But as some investors cling to hopes that last week’s stock market run can continue, fueled by that softer inflation report, Wall Street remains wary, and fresh warnings from two big banks making up our call of the day.
Taking advantage of last week’s rally, JPMorgan plans to “moderately” trim its equity overweight. Other moves? Exit a long-dollar bias, adding exposure to corporate bonds with a focus on high yields; reverse a previous overweight in U.S. versus European high-grade credit, owing to the latter’s bigger risk premium; and shift to neutral from underweight on emerging market sovereign debt.
Consistent with a negative correlation seen with bond yields this year, the recent stock bump “likely reflects the markets’ hopes for a true peak in inflation and hawkishness, which would tend to support risky assets provided growth remains good,” she said. Goldman’s advice? Avoid those tech stocks that continue to look expensive and check out China, which is backed by reopening hopes.
China’s economic activity showed signs of slowing in October, but stronger online sales lifted Alibaba BABA and other tech names in Hong Kong, with related ADR listings climbing in premarket trading.
Because they missed the boat.
Walmart doesn’t care!
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