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Despite all the attention given to the argument that the stock market is in a bubble, it’s important to stress that not everyone shares this point of view.
Few fund managers have been more successful than Cathie Wood, Managing Director of ARK Invest and Fund Manager of ARK Innovation ETF ARKK,
and ARK Genomic Revolution ETF ARKG,
which, according to FactSet, have attracted more inflows than any other actively managed exchange-traded fund in the past 12 months. In a monthly webinar, Wood argued that stocks were in a bubble.
Since 2018, there have been roughly $ 300 billion in equity outflows, excluding corporate share buybacks. But there have been inflows of $ 1 trillion in bonds, she said. “If there’s a bubble somewhere, it’s not in the equity market, it’s in the fixed income market,” she said.
Also see: Should the stock market undergo a correction in 2021? Here’s what some experts think
Private equity is fueling this bubble, she said. “It’s incredible for me to watch private equity, with [companies], will continue to exploit them so that they can profit from the distribution of private equity, ”she said. Private equity owners maintain high multiple cash flows by not investing in the future. “It’s become problematic for these companies, and their high cash margins will disappear over time.”
The phenomenon of “moonshots” of purchase by call that the video game retailer GameStop GME,
and AMC Entertainment AMC,
stocks also benefited from the bond bubble, she said. AMC bonds traded at 5 cents on the dollar climbed to 80 cents because the movie chain was able to issue stock. “Who will have the bag left if AMC goes bankrupt?” I don’t think just one share offering will change their situation, ”she said.
It also took a hit on passive investing. “This move towards passive investing that we’ve seen over the past 20 years… it’s now a setup for disappointing returns,” Wood said. While acknowledging that passive funds were cheap, she said they were “cheap for a reason,” a phrase often associated with arguments against value stocks. At least have some cover by investing in innovation, Wood said.
In the equity market, there is a bifurcation between companies at the cutting edge of innovation and investment and those which have not. She gave electric vehicle maker Tesla TSLA,
Square SQ payment service company,
and digital streaming player manufacturer Roku ROKU,
as examples of evolving platform companies that will be the most successful. “We think these companies will grow in their ratings, just like Amazon has.”
The buzz
The economic calendar includes the release of consumer prices for January and, at 2 p.m. EST, a speech by Federal Reserve Chairman Jerome Powell on the job market.
Cisco Systems CSCO,
Shares fell 5% in pre-market trading, as the network services company forecasted weaker current quarter results than markets had expected.
Twitter TWTR,
shares rose 5% as the microblogging service posted higher-than-expected profits and revenue, although user growth fell below expectations. Lyft LYFT Rideshare Service,
jumped after cutting its loss, and rival Uber Technologies UBER,
reports after Wednesday’s close.
Under Armor UA,
shares rose 5% as the apparel maker’s earnings beat expectations.
Other revenues on the bridge include General Motors GM,
which benefited from investor interest in electric vehicles.
Former quarterback Colin Kaepernick is the latest to set up a special purpose acquisition company, looking to raise up to $ 287.5 million in an initial public offering.
As a BTCUSD bitcoin,
Of value, economics professor Nouriel Roubini says that “the Flintstones” had a more sophisticated monetary system.
The market
ES00 US equity futures contracts,
NQ00,
pointed higher, after the S&P 500 SPX,
finished a calm Tuesday at its second highest level on record.
The 10-year Treasury yield TMUBMUSD10Y,
was 1.16%.
Table
Based on data from the National Multifamily Housing Council, here is the proportion of late rent payments, with the graph showing it did not drop too much during the COVID-19 pandemic. But the data set does not cover subsidized and affordable apartments, or other low-end units. “More of these tenants may have greater difficulty paying their rent,” says Wolf Richter of the Wolf Street blog.
Random readings
“Stop moaning” – the advice one executive gave to his 1,500 housewives. He apologized later.
It turns out that Gorilla Glue is not a hair spray.
House prices can be high, but the sharks seem to be heading towards San Francisco.
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