Despite all the attention paid to the argument that the stock market is in a bubble, it is important to note that not everyone shares this view.
Few fund managers have been more successful than Cathie Wood, CEO of ARK Invest and fund manager of the ARK Innovation ETF ARKK,
and ARK Genomic Revolution ETF ARKG,
which according to FactSet have garnered more entries than any other publicly traded fund actively managed over the past twelve months. At a monthly webinar, Wood argued that the shares were in a bubble.
Since 2018, there have been outflows of approximately $ 300 billion from equities, excluding the repurchase of shares by companies. But there have been $ 1 trillion entries in bonds, he said. “If there’s a bubble anywhere, it’s not in the equity market, it’s in the fixed income market,” he said.
See also: Will the stock market have to make a correction in 2021? This is what some experts think
Private capital feeds this bubble, he said. “It is incredible for me to see private capital, with maturity [companies], will continue to take advantage of them so that they can enjoy the distribution of private capital “, he said. Private equity owners maintain multiple cash flows by not investing in the future. “This has become a problem for these companies and their high margins of cash flows will disappear over time.”
The phenomenon of buying so-called “moons” that the video game retailer GameStop GME,
and AMC Entertainment AMC,
the shares they have enjoyed have also been fed into the bond bubble, he said. AMC bonds trading at 5 cents have risen to 80 cents because the film chain was able to issue shares. “Who will stay with the bag if AMC goes bankrupt? I don’t think a equity offer will change its circumstances, ”he said.
He also took a look at passive investment. “This move toward passive investment that we’ve seen over the last 20 years … which is now a setup for disappointing returns,” Wood said. While acknowledging that passive funds were economic, he said they were “cheap for a reason,” a phrase often associated with arguments against stocks of value. At least have coverage by investing in innovation, Wood said.
In the equity market, there is a bifurcation between those leading companies in innovation and investment, compared to companies that have not. He gave the electric vehicle manufacturer Tesla TSLA,
payment service company Square SQ,
and manufacturer of Roku ROKU digital players,
as examples of evolving platform companies that will earn more. “We believe these companies will grow in their valuations, just as Amazon has been doing.”
The buzz
The economic calendar includes the launch of consumer prices in January and, at 2 p.m., 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 forecast softer results for the current quarter than markets expected.
Twitter TWTR,
shares rose 5% as the microblogging service reported stronger-than-expected earnings and revenue, although user growth lagged behind expectations. Lyft LYFT Travel Assistance Service,
jumped after reducing his loss and rival Uber Technologies UBER,
reports after Wednesday’s close.
Under Armor UA,
shares rose 5% as clothing manufacturer’s results exceeded forecasts.
Other gains on deck are General Motors GM,
which has benefited from investor interest in electric vehicles.
Former quarterback Colin Kaepernick is the latest to set up a special-purpose acquisition company, which seeks to raise up to $ 287.5 million in an initial public offering.
Like bitcoin BTCUSD,
increase in value, economics professor Nouriel Roubini says “The Flintstones” had a more sophisticated monetary system.
The market
US stock futures ES00,
NQ00,
pointed above, after the S&P 500 SPX,
he finished a quiet Tuesday at his second highest level in history.
The performance of the TMUBMUSD10Y of the Treasury at 10 years,
was 1.16%.
The graph
Based on data from the National Council on Multifamily Housing, here’s the proportion of late rental payments, with the graph showing that it hasn’t gone down too much during the COVID-19 pandemic. But the data set does not cover subsidized and affordable apartments and other low-end units. “More of these tenants may have greater difficulty making rent payments,” says Wolf Richter of the Wolf Street blog.
Random readings
“Stop Moaning”: The advice an executive gave to the 1,500 workers who stayed home. He later apologized.
It turns out that Gorilla Glue is not a hair spray.
House prices may be high, but sharks seem to be moving toward San Francisco.
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