, and now more than commodities, currencies, and alternatives. Tech leads the sector preferences everywhere, but defensives and commodities are rising. New, younger, and female investors are increasingly changing the face of investing.
Closing the best month in nearly a year
Strong earnings drove a solid week for markets, and closed the best month in 11. S&P 500 saw its 57th all-time-high of the year. Tesla (TSLA) joined the $1trn market cap. club. But growth fears remain after US GDP rose only 2% and bond yields repriced upcoming rate hikes globally ahead of Fed tapering this week. Crypto a focus as SHIBA soared. See our presentation here.
‘TIM’ leads the earnings surprises
Halfway through US Q3 earnings and it’s been all about ‘TIM’. Resilience of Tech earnings, despite Apple (AAPL) and Amazon (AMZN) misses. The strength of International earnings. And revenues offsetting the cost-pressures on profit Margins. This will drive increases to low earnings forecasts, and more market upside.
What now after the rebound?
The inevitable question is what now? Investor worries are still high, from Fed tapering (Nov. 3) to debt ceiling (Dec. 3). But we see ‘stagflation’ risks as overdone, Fed tapering well-priced, and GDP to re-accelerate. Seasonality is now positive. Our 2022 S&P 500 target is +11%.
Looking again at China
It’s time to look again at China, with its tech and growth risks now well-priced. Valuations are at a 30% discount. Largest stocks are Alibaba (BABA), Tencent (0700.HK), Meituan (03690.HK). Themes @ChinaTech to @ChinaCar.
New Ethereum high. Crypto goes ‘woof-woof’.
Bitcoin (BTC) stable after recent all-time-high, whilst Ethereum (ETH) saw a new one, at $4,400. But focus was on meme-coin Shiba (SHIBxM) up over 100% on the week and now a top-10 coin. We are seeing increasing acceptance of bitcoin as an inflation-hedge, as CPI expectations soar and gold seeing lower demand.
Commodities stabilise. Sugar turn in limelight
Commodities stabilised after a blistering rally. Oil eased on rising inventories and upcoming Iran talks. Sugar stood out, up 25% this year, on stronger consumer demand and weather-driven supply issues in no.1 producer Brazil.
The week ahead: Tapering to finally arrive
1) Fed to finally announce tapering its $120bn/m bond purchases (Wed). Bank of England to likely raise rates for first time. 2) China and US PMI reports and US employment (Fri) rebound from last 194,000 jobs shocker. 3) OPEC meeting (Thur). No new supply to support prices. 4) US Q3 earnings shifts to healthcare, with vaccines Pfizer (PZE) and Moderna (MRNA) focus.
Our key views: Growth to re-accelerate
We see a positive outlook of 1) vaccine rollout and economic re-opening, and 2) still huge policy support, offsetting ‘stagflation’ and Fed risks. We see the ‘wall of worry’ giving way to a ‘Santa rally’. We like equities, commodities, crypto, and are cautious fixed income, and the USD.
Written by a team of experienced financial analysts at eToro.
This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation. Past performance is not an indication of future results.