Joseph William Monteiro’s Post

GLOBAL INVESTORS SEEKING SHELTER IN EUROPEAN AND EMERGING MARKETS - Aiming to shield themselves from turbulence in U.S. stocks and bonds - April was a washout - Inflation remains stubborn - U.S. Government debt is likely to hobble any recovery KEY TAKEAWAYS: "Investors scour the globe for shelter as Wall Street shakes." "Global investors are eyeing European and emerging market assets to protect themselves from further turbulence in U.S. stocks and bonds as stubborn inflation causes bets on the timing of Federal Reserve interest rate cuts to be revised." "April was a washout on Wall Street, with the S&P 500 share index (.SPX), opens new tab and U.S. Treasuries posting their biggest monthly loss since September." "Diversification will be a lot more important going forward," she said, adding that LGIM was not expecting superior returns from global stocks but now preferred European shares to those from the United States." "The "Magnificent Seven" group of tech stocks, supercharged by an artificial intelligence boom, contributed over 60% of the S&P's total return last year." "But as sticky inflation drives expectations that the Fed will hold U.S. borrowing costs at a 23-year high of 5.25%-5.5% or even hike again, the cost of betting on long-term gains from big tech's hefty AI investments versus holding cash is rising." "A sharp fall in Facebook owner Meta's (META.O), opens new tab shares in April highlighted the risks of hoping for stellar tech earnings in an environment where rates stay high. Until recently, markets had expected the Fed to start cutting in June." "We are increasing exposure to Europe," said Luca Paolini, chief strategist at Pictet Asset Management. "The general macro outlook is supportive for a cheap, cyclical value market." "Ross Yarrow, managing director for U.S. equities at investment bank Baird, said global investors were mostly negative on towards U.S. stocks on valuation grounds." "But superior revenue growth also helped Wall Street outpace Europe in 12 of the past 16 years, he said." "According to Barclays strategists, Treasuries may not rally even when the Fed does cut because of high and rising U.S. government debt." #globalinvesting #investing #inflation #unitedstates #wallstreet #europe #emergingmarkets #investingstrategies #investingstrategy #usgovernment #deficit #deficitspending #inflation #economics #usdeficit #usdebt #governmentdebt #europeanstocks #bonds #bondmarket #marketturbulence #stockportfolio #portfolio #financialplanning #financialplanners #cfo #cfp #reuters

#markets #forecasts #US #Europe European equities are grappling with their worst year of underperformance against U.S. stocks since 1976, as the Stoxx Europe 600 lags significantly behind the S&P 500. Most investors are shunning Europe due to political crises, such as the turmoil in France, while pouring money into U.S. stocks amid bets on President-elect Donald Trump's "America First" policies. According to EPFR data, U.S. stock funds have attracted $441 billion in new inflows so far this year, while European funds have suffered $56 billion in outflows. This divergence has created an "extreme disconnect" between bullish sentiment on U.S. assets and bearishness on global markets. Investor positioning reflects this divide. Citi reports that U.S. equities remain largely bullish, with Wall Street’s rally showing little sign of slowing. U.S. equity markets are now among the top three most extended globally, as investors continue to build long positions. However, the gradual accumulation of these positions has kept average profit levels modest. In contrast, European markets, particularly the Eurostoxx, remain net short, with 100% of long positions currently at a loss. The positioning gap between U.S. and European markets continues to widen. However, a growing number of analysts believe this trend could reverse next year. BofA strategists, led by Sebastian Raedler, have taken a contrarian stance by upgrading European stocks to overweight, citing potential fiscal spending and an improving macroeconomic outlook in the Eurozone. They argue that a ceasefire in Ukraine and easing energy prices could further relieve regional pressures, offsetting challenges like French political instability. Meanwhile, the U.S. is expected to face headwinds from a stronger dollar and declining real disposable income. Separately, another BofA team, including Michael Hartnett, acknowledged that their view is "most unconventional," but they forecast that bonds, gold, and global equities will outperform U.S. assets in 2025. Factors that could drive non-U.S. performance include aggressive fiscal easing by China and anticipated ECB interest rate cuts in response to Trump's proposed trade tariffs. From a valuation perspective, European equities appear undervalued compared to their global peers, offering potential upside if expectations are exceeded. Invesco notes that Europe’s minimal growth over the past 15 years has set a low bar, leaving room for a rebound as inventories bottom out and real wage growth supports consumer spending. The region’s sensitivity to interest rates and the potential for more accommodative monetary policy could further bolster GDP growth. Additionally, structural investments in areas such as energy security, defense, and digitalization could provide a long-term foundation for moderate inflation and normalized interest rates, improving the outlook for value-focused stock pickers.

KD Capital Markets Weekly Update (11/18 - 11/22/2024) 📢 Global Economic Outlook: 1. Japan’s $1.41 trillion stimulus plan is expected to boost GDP by 9%. 2. China’s banking system faces rising risks due to bad debt and property market struggles. 3. The U.S. blacklists nearly 30 Chinese companies amid geopolitical tensions. 4. BlackRock ETFs see $10 billion in inflows, signaling investor preference for safe assets. 📈KD Perspective: Japan’s stimulus offers opportunities in technology and construction sectors via related equities or ETFs. Investors should remain cautious about China’s financial risks and focus on defensive or high-dividend assets. 📢 Japan Economic Stimulus Plan Japan's economic growth could drive increased demand for Taiwanese products, particularly in the electronics and machinery sectors. 📈 KD Perspective: It is worth monitoring whether Japan's stock market rises due to the stimulus policy; however, attention should be paid to the potential long-term risks associated with Japan's increasing public debt. 📢 GB200 Industry Outlook NVIDIA's Q3 results surpassed market expectations, reinforcing a long-term bullish outlook despite potential short-term pullbacks. The gradual rollout of GB200 in Taiwan from November positions related concept stocks for growth starting in Q4 and extending into the next year. 1. GB200 Supply Chain Wafer Foundry: 2330 ; ODM Suppliers: 2317、2382、3231、6669、2356 ; Thermal 2. Solution Providers: 3017、3324 ; Sliding Rails: 2059 ; BBU Suppliers: 6781, 3211 2. Other Related Concept Stocks Robotics: 2359 ; CCL: 2383 ; CoWoS: 2486 ; PCB: 3037、2368 📈 KD Perspective: GB200 shipments are set to ramp up in Q4 2024, with mass production starting in Q1 2025. Related concept stocks, particularly in Taiwan's supply chain, stand to benefit. After recent short-term highs, a pullback could offer better entry points for gradual accumulation. 📢 U.S. Stock Market Overview 1. Snowflake (SNOW): "AI data cloud company," Snowflake reported outstanding third-quarter results, with revenue hitting $942 million, surpassing the $897 million forecast, and a 55% growth in contract value. 2. Google (GOOGL): Google faces scrutiny and a potential breakup, with a proposal to sell Chrome to end its control over a key search gateway and boost competition among search engines. 3. Nvidia (NVDA): Nvidia's Q3 revenue reached $35.1 billion, up 17% quarter-over-quarter and 93.6% year-over-year, exceeding expectations by $2 billion. EPS also surpassed forecasts at $0.81 vs. $0.75. 4. Vertiv (VRT): Vertiv issued a positive 2025 outlook, exceeding analyst expectations with higher EPS and sales growth forecasts. It also benefits from Nvidia's order shifts due to Supermicro's issues. 📈 KD Perspective: Nvidia's impressive quarterly earnings make its recent stock pullback an attractive opportunity for potential investors. Google is facing scrutiny and a potential breakup, making it a stock to watch for possible entry opportunities.

Global equity markets have recently retraced some of their year-to-date gains, while government bond yields have fallen (i.e., higher bond prices), as investors gravitated towards the safety of high-quality bonds. This market action can be attributed to a mixed earnings season, where results from several highly valued mega-cap tech companies underwhelmed relative to elevated expectations, and conflicting economic signals from the U.S. amidst persistently high borrowing costs. Below, we address what has driven this latest round of market unease.

"Th[e] 1995 Fed pivot and soft landing playbook can serve as an important guide to rising European stock markets today. Sure, Europe’s economic growth is lacklustre compared to the United States, but this was also the case in the mid-1990s. Germany and Italy registered close to zero GDP growth soon after the pivot. [ ] European stocks’ valuations are being boosted in much the same way as they were in 1995, as hopes for future rate cuts, improving economic data and generally rising corporate confidence fuel markets. MSCI Europe’s forward price/earnings ratio has increased from just under 12 times at October 2023’s market lows to about 13.5 times today. By the end of 1995, MSCI Europe’s stock valuations had increased to nearly 15 times and continued heading higher, despite only two Fed rate cuts in that first post-Fed pivot year. Similarly, Europe’s aggregate M&A deal volumes are rising sharply year-on-year from cycle lows, just as they did in 1995. Even the recent tactical pullback in European equities coincided almost exactly with one that occurred at this phase of the rally in 1995."

An end-of-week analysis of what’s happening in global financial markets from the perspective of our Investment Management Team (as of Nov. 14, 2024) ⤵ 1️⃣ Victory Lap "The S&P 500 Index surged to new all-time highs following the Donald Trump’s U.S. presidential victory last week, with small caps and financials leading the charge higher.  Historically, the country’s bellwether index has generated a median return of 4% between the day of the U.S. election and the end of the calendar year, yet the perceived shift towards a more business-friendly administration in Washington could result in even greater returns over that same stretch this time around." - Auritro Kundu, Portfolio Manager 2️⃣ Tough on Trade "There’s strong support for tough trade policies among U.S. voters we’ve talked to since the election and the threat of higher tariffs has surprising support. Economists think this is a bad idea, but the public disagrees. Moreover, few voters we spoke with believe the U.S. economy is in good shape. The public’s fear of persistent inflation — especially wage inflation — is the dominant economic issue, by far." - Greg Valliere, Chief U.S. Policy Strategist 3️⃣ Spaced Out "A recent report from the World Economic Forum says the global space economy could be worth US$1.8 trillion by 2035, up from US$630 billion last year. As such, we see related investment opportunities emerging, particularly if new constellations of low-earth orbit satellites result in a growing number of new applications across various industries." - Lazar Naiker, Senior Analyst

Global investors have shifted their economic expectations significantly following Donald Trump’s recent election victory, anticipating both stronger global growth and rising inflation, according to Bank of America’s (BofA) monthly fund manager survey. The survey indicates that investors are positioning their portfolios in response to Trump’s win, with increased allocations to U.S. stocks and small-cap companies likely to benefit from a revitalized U.S. economy. https://bit.ly/3YQvYCo

We believe that the Fed remains set to begin easing policy this year, and that more evidence of rising adoption and monetization of artificial intelligence looks set to emerge in the coming weeks. US corporate earnings growth should also broaden out beyond the Magnificent 7, underpinning our 7–9% growth forecast for the first quarter. In the Middle East, we stick to our base case that attacks and tension will persist in the months ahead, but that they should not lead to a major direct confrontation between the US and Israel on the one side, and Iran on the other (barring any unintentional miscalculations). But with implied equity volatility remaining higher—the VIX Index, or Wall Street's "fear gauge," stands at 18.2, below the year-to-date high of 19.3 but above the 13 reading at the beginning of 2024—investors seeking steady portfolio returns and reliable income may need to consider diversifying their investment approach to add durable income and navigate choppier times: Active and diversified exposure to fixed income. We continue to favor quality bonds in our global portfolios given the prospect of lower interest rates and elevated starting yields. In addition, investors should consider an active and diversified approach to managing their risk exposure in order to capture opportunities across the fixed income spectrum, including select opportunities in US high yield, emerging market debt, and securitized credit. We also believe sustainable fixed income offers an appealing alternative to high-quality bonds. Structured stock investments with yield-generating strategy. For investors looking to add more cautious exposure to equity markets, we recommend yield-generating structured investments. Strategies that combine a bond with the sale of a put option—the right but not obligation to sell an asset at a predefined price—may present a more defensive way to buy an asset, especially if investors expect the asset to deliver moderate returns in the near term. The coupon payments from this type of structured strategy can provide returns or a buffer against price corrections. Generally, higher volatility can lead to higher coupon payments. This approach may allow investors to buy a particular asset, but at a lower level than today's market price. And investors looking for steady cash flow may also like the predictability of a so-called "reverse convertible" strategy's income stream. However, investors must be mindful of risks like changes in interest rates, implied volatility, and the ability of the underlying issuer to repay the investor's capital. So, despite the uncertainty across macroeconomics, geopolitics, and corporate fundamentals, we believe investors have ways to add durable yield to their portfolios.

I just found this post https://lnkd.in/d4zWwjxt from Eddie Donmez with the top Wall Street mid-year investment outlooks (great work collecting all of these), but sadly I don't have so much time to read all of them. On the other hand, why not try sending some of them to an AI and asking it to summarize 10 important topics? Given 4 reports: 1. Vanguard 2. Charles Schwab 3. Morgan Stanley 4. Fidelity Investments Here you can find the summary: --- FROM HERE, IT'S AI OUTPUT --- Here are ten key points from the mid-year reports of leading investment firms: 𝗣𝗲𝗿𝘀𝗶𝘀𝘁𝗲𝗻𝘁 𝗛𝗶𝗴𝗵𝗲𝗿 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗥𝗮𝘁𝗲𝘀: Higher interest rates are expected to persist, significantly impacting borrowing costs, saving incentives, and fiscal policies globally. [in 1. and 2.] 𝗣𝗼𝘀𝗶𝘁𝗶𝘃𝗲 𝗘𝗾𝘂𝗶𝘁𝘆 𝗠𝗮𝗿𝗸𝗲𝘁 𝗢𝘂𝘁𝗹𝗼𝗼𝗸: Equities are expected to perform well in the second half of 2024, driven by steady economic growth and potential interest rate cuts. European and Japanese stocks offer attractive valuations with expected returns up to 18%. [in 3. and 4.] 𝗔𝘁𝘁𝗿𝗮𝗰𝘁𝗶𝘃𝗲 𝗙𝗶𝘅𝗲𝗱 𝗜𝗻𝗰𝗼𝗺𝗲: Investment-grade corporate bonds, mortgage-backed securities, and leveraged loans are highlighted for their higher yields compared to government bonds, benefitting from anticipated rate cuts. [in 3.] 𝗚𝗲𝗼𝗽𝗼𝗹𝗶𝘁𝗶𝗰𝗮𝗹 𝗥𝗶𝘀𝗸𝘀: Tensions such as U.S.-China relations and upcoming U.S. elections pose significant risks to global markets. Diversification is recommended to mitigate these risks. [in 2. and 4.] 𝗚𝗹𝗼𝗯𝗮𝗹 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗚𝗿𝗼𝘄𝘁𝗵: The global economy has shown strength in the first half of 2024, with forecasts for continued growth into 2025, driven by resilient corporate earnings and steady consumer demand. [in 1. and 2.] 𝗠𝗼𝗱𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗜𝗻𝗳𝗹𝗮𝘁𝗶𝗼𝗻: Inflation is expected to continue moderating. This trend, along with potential central bank rate cuts, could create a more stable economic environment in the latter half of the year. [in 2. and 4.] 𝗨.𝗦. 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗥𝗲𝘀𝗶𝗹𝗶𝗲𝗻𝗰𝗲: The U.S. economy has been notably resilient, with strong job growth and corporate earnings. This has delayed expected rate cuts by the Federal Reserve, though some cuts are still anticipated later in the year. [in 2. and 4.] 𝗔𝗹𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝘃𝗲 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁𝘀: Hedge funds, private equity, and real estate remain attractive, offering resilience and potential high returns in a volatile market environment. [in 3.] 𝗣𝗿𝗼𝗺𝗶𝘀𝗶𝗻𝗴 𝗦𝗲𝗰𝘁𝗼𝗿𝘀: Technology, healthcare, and industrials are expected to perform well. Small- and mid-cap growth stocks in the U.S. and select Asian equities are also seen as promising. [in 4.] 𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝗶𝗰𝗮𝗹 𝗔𝗱𝘃𝗮𝗻𝗰𝗲𝗺𝗲𝗻𝘁𝘀: Advances in AI are expected to enhance productivity and economic growth, presenting new investment opportunities in tech-related sectors. [in 2. and 4.] --- END OF AI OUTPUT ---

🌍 Tracing the Roots: A Historical Journey Through European Indexes 📊 The European financial landscape is rich with history and innovation, and its major stock indexes are no exception. Here's a look back at how some of Europe's most prominent indexes came to be: FTSE 100 (1984, UK) 🇬🇧: Launched on January 3, 1984, the FTSE 100 emerged as a benchmark for the UK equity market, representing the 100 largest companies on the London Stock Exchange. It continues to be a vital indicator of the economic pulse in the UK. DAX 30 (1988, Germany) 🇩🇪: Established on July 1, 1988, the DAX 30 includes 30 major German companies on the Frankfurt Stock Exchange. It's a key barometer of Germany's economic health and a focal point for global investors. CAC 40 (1987, France) 🇫🇷: Created on December 31, 1987, the CAC 40 comprises 40 leading stocks on Euronext Paris. It serves as a primary gauge for the French stock market, reflecting the dynamic nature of France's economy. EURO STOXX 50 (1998, Eurozone) 🌐: Launched on February 26, 1998, the EURO STOXX 50 captures the performance of 50 blue-chip companies across 11 Eurozone countries, offering a snapshot of the region's economic leaders. IBEX 35 (1992, Spain) 🇪🇸: Debuting on January 14, 1992, the IBEX 35 features 35 of the most liquid stocks on the Madrid Stock Exchange, providing insights into Spain's vibrant market. These indexes not only reflect the economic narratives of their respective regions but also offer valuable insights and opportunities for investors worldwide. Understanding their history helps us appreciate the evolution of European markets and the role they play in today's global economy.