Focus: Rise of the female investor
The rise of female investors is under-appreciated, alongside the rise of both more self-directed and younger investors. More women are now investing, with 26% new to investing, and are controlling more wealth. They also invest differently, for the longer term, with lower risk, and different priorities, according to our global retail investor survey. This rise has broad implications for everything from diversification, to ESG and financial education.
‘Stagflation’ versus strong earnings
Nervous markets faced cross-currents. With high and sticky 5.4% US inflation and more growth concerns (‘stagflation’), and the Fed set to taper soon. But with a strong Q3 earnings start, as the ‘big 4’ US banks beat estimates by 24%, and Chinese export growth rebounded 28%. US bond yields fell back, helping the tech sector, but was a headwind to financials. Chinese ADRs continued to stabilise after heavy losses this year. See our global markets presentation here.
Resilient GDP growth and higher bond yields
The IMF trimmed its global GDP outlook, but growth rates remain more than twice the ten year average, supporting strong earnings. This growth, along with nearing Fed tapering, argues for higher 10-year bond yields. The copper/gold ratio supports this. This favours an investment rotation to so-called Value; cyclical sectors such as financials (XLF) and energy (XLE).
Energy ‘everything’ rally, and holiday retail
We see ‘higher-for-longer’ energy prices as structural under-investment supports fossil fuel prices, but also incentives a dramatic renewables investment catch up. This ‘everything’ rally helps both @OilWorldWide and @RenewableEnergy. The strength of the consumer is a key market support. Rising wages, asset prices, and ‘excess’ savings offset inflation and likely drive a strong holiday season, benefiting those from consumer ETF’s like XLY, to @FashionPortfolio.
Bitcoin back over $60,000. Polkadot focus
Bitcoin (BTC) back over $60,000 and closing on all-time-high as ETF launch and ‘taproot’ upgrade nears. Polkadot (DOT) saw strong gains, setting a November 11 date for first hotly anticipated parachain auction. Solana (SOL) was added to the eToro platform, becoming the 32nd listed coin.
Broadening commodity rally
The rally is broadening from the much-focused energy price surge. Commodities as diverse as uranium, zinc, palladium, and lumber all rallied strongly last week. The asset class is enjoying a ‘sweet spot’ of both strong demand and increasingly tight supply. The CRB commodity index is now 150% from covid lows.
The week ahead: Earnings season accelerates
1) US earnings accelerate with Netflix (NFLX) and Tesla (TSLA) among those to report Q3, as banks started strong last week. 2) Purchasing manager indices in US, EU, UK, and Japan a timely global growth snapshot. 3) UK inflation in focus as Bank of England prepares to be the first major central bank to raise interest rates.
Our key views: Climbing the ‘wall of worry’
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.