Please see this week’s market views from eToro’s global
To rotate to Value and cyclicals or not?
The investment style and sector rotation is the biggest investor decision in markets today. The gap between best and worst styles and sectors is already above average. Value stocks (VTV to EFV ETFs) are much cheaper, more cyclical and GDP exposed, and pay more dividends. We nibble at select Value ideas, from BEACH stocks to big pharma and EM, but any more needs PMI growth lead indicators to bottom. We think Growth and tech has still has more in the tank. See Page 4
Excuses for some profit taking
Stocks pulled back after their huge YTD gains as Fitch cut the US credit rating and US Treasury announced $1 trillion debt issuance plans. The US dollar rose to a 4-week high and 10-yr yields broke 4%. Brazil became 2nd major central bank to cut rates. AMZN gave earnings relief, but AAPL less so. PYPL slumped. TUP became the latest meme phenomena. See Q3 Markets Outlook HERE and at twitter @laidler_ben. See Page 2
Profiting from the summer doldrums
Path of markets least resistance remains up, and inevitable pullback to be bought. August focus is commodity rally risks, dovish inflation consensus, and Q2 earnings ending with a bang. See Page 2
Global interest rate cuts have started
Chile and Brazil leading LatAm off rate cutting starters block, with eastern Europe to follow, and US next year. Anticipation of cuts usually drives stocks, whilst FX focused on the coming growth pick up than lower rate differentials. See Page 2
Gasoline risks derailing goldilocks rally
20% gasoline price surge risks taking bite out of consumer spending and restoking inflation fears, two pillars of rally. Hopes are gasoline’s unusual 50% price premium to oil narrows. See Page 2
Shadow banks ‘dancing in the streets’
Hefty new US capital proposals latest headwind for underperforming banks. And boost to alt. lenders, APO to BX. See @BigBanks. See Page 2
Crypto sits on the sidelines
BTC firm at $29,000 with altcoins SOL to MATIC bearing brunt of stocks weakness. SHIBxM gained as moved to add digital ID’s to projects, and LTC completed its halving. MARA extended its lead as largest listed miner, whilst Hong Kong awarded first new crypto regime license. GS see $200bn AI investments by 2025. See Page 3
Commodity rally losses steam
US debt downgrade and stronger dollar stalled the recent commodity rebound, 7% up from its June lows. Brent oil held firm above $85 as Saudi extended its voluntary 1mbpd supply cut. Whilst high-flying ag prices saw profit taking and a better supply outlook, led by grains. ALB raised lithium profits and pricing outlook. See Page 3
The week ahead: US inflation, Oil, and Disney
1) Headline US inflation fall to under 3% (Thu) versus China deflation (Wed). 2) UK flirting with recession (Fri) and house prices fall. 3) Latest OPEC market outlook (Wed) as rebounding prices threatening lower inflation outlook. 4) DIS to LLY earnings and NOVO to SONY. See Page 3
Our key views: A positive markets breather
Markets due a breather after the strong 1H, with weaker seasonality, low volatility, and coming growth slowdown. But fundamentally positive on lower inflation and coming rate cuts. Focus on defensive growth and long duration assets from healthcare to big tech. Cautious growth exposed cyclicals, commodities, and banks. See Page 5