Sunday , March 26 2023

Investors do not know where the next economy will fall


Anxiety is a professional risk and is part of the life of professional operators. After all, even on good days, always, somewhere, something is wrong.

But when everything starts to become wrong at the same time, imagination may be tragic. Now, when you look, something is exploding. On commodity markets, this is a real drop in oil prices. S & P 500 shares are six weeks of shocks. Debt markets are shaken by the turmoil that surrounds General Electric and PG & E. Bitcoin only declined by 13% Y Goldman Sachs, the famous investment bank, continues the worst week since 2016.

By themselves, no one will be enough to induce a panic. But if they all emerge together, and even the worst of Wall Street can begin to look like a paranoid. Does GE have anything to do with Goldman? How bitcoin affects the stock market? Forest fires are not related to oil spills, but both banks are bad news.

Malcolm Polley, who oversees $ 1.2 billion as Chairman of the Stewart Capital Advisors LLC in Indiana, Pa., "Almost everything can be panic, infectious, and is not there." "It's not clear where and how things are connected," said Malcolm Polley, who oversees $ 1.2 billion as Chairman of Stewart Capital Advisors LLC in Indiana, Pa. meaning. "

Synaptic fails in the world's nervous system, which connects today's markets. He began already before the month and a half in a month when the Nasdaq 100 began to decrease from 22 to 30 days. Then the oil began to pull, accumulating for 12 days to finish the longest stripe in history. GE, which had already dropped by 20% in mid-October, dropped its stock from over $ 13 to less than $ 8, but its bonds continued to decline on Thursday. Fall Goldman of its market capitalization eliminated 12 billion US dollars.

These bad things come together not to be surprised by Donald Selkins, a major market strategist at Newbridge Securities, who sees it as a result of things that have been so good for so long. He wakes up every night to see the future.

"People are saying," Get out of me, "he said." Everyone is worried, I'm worried, you buy a good company, and you expect the best, and you ask it not to be destroyed, look at Apple, which has fallen by $ 40 . Check out some of the most well known companies that are being destroyed. I have Exxon, of course I feel a lot of pressure. "

Maybe it's too far to say that everything is connected. But it's hard to argue that the impact of falling oil does not affect all markets. As crude oil declined, energy producers became the largest global shareholding. And the credit was affected, where energy accounts for about 15% of the total US yield index.

Bitcoin is considered to be an isolated ecosystem, but it is related to chip makers, especially the speculative corner of the market, which has been observed to measure investors' willingness to take risks. In December, the maximum recorded digital currency was two months before the worst fall in S & P 500 over two years.

Connection between GE and banks? After reducing the debt, it was more difficult for the manufacturer to borrow with a commercial document and used the credit lines provided by the banks to finance the business. According to quarterly presentations, the industrial conglomerate has used more than 30 financial units in its credit line of $ 41,000 million.

"When it finally finds its bottom, panic will be everywhere," said Jim Paulsen, Leuthol Weeden Capital's chief investment strategist.

Not everyone is so pessimistic. After a downturn, economic growth and corporate profits are likely to remain positive for at least the next two years. In any case, the current turmoil is likely to force the Federal Reserve to mitigate monetary problems and President Donald Trump to limit his combatants' position on global trade, say some strategists and investors.

Equity investors are always under attack, and in most of the last two months, people were able to point out corporate bonds as a market whose signals are less terrible and more related to global economic health. In fact, the difference between the investment grade bonds in October was largely volatile, even though S & P 500 fell to a 10% retracement.

"We have seen a number of specific events, such as GE, GS, PG & E, which does not necessarily indicate a market correction," said Dorian Garay, NJ Investment Partners' Money Manager in New York, who managed 240 billion euros in June. . "The US credit and macro framework are sound, as confirmed by recent macroeconomic indicators and revenue."

However, they are not fully protected against collisions. The largest stock exchange fund that buys a high-yielding debt has lost more than $ 1,500,000 this week and the short-term interest rates that IHS Markit calculates increased to 26% of the shares.

Investors also went out of investment grade companies and on the second day iShares iBoxx Investment grade corporate bonds fund spent money, but massively closed short-term treasuries that were more isolated from increases in rates and corporate offenses.

"We are still focusing not only on valuation but also on the quality of the future," said Joe Smith, Deputy Director of CLS Investments in Omaha, Nebraska, who manages $ 9,000 million. He added that low rates have allowed to fund shares repurchase with loans and larger dividends. "Some of these factors could potentially turn into things that in the future cause more pain or anxiety to investors, because people are starting to think if these companies really use too much of their credit cards."

The last set of explosions is in contradiction to what happened at the beginning of this year, when money moved from one place to another. Are new markets in trouble? Investors found security in US equities. Does FANG lose its sheen? Put money in oil or in financial stocks.

Thanks to the fast camera to date, technology, energy and banks have been steadily reducing the stock market. The S & P 500, which is ready to suffer from one of the worst years since the bull market started in 2009, a consistent mass sale for some sounds. Is this the end of the beginning?

Following one of the longest economic expansion in history, growth will slow down and lack of leadership highlights investors' concerns that nobody is immune to the cycle. And many of them are ready to flee with the first warning sign.

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