Latest news with #Magnificent7
Reuters
3 days ago
- Business
- Reuters
Dollar exit could be crowded for some time
LONDON, June 18 (Reuters) - It's tempting to think the dollar's precipitous decline this year will soon taper off, but the move appears neither especially speculative nor cyclical and a durable turnaround could be years away. The dollar index's (.DXY), opens new tab near 10% decline so far this year against the most-traded currencies marks its steepest first-half loss since 1986, back when the greenback was still reeling from the then G5's "Plaza Accord" agreement to puncture the currency's overvaluation in late 1985. And as overshoots are typical in currency markets, there are some reasonable questions about whether the dollar may have come down too far too soon, leaving it ripe for a correction. Indeed, this month's global fund manager survey from Bank of America suggests at first glance that the dollar move may be overstretched. The survey showed the net underweight position in the dollar is the largest in 20 years. What's more, "short dollar" had found its way into the top three "most crowded trades" on the planet according to investors. That was just behind "long gold" and "long Magnificent 7" megacap stocks. Often seen as a contrarian indicator, crowded trades typically signal an extreme and potentially over-priced move. But history shows that certain trades can stay crowded for quite some time. The scramble for Magnificent 7 stocks, for example, was considered the single most-crowded trade in the same monthly survey for two years through this February. And yet exchange-traded funds tracking these seven mega cap tech stocks more than doubled in price over the same period, before eventually retreating late last year. To be sure, highly speculative or leveraged trades can get overcooked and unwind a lot more quickly. But dollar positioning among currency speculators is nowhere near historic extremes. According to weekly CFTC data, speculative net short dollar positions did accumulate to their most in about two years in April but have been pared back since. And the dollar has resumed its decline this month regardless. The 20-year high in dollar underweighting by asset managers in the BofA survey, by contrast, is of a different order altogether. That indicates both wariness of U.S. assets at large - due to concerns about the current U.S. administration's approach to global trade, geopolitics and institutional integrity - and a more structural dollar retreat. It's notable that even with this year's 10% dollar decline and the existing underweight among global funds, almost two-thirds of survey respondents still saw the dollar as overvalued. What's more, relatively short interest rates are often the driving force in cyclical currency moves - with the dollar sinking even as widening transatlantic rate gaps suggest otherwise. "The name of the game will be diversifying away from the U.S. and into European and emerging market bonds," said Amundi chief investment officer Vincent Mortier on the release of the giant European asset managers' half-year outlook. For others, such as Carlyle's Jeff Currie, the historic developments weighing on the dollar are related to long-term geopolitical shifts, defense and energy considerations. The basis of his framework is that the U.S. retreat from international engagement - or its arm's-length engagement, as seen over the past week in the Middle East - is making the world more dangerous and more expensive. Tariffs and capital costs are rising, while liquidity is draining. The net result is a weaker dollar, higher commodity prices and a demand for "asset-heavy" sectors like defense, which he argues should lead to higher growth and innovation in those countries with the capacity to fund these efforts. "This is just the beginning of a much larger capital rotation out of the asset light sectors and into asset heavy sectors that are the backbone of global supply chains and slanted towards Europe," Currie wrote. To reinforce the point, he highlights two prior rotations that each lasted about two years. These include the shift from 'BRICS' emerging market economies to U.S. tech in 2014-2015 and, before that, the move from stocks to BRICS in 2002-04 - the last time asset managers polled by BofA were this underweight dollars. "We believe we are (now) in one of these rotations towards Europe given the valuations discounts in Europe and the region's stronger fundamental backdrop and fiscal capacity for defense," Currie wrote. Of course, the dollar exchange rate, much like any other financial price, rarely moves in a straight line in one direction for very long. But even if we get periodic bounces, the downtrend could persist for a lot longer - even as crowded as it may be already. The opinions expressed here are those of the author, a columnist for Reuters.
Globe and Mail
4 days ago
- Business
- Globe and Mail
Gold is the most crowded trade, say global fund managers
Daily roundup of research and analysis from The Globe and Mail's market strategist Scott Barlow BofA Securities strategist Michael Hartnett summarizes his monthly survey of global fund managers and finds, among other things, that gold is the most crowded trades according to money managers, 'Investor sentiment recovers to pre-Liberation Day 'Goldilocks bull' levels as trade war & recession fears abate; cash level drops to 4.2 per cent (was 4.8 per cent in April) but not worrying low … Investor UW [underweight] in US$ largest in 20 years … Biggest summer pain trade is long the buck … Global growth expectations improve but still weak (net 46 per cent); big reversal in recession odds (net 42 per cent 'likely' in April to 36 per cent 'unlikely' in June); 66 per cent expect soft landing (8-month high - 16 per cent = no landing, 13 per cent = hard landing); One Big Beautiful Bill to increase U.S. growth say 33 per cent vs 81 per cent to increase U.S. deficit; investors say corporate balance sheets in best health since Dec'15, and most since Jul'13 want companies to return cash to shareholders. On Returns, Risks, Crowds: best performing asset next 5 years … 54 per cent say international stocks, 23 per cent U.S. stocks, 13 per cent gold, 5 per cent bonds; expectation of higher bond yields most since Aug'22; most crowded trades…long gold (41 per cent), long Magnificent 7 (23 per cent), short US$ (20 per cent); #1 tail risk still trade war recession, but down from 80 per cent in April to 47 per cent' *** Purpose-built rental housing construction is supporting the real estate construction sector, 'Canadian housing starts continue to hold up despite weak buyer demand. Starts for homeownership and condos have trended at around 110k annualized units (seasonally adjusted) so far this year, which is down more than 20 per cent from recent norms through 2022 and 2023. Purpose-built rental starts, however, have filled the gap, also trending at right around 110k annualized units so far this year. In fact, the longstanding gap between ownership/condo starts and purpose-built rental starts has now closed. The supply-demand dynamic for the rental market— a sudden cooling of immigration-led demand, but long lead times on supply—is likely to pressure rents down in the year (or more) ahead. At the same time, this does little to alleviate shortages of family-sized single-detached housing, especially in the major cities' 'BMO: Purpose-built rental construction holding up the sector' – (research excerpt, chart) Bluesky *** Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, respects strong technicals but does not love the longer-term market outlook, 'Survey-based sentiment suggests ample room for equities to climb the 'wall of worry,' and better financial conditions have helped normalize implied stock volatility, fueling the rally. Market-leadership factor composition suggests a tilt toward economic reacceleration and upside surprises. Tactically, we must respect these technical … Not only has reduction of tariff and tax policy uncertainty been limited, but geopolitical risks have persisted, as the labor market hints at a turn. We also remain skeptical that improved operating margin leverage is imminent. Last week, we outlined potential contours of a new bull case dependent on 'ooking through' 2025 and faith in capex-fueled productivity gains. That remains plausible, but for now we are proceeding with caution given limited visibility. Consider increasing active stock-picking, as the passive index undergoes compositional rotation, with the Magnificent Seven no longer a correlated block. Use risk-asset repricing to rebalance and position for potential 5–10-per-cent U.S. equity returns amid more volatility, higher real rates and a weaker U.S. dollar, noting this isn't the time to count on valuation expansion. Add diversifying positions in international equities, commodities and hedge funds. Energy/energy infrastructure is our most favored tactical long recommendation. Overweighting short-to-neutral-duration investment grade and municipal bonds still makes sense' *** Bluesky post of the day: Diversion: 'AI transforms new drug development with simultaneous analysis of 21 chemical reactions' –
CNBC
5 days ago
- Business
- CNBC
Apple shares are at an inflection point, says StockBrockers.com's Jessica Inskip
Apple is underperforming the rest of the "Magnificent 7," but the technicals show it is at an inflection point, said Jessica Inskip, director of investor research at Apple was one of three names Inskip discussed during the " Three Stock Lunch " segment on CNBC's " Power Lunch " Monday. Apple Shares of the tech giant, which are down more than 20% year to date, have the potential to move higher, according to the charts, Inskip said. "There is a very, very strong resistance support zone where we're in right now -- thus the inflection point, which is around 195 to 200," she said. "We're sitting in there." The highs of the range goes to around 260, she noted. "This is an inflection to go higher because we're at the bottom," she added. AAPL YTD mountain Apple year to date However, Inskip would protect herself with an options trade called a wheel strategy, which will capture some premium in case she is wrong. "We sell a put to buy the stock. It creates neutrality in the short term, but then bullishness on the long term," she said. "We'll do that while we're at the bottom end. If we're assigned and we're wrong, we'll sell a call." Nasdaq Nasdaq should benefit from the move to 24-hour trading , seven days a week, Inskip said. The around-the-clock trading doesn't mean people staying up late in the United States, but more global access to the markets, she explained. That means the markets will need more liquidity, she said. "The way to truly hedge is utilizing options, which means that's next," Inskip said. NDAQ YTD mountain Nasdaq year to date All that new activity is beneficial to Nasdaq, she explained. "They generate off of a lot of trades. We have more trades if they start listing the options," she said. "We need that in order to hedge properly. So there's more activity." UnitedHealth Investors should be careful with UnitedHealth , Inskip said. UnitedHealth wound up on her radar when the stock landed in the Schwab Trading Activity Index (STAX), which is an index of the firm's most actively traded securities. "UNH came up with this buy the dip mentality," she said. "From a technical perspective, UNH is in a bearish trading cycle. It is finding support based on levels, so far, even before Covid," she added. "If there is some support that's there, I expect some rallying to at least the 240 level." However, she is not a bull and is warning retail traders to watch out. "Just like GME, we're buying something because we think it's low, buying the dip without any real conviction of earnings follow-through and I don't see that," he said. UnitedHealth shares are down more than 39% year to date.
Forbes
11-06-2025
- Business
- Forbes
The Great Whipsaw Of 2025 Investors Need To Pivot Into Trump Era Stocks.
How quickly the financial landscape can change in just one year! After 24 months of blissfully easy profits in the 'Magnificent 7' tech stocks, 2025 is a year of financial limbo where many investors are still dazed and confused from the beating they took during April's panic, then failed to profit from the market's rebound that made up the losses quickly – a classic whipsaw! It is too soon to tell whether 2025 will be a flat year or just a brief, volatile interruption in a continuing bull market like what we saw in 2020's powerful reversal. There have been other 'whipsaw' years! Since 2000, there have been five previous years that produced pitiful year-end stock market returns that were not bear markets: 2005 3%, 2007 4%, 2011 0%, 2015 -1%, 2018 -6% (See chart). S&P 500 Index Chart Good News! Excluding 2007's financial crisis, the following years produced average returns of 16%! What should investors do? During stock market whipsaws, it is common for investors to commit the sell low & buy high mistake based on a lack of investment discipline or news headlines. Here are four tips to help navigate volatile market conditions: There is an old Wall Street saying, 'Don't confuse brains with a bull market.' As an active money manager with over 30 years of experience, I have learned to pivot quickly to market conditions using these tips to great effectiveness. Whipsaw years are a great opportunity for investors to review their investment strategies and make adjustments
IOL News
11-06-2025
- Automotive
- IOL News
Tesla on a winning streak after Musk says sorry amid Trump divorce
Tesla Motors CEO Elon Musk. Image: File As the so-called Magnificent Seven report solid earnings on the back of a continuing artificial intelligence wave, Tesla is leading the charge. The electric vehicle car, founded by billionaire Elon Musk 12 years ago, is up 5.67% as of noon on Wednesday, although this is 14.02% lower than the start of the year. According to Tesla is outperforming other Magnificent 7 stocks – Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla. Its shares are gaining after Musk, once US President Donald Trump's 'best buddy,' posted that he regretted some of the things he recently wrote on X, which he also owns. "I regret some of my posts about President @realDonaldTrump last week. They went too far," Musk said. The billionaire also called for Trump's impeachment. Tesla share price on June 11 Image: Google Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Musk and Trump had a very public falling out last week, with Musk posting "@realDonaldTrump is in the Epstein files. That is the real reason they have not been made public." Sky News reported at the time that Tesla stocks lost $150 billion due to the fall out between the two. Trump retaliated, stating on his own media platform that "Elon was 'wearing thin,' I asked him to leave, I took away his EV mandate that forced everyone to buy electric cars that nobody else wanted (that he knew for months I was going to do!), and he just went crazy!". The spat was caused by Musk's dismay at a Bill, which would result in billions in tax breaks, passing through the House of Commons. The proposed law is a pet project of Trump's and he refers to it as the "big, beautiful bill". The Magnificent 7 group of technology stocks have significantly underperformed so far this year, according to John Flood, head of Americas equities sales trading at Goldman Sachs. This, he said, comes after two years of them leading the US markets higher. Yet, Flood said in a recent podcast that Goldman Sachs is taking a contrary view to that of some investors, who are asking whether the stocks are overvalued. 'You even get the word 'bubble' thrown around,' he said. 'We see it differently. These companies just reported outstanding earnings, beating estimates by 13%. With rising earnings and falling stock prices, valuations are becoming much more reasonable,' Flood said. Flood stated that the valuation premium of these companies is falling and are well set up from an economic perspective. 'They are less reliant on economic growth, which means they can become defensive during uncertain times,' he said. The Organization for Economic Development (OECD) recently downgraded its forecast for economic growth, dropping it from 3.1% for this year down to 2.9%. It said that this assumes that tariff rates as of mid-May are sustained, which was just before Trump started negotiations with major trading partners to drop import duties, which he initially announced on April 2 – 'Liberation Day'.
