tk9QnWsKjz
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I am not a $NVIDIA (NVDA.US)$ shareholder.
Nobody's perfect.
But if I did own it, I certainly would never sell it.
NVIDIA has been an outstanding long term investment.
Nobody's perfect.
But if I did own it, I certainly would never sell it.
NVIDIA has been an outstanding long term investment.
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Central banks could drive stocks higher all the way through to the middle of 2023, but that would create a serious economic risk when the bubble bursts, according to Stifel.
"We calculate that a bubble driven by current central bank real yield repression may take the $SPDR S&P 500 ETF (SPY.US)$to 5,500 mid-2022 and 6,750 mid-2023, creating a systemic risk when it bursts," Stifel says.
Real rates saw a jump higher yesterday, but are still historically low. The 10-year inflation-protected $iShares TIPS Bond ETF (TIP.US)$is at -0.98%.
There have been just two equity bubbles in Wall Street's history: 1928-1928 and 1998-1999 and "neither ended well for stock or economic conditions," Stifel says.
Now, a third bubble is "percolating," the team adds.
The question is whether the Federal Reserve will lean against the risk of a bubble or just let asset prices rip, "magnifying financial risk when it bursts."
What can the Fed do? Watching the 10-year real yield is key to assessing market risk and the possibility of an S&P correction, Stifel says.
Stifel says that to forestall risk, the Fed may "tilt more hawkish while at the same time the Biden/Yellen duo may support the stronger dollar ( $USD (USDindex.FX)$) that accompanies such a Fed shift (a strong dollar subdues energy & food inflation in a supply-constrained inflation environment and improves the chances that BBB overcomes inflation concerns among Senate moderates, while also affecting the timing of a reconciliation bill to lift the U.S. debt ceiling)."
"This combination of factors may raise U.S. real yields and lower the S&P 500 P/E."
Watch Cyclicals and Defensives. Cyclical stocks have led the market rebound from the pandemic low on an equal-weight basis.
Actions like the above by the Fed and administration would cut into the reflation that favors Cyclicals over Defensives.
Stifel recommends going overweight some defensive stocks in sectors like Utilities ( $Utilities Select Sector SPDR Fund (XLU.US)$), Consumer Staples ( $Consumer Staples Select Sector SPDR Fund (XLP.US)$) and Health Care ( $The Health Care Select Sector SPDR® Fund (XLV.US)$) for the current quarter and Q1 2022.
They underweight some cyclical subsectors in Financials ( $Financial Select Sector SPDR Fund (XLF.US)$), Energy ( $Energy Select Sector SPDR Fund (XLE.US)$) and Materials ( $Materials Select Sector SPDR ETF (XLB.US)$).
BMO says that the still-hot tech sector can outperform next year, even with rising rates.
"We calculate that a bubble driven by current central bank real yield repression may take the $SPDR S&P 500 ETF (SPY.US)$to 5,500 mid-2022 and 6,750 mid-2023, creating a systemic risk when it bursts," Stifel says.
Real rates saw a jump higher yesterday, but are still historically low. The 10-year inflation-protected $iShares TIPS Bond ETF (TIP.US)$is at -0.98%.
There have been just two equity bubbles in Wall Street's history: 1928-1928 and 1998-1999 and "neither ended well for stock or economic conditions," Stifel says.
Now, a third bubble is "percolating," the team adds.
The question is whether the Federal Reserve will lean against the risk of a bubble or just let asset prices rip, "magnifying financial risk when it bursts."
What can the Fed do? Watching the 10-year real yield is key to assessing market risk and the possibility of an S&P correction, Stifel says.
Stifel says that to forestall risk, the Fed may "tilt more hawkish while at the same time the Biden/Yellen duo may support the stronger dollar ( $USD (USDindex.FX)$) that accompanies such a Fed shift (a strong dollar subdues energy & food inflation in a supply-constrained inflation environment and improves the chances that BBB overcomes inflation concerns among Senate moderates, while also affecting the timing of a reconciliation bill to lift the U.S. debt ceiling)."
"This combination of factors may raise U.S. real yields and lower the S&P 500 P/E."
Watch Cyclicals and Defensives. Cyclical stocks have led the market rebound from the pandemic low on an equal-weight basis.
Actions like the above by the Fed and administration would cut into the reflation that favors Cyclicals over Defensives.
Stifel recommends going overweight some defensive stocks in sectors like Utilities ( $Utilities Select Sector SPDR Fund (XLU.US)$), Consumer Staples ( $Consumer Staples Select Sector SPDR Fund (XLP.US)$) and Health Care ( $The Health Care Select Sector SPDR® Fund (XLV.US)$) for the current quarter and Q1 2022.
They underweight some cyclical subsectors in Financials ( $Financial Select Sector SPDR Fund (XLF.US)$), Energy ( $Energy Select Sector SPDR Fund (XLE.US)$) and Materials ( $Materials Select Sector SPDR ETF (XLB.US)$).
BMO says that the still-hot tech sector can outperform next year, even with rising rates.
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tk9QnWsKjz : I’m never selling this one!