Wall Street Today: Markets no longer fear inflation, HSBC says

Asia’s renewed surge in infections is compounding supply-chain blockages across the world’s biggest source of manufactured goods.

After weathering earlier global health crisis waves better than other regions, the fast-spreading delta variant has thrown into turmoil factories and ports in countries that were once among the most successful containing the crisis.

It’s been two decades since Wall Street analysts were this upbeat. About 56% of all recommendations on S&P 500 firms are listed as buys, the most since 2002. It’s one more data point that shows the extent of the euphoria sweeping markets after a blockbuster earnings season.

While analysts are historically a bullish bunch, they’re turning even more optimistic in the face of relentless stock-market gains and corporate earnings that topped even the highest expectations. For all the concerns about the delta variant, China’s regulatory crackdown or waning Federal Reserve stimulus, it hasn’t made much of a dent yet on stock prices.

Apple Inc. is in full preparation mode for another jampacked holiday season of device launches. Last year brought the iPhone 12, a redesigned iPad Air, new audio accessories and M1 Macs. This time around, all eyes should be on the new iPhones, Apple Watches, AirPods, the iPad mini and MacBook Pro.

Markets no longer fear inflation and are now focused on the spread of the delta variant, according to HSBC Wealth Management.

In a note Thursday, Chief Investment Officer Xian Chan said that after a period of concern about persistent higher inflation, with investors assessing whether the U.S. Federal Reserve may be forced to tighten monetary policy, markets appear to have gotten used to the concept.

Ed Yardeni believes the U.S. economy is on the cusp of “nirvana.”

Despite uncertainty surrounding inflation and Covid-19 variants, the longtime bull believes the health crisis is significantly accelerating corporate America’s adoption of cutting-edge technology designed to expand productivity.

According to Yardeni, the move is ushering in a modern roaring ’20s on Wall Street.

Reddit, the online discussion forum whose users roiled US stock markets earlier this year, is experiencing its own valuation spike with a new financing round putting its worth at $10bn.

The financing, led by Fidelity Investments, lifts Reddit’s valuation by 67 per cent since its last round in February. The deal, which will provide the social media company with up to $700m in new funding, means it has more than tripled in value within two-and-a-half years.

Investors are piling into Chinese chip, software and biotech groups at a record pace while paring their bets on ecommerce, as they try to align with Beijing’s policy priorities and sidestep a broadening regulatory crackdown.
China’s semiconductor sector has been supported by a multibillion-dollar government plan, partly to counter US determination to stifle its technology industry. Beijing wants the country to make 70 per cent of its semiconductors domestically by 2025, up from a third today.

Source: Bloomberg, Dow Jones, CNBC, Financial Times