Displaying items by tag: equity

Global equity funds attracted $8.71 billion in net inflows, reversing the previous week’s $4.4 billion outflow as risk appetite returned. Investor optimism was fueled by solid U.S. economic data, progress on trade deals with Japan and the EU, and upbeat early earnings reports, including record profits from TSMC and a forecast bump from PepsiCo. 

European equity funds led the charge with $8.79 billion in inflows, their best showing in 11 weeks, while U.S. equity outflows slowed significantly. Sector-wise, tech rebounded with $1.61 billion in inflows, while financials and industrials each brought in over $1 billion. 

Global bond funds continued their 14-week inflow streak, adding $17.94 billion, led by short-term, euro-denominated, and high-yield bond categories. Commodity funds saw a resurgence too, with gold and precious metals funds notching $1.9 billion in net inflows their strongest showing in over a month.

Finsum: If optimism over trade deals and AI-driven earnings continues to build, we could be on the verge of a sustained equity rally that pulls even hesitant U.S. investors off the sidelines.

As investors brace for the effects of Donald Trump's second term, Scott Sperling, Co-CEO of Thomas H. Lee Partners, offers a fresh outlook on the private equity scene. Mark Rowan, CEO of Apollo Global Management, hints at pursuing strategic acquisitions to bolster the firm's growth, while maintaining a strong focus on its existing operations. 

Sperling foresees an uptick in economic expansion and reduced operational costs under the new administration, largely due to regulatory reforms. He reflects on the past few years, noting that stringent regulations have made deals like mergers and acquisitions more complex and costly.

 Sperling also highlights the recent pressure on major tech companies, as government scrutiny and antitrust actions could stifle innovation in key sectors. Nonetheless, he remains hopeful that private equity will thrive, despite the challenges posed by shifting political dynamics

Finsum: We anticipate both regulatory and policy changes to be friendlier to P/E in the new administration. 

Value investing has fallen out of favor in a market dominated by FAANG stocks, but there are strong indicators suggesting a revival is possible. Currently, value stocks are priced significantly lower than their growth counterparts, trading at only a fraction of the cost. 

Even though they’ve lagged behind, the core business metrics, such as earnings, have remained competitive with growth stocks, implying the downturn isn't tied to company performance. 

Moreover, in times of rising inflation, value stocks historically outperform, and with inflation likely to stay above central bank targets, this could boost their appeal. Growth stocks shine in long bull markets but tend to struggle in bear markets or early recoveries, making value stocks a safer option during uncertain times.

Finsum:  For those looking to diversify, gradually increasing exposure to value-focused investments could offer solid returns as value stocks regain prominence.

Goldman Sachs projects that the stock market could see a 15% rise by year-end if mega-cap tech stocks continue their strong performance. The bank argues that tech stocks are not currently in a bubble, as investors are focused on companies with profitable growth rather than speculative ones. 

Goldman’s David Kostin notes that while long-term growth expectations for the S&P 500 are slightly above average, they remain well below levels seen during previous market bubbles. Despite concerns about the high concentration in a few tech giants, Goldman believes this is justified given their rapid growth compared to other S&P 500 companies. 

The valuation spread between market-cap-weighted and equal-weighted S&P 500 indexes does not suggest bubble conditions, staying below historical extremes. 

Finsum: We would look into more traditional measures like price to earning ratios if we are concerned about a bubble forming, rather than just long run growth.

Seems volatility hunkered down with a good book in front of a roaring fireplace and felt well at home this month.

During October, implied volatility was unfailingly hovered well above average. In fact, it hit its highest monthly average since June 2020, according to gia.com. Down to the nitty gritty: half of the days parked beyond the first two weeks of the months experienced swings in the equity market of at least +/- 2%. Joining the party was an Oct. 13 intra-day move exceeding 5%. That unfolded before the gales of an advance in the midst of the months’ second half.

As for next year? Um, don’t ask. According to msn.com, with investors updating their economic outcome probabilities, UBS Global Wealth Management recently said investors should figure on even more volatility in the 2023 S&P.

"Large month-to-month swings could continue well into next year," said UBS.

In all probability, wide monthly S&P 500 swings will stretch in 2023. Why? Investors will watch moves by the Fed and economic data to ascertain the chances of a soft landing or recession in the U.S.

"[Expect] more volatility and large market swings exacerbated by positioning as investors update their economic outcome probabilities in reaction to each new data point and Fed utterance," Jason Draho, head of Asset Allocation Americas at UBS Global Wealth Management, in a note.