Cramer says avoid all speculative investments like crypto as the Fed stays hawkish

CNBC's Jim Cramer on Tuesday implored investors to stay away from speculative assets such as cryptocurrencies, warning that they will continue to struggle during the ongoing Federal Reserve tightening cycle. "Look, Fed chief Jay Powell told us that we need to stop doing stupid things with our money. That was the thrust of his speech on Friday," the "Mad Money" host said, referring to the top U.S. central banker's Jackson Hole address, in which Powell warned the Fed's commitment to squashing inflation could bring "some pain" to American businesses and households. Wall Street has finished lower in three straight sessions as investors digest Powell's Friday morning remarks. Powell is "going to bring the pain until it puts an end to the gambling," Cramer said. "Of course, he'll also hurt some good investments in the process ... but we won't see the end of this decline until we get a giant washout of all things that are speculative." That includes, but is not limited to, cryptocurrencies, said Cramer, who also acknowledged he no longer believes in the argument that bitcoin is a store of value. In Cramer's opinion, other speculative parts of the market to avoid are money-losing firms that went public via special purpose acquisition companies and meme stocks. "This is what it looks like when the Fed gets serious," Cramer said. What matters is that we just have to get through it intact. Don't get memed. Don't get SPAC'd. Don't get crypto'd. And you'll get through this thicket and find yourself in a much better time when we are sufficiently oversold for a huge bounce."

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Dow futures sink 300 points as Friday's rout on Wall Street looks set to continue

Traders work on the floor of the New York Stock Exchange (NYSE) on August 26, 2022 in New York City. Spencer Platt | Getty Images

Stock futures fell on Sunday evening as investors tried to shake off a sharp decline in stocks at the end of last week. Futures for the Dow Jones Industrial Average slid 300 points, or about 0.93%. Those for the S&P 500 and the Nasdaq 100 dropped 1.18% and 1.6%, respectively. The moves in futures come after a brutal sell-off for Wall Street on Friday, when Federal Reserve Chairman Jerome Powell's short and blunt remarks in Jackson Hole, Wyoming, appeared to extinguish hopes of the central bank changing its aggressive course of rate hikes in the months ahead. The Dow fell 1,008 points, or just over 3%, for its worst day since May. The S&P 500 and Nasdaq Composite fell 3.4% and 3.9%, respectively, for their worst days since June. The drop erased the August gains for all three averages. "Investors again cut back on their recent Risk-On positioning, supporting our view that it is way too soon to call their recent risk appetite a more permanent stance, and now one more likely to have cost them badly," Rick Bensignor of Bensignor Investment Strategies said in a note to clients.

The coming week brings more Fed speeches, including Vice Chair Lael Brainard on Tuesday, before August's nonfarm payrolls report on Friday.

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Playing the sustainable energy transition

Earlier this month, the Biden administration took a major step in combating the climate crisis with the passage of the Inflation Reduction Act, which includes roughly $370 billion in energy and climate incentives – mostly in the form of tax credits, according to Goldman Sachs. But with potential ripple effects on global supply chains as the domestic economy shifts toward a more energy-efficient era, strategic ETF investors can stand to benefit from the advances. "It's very clear that the administration is using the carrot," Tim Johnston, partner at Blue Horizon Capital and co-founder of Li-Cycle, told Leslie Picker in an interview Monday on CNBC's "ETF Edge." "Trying to incentivize people to domesticate or at least work with fair trade countries in order to bolster the supply chain." Johnston said that incentives are decisive in building infrastructure for a sustainable energy generation, and how we use that energy all the way through. "This capital that's flowing in through the administration, it's not just coming from the form of loans and grants," he said. "It's also coming through in the form of tax incentives, so all we're expecting to see is a structural benefit that's geared towards some of these companies that are really helping with this overall transition." And with a recent push toward sustainable ETFs, the move could double as a catalyst to drive further flows in those clean energy companies and industries that stand to benefit. "It's not as though clean energy is new to the ETF space," Tom Lydon, vice chairman at VettaFi, said in the same interview. "There have been some great ETFs have been around for over a decade." Two of the biggest, Lydon said, are the iShares Global Clean Energy ETF (ICLN) and the Invesco Solar ETF (TAN). The two funds collectively have $9 billion in assets and are up year to date. "Most of those ETFs that we have today tend to be cap weighted, so there's more invested in fewer companies," he said, which leaves less allocation to bolster up-and-coming companies in the clean energy space. Beyond the dominating ETFs in the clean energy sphere, Lydon said that strategic investors need to look at other areas like smaller and overseas companies, and producers of lithium cobalt – not just battery or solar companies. "We're going to need those minerals as we continue to move this clean energy process forward," Lydon said. Among the funds driving the transition to new energy is the Blue Horizon New Energy Economy ETF (BNE), which acts as a single index solution to gain global exposure to clean energy themes. Johnston said that Blue Horizon looks at the transition as being broken out across five broad segments: energy generation, distribution and storage, as well as e-mobility and performance materials – commodities like lithium, nickel, cobalt, copper and rare earths. "This transition is really broad based, it's not just here in North America," he said. "And what we're trying to do is identifying what we consider the leaders." That includes staple companies like Tesla that most every ETF investor has, Johnston said, while also incorporating areas like new types of battery technology subgroups and solar power. "We see them as being an important part of this transition as we go forward," he said.

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Stock futures fall as Wall Street looks ahead to Jackson Hole

Traders on the floor of the NYSE, Aug. 9, 2022. Source: NYSE

U.S. stock futures fell on Sunday night following a halt in the summer rally last week, as fears of aggressive interest rate hikes returned to Wall Street. Dow Jones Industrial Average futures slid by 93 points, or 0.28%. S&P 500 and Nasdaq 100 futures dipped 0.35% and 0.53%, respectively. On Friday, the S&P 500 closed down 1.29%. The Dow Jones Industrial Average dropped 292 points, or 0.86%, and the Nasdaq Composite dropped 2.01%. Those moves come ahead of what could be a volatile week of trading on Wall Street. Investors are anticipating Fed Chairman Jerome Powell's latest comments on inflation at the central bank's annual Jackson Hole economic symposium. "We've written a couple of times recently about wait and see trading ahead of key events/releases... and how that can set the stage for greater volatility around the events themselves, and we may see a bit of that play out next week as investors await the symposium," read a Friday note from Susquehanna's Christopher Jacobson.

On the earnings front, traders are expecting Palo Alto Networks and Zoom Video to report results Monday after the bell.

Source https://www.globalcourant.com/stock-futures-fall-as-wall-street-looks-ahead-to-jackson-hole/?feed_id=14003&_unique_id=6302d435499a0

Market outlook 'too volatile' to chase stock, bond rallies, asset manager says

Investors should eschew chasing recent rallies in stocks and bonds given the current economic uncertainty, according to the chief investment officer of Swiss asset manager Prime Partners.

Francois Savary said it was hugely difficult to have clear economic visibility due to the particulars of the current investment cycle, such as the Covid-19 recovery and the Ukraine war.

"One of the key factors that supported the rally, which was a strong bond market during the month of July, has disappeared to a certain extent," he told CNBC's "Street Signs Europe" on Monday.

Additionally, while the second-quarter earnings season has been robust so far, a key issue looming is how much analysts will revise their third-quarter earnings forecasts. "So we consider that the two elements that can support a further rally in the equity market are not clearly there," Savary said.

As such, he said investors should "absolutely not" be chasing the rally in equities that has been underway since mid-July. The S&P 500 is up almost 13% from its July lows, closing at 4,140 on Monday, but remains down since the start of the year.

On bonds, Savary said, "we all know it's very difficult to make money on the bonds side. I would not chase the bond rally that we experienced over the last two months."

Corporate, government and high-yield bond funds saw sizeable inflows last month. The U.S. 10 Year Treasury yield — which moves inversely prices — has slipped to trade around 2.76% on Tuesday after topping 3.48% in mid-June.

Investors in global markets are navigating a whirlwind of inflationary pressures, recession risks and central bank tightening cycles, with even juggernauts such as Berkshire Hathaway and SoftBank posting investment losses in the June quarter.

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"It's a very difficult market environment," Savary told CNBC. "You need to have some hedge funds [and] some kind of decorrelating strategy that are in your portfolio."

Keeping some investment in stocks will provide partial protection from inflation, he said, however investors will need to be tactical and observe the latest economic figures.

Meanwhile cash, Savary said, is useful for providing flexibility.

"It's interesting to have some cash to check because everything is possible in this kind of environment. We could have a recession, but you could also get a slow but satisfactory rate of growth in the coming 12 months," he said.

For now, Savary said the market has priced in a recession. "But the numbers are not telling you that there is a recession, so we need to be nimble and to check what is happening week-by-week and month-by-month, and we should have more visibility by the early fall, in the U.S. in particular."

U.S. gross domestic product fell for the first two quarters of the year, meeting a common definition of a recession, although the NBER defines it differently and the White House insists the U.S. is not currently in recession.

Investors will be looking to U.S. inflation data out Wednesday for further clues on the state of the world's largest economy. It comes after the jobs report for last month showed unexpected strength and increased expectations of a 75 basis points rate hike in September.

Source https://www.globalcourant.com/market-outlook-too-volatile-to-chase-stock-bond-rallies-asset-manager-says/?feed_id=8522&_unique_id=62f213a04a7dc

Morgan Stanley on market bottom and tech stocks, Nasdaq

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Singapore's GIC reports stable returns amid uncertainty over inflation

The logo of the Government of Singapore Investment Corp. (GIC)

Munshi Ahmed | Bloomberg | Getty Images

Singapore's sovereign wealth fund GIC reported stable returns for the year but warned of "profound uncertainties" as investors face worries about inflation, pandemic risks and geopolitical challenges.

The fund's portfolio recorded an annualized dollar nominal rate of return of 7% over a 20-year period ending March 31, 2022, GIC said in its annual report published on Wednesday.

It also achieved an annualized rolling 20-year real rate of return of 4.2 % for the period ending March 31, after stripping away inflation. GIC doesn't publish annual results.

Still GIC, which is among the world's largest investors, painted a rather bleak picture of the global environment.  

"Years of concerns over deflation have turned into worries of elevated inflation, forcing economic policymakers to reverse stimulus policies," said Chief Executive Lim Chow Kiat in the report.

"At the same time, the clock for the climate crisis is ticking, pandemic risk lingers on, and geopolitical conflicts and domestic political schisms are growing. There are no easy choices for policymakers and business leaders, and in turn, for investors."

Rising inflation

Given these uncertainties, we have doubled down on our core investment principles — diversify our portfolio, take the long view, and emphasize preparing rather than predicting.

As a result, the CEO said he expects portfolio diversification to be "more challenging as few assets are spared from the effects of worsening inflation and slower economic growth."

GIC said its diversified portfolio and cautious investment stance helped cushion its performance from the market correction that occurred in early 2022.

"Given these uncertainties, we have doubled down on our core investment principles — diversify our portfolio, take the long view, and emphasize preparing rather than predicting," Lim said in the report.

Amid the global shift to a low-carbon economy, the fund announced it has set up a dedicated office focusing on sustainability, to ramp up focus on that front.

The new office will deepen research into critical issues and integrate sustainability further into all its investment and corporate processes, GIC said as part of the release of its annual report.

Source https://www.globalcourant.com/singapores-gic-reports-stable-returns-amid-uncertainty-over-inflation/?feed_id=2710&_unique_id=62e0dd16e5628