Hello and welcome to Insider Investing. I’m Joe Ciolli, and I’m here to guide you through what’s been happening in markets, as well as what to expect in the coming weeks. Here’s what’s on the docket:
- The risk of an inflation shock rattled investors last week. JPMorgan’s head of cross-asset strategy has five ways you can protect your portfolio from a sudden spike.
- Two analysts at Cathie Wood’s Ark Invest shed light on how the firm is built to weather pullbacks like the one seen last week in tech stocks – and offer insights around what it’s like to work at Ark.
- JPMorgan analyzed 85 SPAC IPOs in order to examine the winners and losers of the ongoing boom.
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Your weekly recap/outlook
This past week was a total throwback. GameStop traders ran rampant. The US stimulus outlook caused significant market gyrations. It felt like the last week January all over again.
GameStop surged 104% in the final 30 minutes of trading on Wednesday and extended those gains to 311% at Thursday intraday highs. The spike was enough to cost short-sellers – apparently gluttons for punishment – another $1.9 billion in mark-to-market losses. The rally petered out on Friday, but it was refreshing for everyone’s favorite brick-and-mortar game retailer to get another couple days in the sun.
Strangely enough, the latest GameStop frenzy was largely overshadowed by a bond-market tantrum that saw 10-year Treasury yields climb to a more than one-year high. The culprit was renewed inflation fears stemming from President Biden’s proposed $1.9 trillion stimulus bill.
The worry is that consumer prices will overheat as the US economy snaps back into shape, and the Fed’s assurance that it will keep a loose monetary policy for the foreseeable future did nothing to soothe nerves. The most overvalued segments of the stock market – most notably mega-cap tech – sold off swiftly as the skyrocketing yields suddenly made bonds an attractive alternative.
At the center of all this going forward, per usual, is the economic recovery. The degree of progress will inform ongoing stimulus negotiations, which will stoke further debate about inflation risk. The narrative that prevails will determine whether the bond-market outburst was a flash in the pan, or a longer-term development that could upend portfolios and send stocks into another tailspin. Stay tuned.
5 ways to guard against inflation
John Normand of JPMorgan is keeping a close eye on rates, and says a small increase could make a huge difference because the economy is so leveraged. Normand says he’s still “comfortable” investing today, but that might change if real rates pick up. He laid out five asset classes that will protect investors if inflation ramps up.
Read the full story here:
JPMorgan says these 5 cross-asset hedges are the best ways to protect portfolios from stimulus-driven inflation
Working at Cathie Wood’s Ark Invest
David McNew/AFP via Getty; ARK Invest; Patricia De Melo Moreira/AFP via Getty; Bitcoin; Samantha Lee/Insider
All eyes were on Cathie Wood’s Ark Invest this past week amid volatility in tech stocks. In recent interviews, two Ark analysts share how Wood has built the firm to weather pullbacks – and their responses provide insights into what it’s like to work at the reputed firm.
Read the full story here:
Famed investor Cathie Wood has staffed her firm with analysts in their 20s and 30s as she looks to predict the future. 2 analysts break down what it’s like to work at Ark Invest.
SPAC winners and losers
The red-hot SPAC craze isn’t slowing as 154 SPACs have raised $48.5 billion so far this year. JPMorgan’s Michael Cembalest studied 85 SPACs to examine the winners and losers in the ecosystem. He also shared why it will be important to monitor the SPAC market over the next two years.
Read the full story here:
The chairman of investment strategy at JPMorgan’s $2.2 trillion asset management arm studied 85 completed SPAC IPOs – and lays out the winners and losers in the ‘significant wealth transfers’ within the ecosystem
Stock pick central
Seeking experts who are willing to name names? Look no further:
- Bank of America says buy these 14 cheap stocks that are best positioned to soar on the strongest economic comeback in nearly 40 years
- Goldman Sachs says these are the top 15 SPACs hedge funds are betting on right now, as roughly 5 go public each trading day
- Renowned strategist Tom Lee says buy these 21 stocks now before the vaccine rollout and economic reopening trigger a ‘vigorous rally’
- Morgan Stanley says buy these 17 EV and green stocks which are shrugging off any ‘bubble’ concerns – including one that could rally almost 60%
- GOLDMAN SACHS: Buy these 38 cheap stocks set to soar as the world’s largest economies reopen – including one with an upside of 65%
- JPMorgan says buy these 40 stocks set to soar as bond yields make a surprising jump higher
- MORGAN STANLEY: Buy these 14 infrastructure stocks now as Congress gets ready to pass a deal later this year – including 8 that could rise at least 55%
- Mutual funds are having their best start to a year in almost a decade. Goldman Sachs shares the 14 new stocks they love the most after analyzing $2.6 trillion of their holdings.
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