For all the attention paid to the argument that the stock market is in a bubble, it is important to point out that not everyone shares this view.
Few fund managers have been more successful than Cathie Wood, CEO of ARK Invest and fund manager of ARK Innovation ETF ARKK,
and ARK Genomic Revolution ETF ARKG,
which, according to FactSet, have attracted more entries than any other fund traded on the stock exchange in the last 12 months. In a monthly webinar, Wood argued against stocks in a balloon.
As of 2018, there have been outflows of approximately $ 300 billion in shares, with the exception of share repurchases by companies. But there were $ 1 trillion in bonds, she said. “If there is a balloon anywhere, it is not in the equity market, but in the fixed income market,” she said.
See also: Is the stock market to be corrected in 2021? Here’s what some experts think
Private capital is fueling this bubble, she said. “It is amazing for me to pursue private capital with maturity [companies], will continue to capitalize on them, so that they can enjoy the distribution of private capital “, she said. Private equity owners support high cash flows, not investing in the future. “This has become problematic for these companies, and the high margins of cash flow will disappear over time.”
The phenomenon of “monthly purchases” of call purchases, retailer of video games GameStop GME,
and AMC Entertainment AMC,
the shares they enjoyed also fueled the bond bubble, she said. AMC bonds traded at 5 cents per dollar rose to 80 cents as the movie chain was able to issue equity. “Who will remain in the hands if AMC goes bankrupt? I don’t think a capital offer will change their circumstances, “she said.
He also took a hit on passive investment. “This move toward passive investment that we’ve seen over the last 20 years … is now a disappointing return,” Wood said. Although recognizing passive funds was cheap, she said they were “cheap for a reason”, a phrase often associated with arguments against stocks of value. At least you have coverage through investment in innovation, Wood said.
In the stock market, there is a bifurcation between those companies at the forefront of innovation and investment, compared to those companies that did not. It gave the electric vehicle manufacturer Tesla TSLA,
payment service company Square SQ,
and digital playback manufacturer Roku ROKU,
as examples of evolving platform companies that will be winners. “We believe these companies will grow in their valuations, just as Amazon did.”
Buzz
The economic calendar includes the release of consumer prices for January, and at 14:00 East, a speech by Federal Reserve Chairman Jerome Powell on the labor market.
Cisco Systems CSCO,
shares fell 5% in premarket trade as the network services company forecasts lower results in the current quarter than expected by markets.
Twitter TWTR,
shares rose 5% as the microblogging service reported higher-than-expected revenue and revenue, although user growth lagged behind expectations. Lyft LYFT lifting service,
jumped after narrowing its loss and rival Uber Technologies UBER,
reports after Wednesday’s closing.
Under Armor UA,
shares increased by 5%, as the clothing manufacturer’s results exceeded forecasts.
Other gains on deck include General Motors GM,
which benefited from investors’ interest in electric vehicles.
Former defender Colin Kaepernick is the latest to set up a special purpose acquisition company, which is trying to raise up to $ 287.5 million in an initial public offering.
Like bitcoin BTCUSD,
value growth, economics professor Nouriel Roubini says the Flintstones had a more sophisticated monetary system.
Market
US ES00 futures,
NQ00,
showed above, after the S&P 500 SPX,
ended a quiet Tuesday at the second highest level ever.
10-year Treasury yield TMUBMUSD10Y,
was 1.16%.
Chart
Based on data from the National Council for Multifamily Housing, here is the proportion of late rent payments, the graph indicating that it did not decrease much during the COVID-19 pandemic. But the dataset does not cover subsidized and affordable apartments and other low-end units. “Many of these tenants may have greater difficulty making rent payments,” says Wolf Richter of the Wolf Street blog.
Random readings
“Stop your moans” – the advice given by an executive to the 1,500 workers at home. He later apologized.
Looks like Gorilla Glue is not a hair spray.
Housing prices may be high, but sharks seem to be heading for San Francisco.
The need to know starts early and updates up to the opening bell, but sign up here to deliver it once in your inbox. The emailed version will be sent at approximately 7:30 a.m. Eastern time.
Want more for the next day? Sign up for The Barron’s Daily, a morning briefing for investors, including exclusive comments from Barron’s and MarketWatch