Get ready for some rally on Thursday as China concerns flare over Wall Street.
This may give some downtime to natural resources, which are often harvested by this global growth engine. But we have call today Tavi Costa, portfolio manager at Crescat Capital, says investors should allocate capital toward those assets that have long been undervalued against stocks and fixed income.
He told financial platform Real Vision at Interview published Wednesday.
“It’s very difficult to be structurally optimistic about the economy today, especially given what we’ve seen in the credit markets, where the Treasury curve has been inverted as it is, despite the fact that both long-term and short-term yields are going up,” leading to “A stagflationary environment,” Costa said.
All of this comes amid a “chronic underinvestment in natural resources,” and inflation that will drive up the prices of just about everything, he says.
The first way to play that is across Brazil, whose stocks have “significantly” underperformed vis-à-vis the United States since the global financial crisis, he says. “Think of Brazil itself. It’s exposed to just about any commodity you can think of — agricultural commodities from mining and minerals, energy… so it’s definitely one of the most commodity-dependent economies you can find today,” says Costa.
He holds a small position in the iShares MSCI Brazil ETF
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But More sees opportunities to pick stocks, noting that banks have always been profitable and are now very cheap. His largest single position in Brazil is steel producer Gerdão
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But he also urges investors to look at the country’s smaller companies.
The second play on these resources is the bullish stance in the energy sector, seeing a “massive” rise in oil prices, which does not believe the United States will be able to keep up with the decline. The companies involved have fewer oil rigs and are “very profitable,” with many offering high profits, he says, adding that mid-cap companies should not be forgotten.
A Couple ETFs to Consider: SPDR S&P Oil and Gas Exploration & Production ETF
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or Vanguard’s Energy ETF
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.
Finally, the manager says go gold upside
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which has not been among the hugely favored investors over the past three years. He believes that gold should be strong in those traditional 60% stocks / 40% of the bond portfolio being built.
“I think gold will re-emerge not only as a central bank asset, which has been the case recently, but also as a hedge against inflation,” he said. He points to two bullish points in history — the 1970s, when gold surged amid high inflation and supplies of the commodity were scarce — and the early 2000s, when China was going through a construction boom.
Right now, central banks are grabbing gold as production falls, and major economies are in the midst of another building boom, which he said will do the same for gold as it did in the early 2000s. Costa said that at a time when countries and companies are facing mounting debt, as well as rising inflation that will lead to political restrictions and the rise of tangible assets such as gold.
Gold has a lot of entries, one of which is the SPDR Gold Shares ETF
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market
Stock futures
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weaker led technology
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while bond yields
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Climb while oil
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It is hovering around a two-week high, after Saudi Arabia said that OPEC+ would do “whatever is necessary” to support the oil market. Asian markets were under pressure.
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uproar
China concerns are front and center, with Hong Kong shares
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3% decline as banks fail. A note from Goldman Sachs discussed “low expectations for policy easing and structural reforms this year” from domestic investors, despite fears of an economic slowdown.
Who needs a cage match when you have Elon Musk’s Twitter account versus Mark Zuckerberg’s Meta
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Rival Threads, whose app launched early Thursday and already has millions of users. Zook tweeted for the first time since 2012 to mark the occasion:
A day ahead of the non-farm payrolls data, the ADP employment data is due at 8:15 am, followed by the weekly jobless claims and US trade deficit at 8:30 am, the US S&P PMI at 9:45 am, and then Job openings and employment data. Institute for Supply Management Services Index at 10 am
Levi Strauss & Co.
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Will report the results and Costco’s
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The June sales numbers come after the market closed.
Spirit Airlines
Memorizes
It’s up afterJetBlue
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She said she was ending her joint venture with American Airlines
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in the Northeastern United States to complete its merger with Spirit.
Exxon Mobil stock
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Declining after the oil giant said lower natural gas prices were likely to hit second-quarter earnings.
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The world is already in a recession, says a team at BCA Research led by strategist Dhaval Joshi, who provides the chart below:
“The global recession that started in China led will change to the developed economy led by the economy. While the play in China may get a short respite, high-yield credit and equities will underperform government bonds,” Joshi said, pointing to metals. Industrial commodities as China’s investment. He also warns that big tech will not remain “immune to a global recession indefinitely.”
His advice: Overweight French luxury-goods makers, which have already corrected concerns about a downturn in China, against vertical US technology stocks.
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