Maybe Cathie Wood was right to keep buying unprofitable speculative technology stocks for her ARK Investment Management ETFs as the prices plunged: Last week, ARK's main fund recorded its best four-day streak since its launch in 2014, leaping more than 25%.
The outsize gain wasn't thanks to Ms. Wood's investment acumen, since $ARK Innovation ETF(ARKK.US)$ remains down almost a third this year alone. But it is indicative of two interconnected issues that matter hugely to investors: rising interest rates and whether to buy the dip.
On the face of it, the Federal Reserve's plans to raise rates rapidly are terrible for stocks and even worse for unprofitable tech shares, since speculation generally thrives on cheap money.
There are two reasons you might be tempted to buy the dip. The first is that the longest-dated bond yields came down as the Fed tightened, and that means far-off profits -- so long as they prove not to be imaginary -- are worth more now. The second is that stocks had already fallen a long way (a very, very long way in the case of the stocks ARK likes), which means investors were already prepared for bad news.
Both these reasons need scrutiny.
Let's look at the first. There's logic to the idea that 30-year yields would fall. The Fed's sharp rate increases now should slow the economy, mean less inflation and so less need to raise rates aggressively later.
That's what Fed policy makers think will happen. Their own predictions show they expect to raise rates now so that they can cut them later. Their median forecast is that interest rates will rise to 2.8% by the end of next year, from 0.25% to 0.5% today, before falling back to a long-run rate of 2.4% -- and the market, broadly speaking, has bought the idea. The 10-year yield is lower than the seven-year, while the 30-year Treasury yield is smack on the 2.4% the Fed predicts.
But this is an altogether happy state of affairs: Bond yields retreat because inflation stops being a problem. Bond yields could also fall because of a recession. The former is great for shareholders; recession not so much.
The historical record is mixed. There are plenty of recessions caused by the Fed. But in the mid-1960s, mid-1980s, and mid-1990s, rate-increase cycles came to an end without recession -- the economy had a soft landing. Had the pandemic not struck, the Fed might have engineered a soft landing with its rate cuts of 2019, too.
The bond market's best signal of an imminent recession is the shape of the yield curve and it isn't -- yet -- flashing a warning. The three-month yield remains far below the 10-year yield, while typically before a recession it rises above the longer-dated yield.
It's true that there are good reasons to worry about recession, with household spending power hit by inflation, sanctions creating financial stresses and geopolitics adding to the troubles for globalization.
But there are reasons to be sanguine, too, with post-pandemic savings able to absorb some of the hit to household spending power, European governments about to embark on a belated post-Covid-19 spending spree, banks strong and vast amounts of cash still sloshing around.
You could even argue that the Fed isn't cooling the economy that much: Consumer-price inflation rose by more than three times the Fed's quarter-point rate hike last week. If, as economists believe, it is after-inflation interest rates that matter to the economy, the Fed has actually eased monetary policy this year (though we shouldn't get too cute about this; talk of future rate rises matters to the economy, too).
Bottom line:
There's a strong case both for and against a stagflationary recession ahead, and it's hard to disagree with either. That suggests to me more wild market swings ahead as data points to one outcome or the other becoming more likely.
The second reason you might buy the dip: The dip has been big. The Big Tech-dominated Nasdaq-100 and Russell 1000 Growth indexes fell into a bear market on Monday, down more than 20% from last year's peaks.
But I remain doubtful that Monday's stock-market low marks the start of a bright new bull market. First, those who chose to buy tech stocks because the fall was a nice, round 20% are hardly making a considered judgment on the fundamental outlook for risk and reward.
Second, the biggest gainers have been the unprofitable tech beloved by Ms. Wood and meme stocks such as $GameStop(GME.US)$ and cinema-chain-to-gold-miner $AMC Entertainment(AMC.US)$ -- hardly the foundation for a solid market.
And third, the Fed is less likely to ride to the rescue of the stock market if it does fall further, because of the importance of bringing down inflation. The lack of a Fed backstop makes stocks riskier than they were.
So dip buyers, beware. The 30-year mantra of buying because the Fed will intervene to help no longer applies, so you'd better be sure Ms. Wood has it right this time.
Write to James Mackintosh at james.mackintosh@wsj.com
或许凯西·伍德在价格暴跌之际继续为她的方舟投资管理ETF买入无利可图的投机性科技股是正确的:上周,方舟的主要基金录得自2014年推出以来最好的四天连涨,跃升逾25%。
这种超乎寻常的收益并不是伍德的投资智慧所致,因为$方舟创新ETF(ARKK.US)$仅今年一年就下降了近三分之一。但这表明了两个相互关联的问题,这两个问题对投资者至关重要:利率上升和是否买入下跌。
从表面上看,美联储迅速加息的计划对股市来说是可怕的,对无利可图的科技股更是糟糕,因为投机活动通常依靠廉价资金而蓬勃发展。
有两个原因可能会让你忍不住购买DIP。首先,随着美联储收紧货币政策,期限最长的债券收益率下降,这意味着遥远的利润--只要证明它们不是虚构的--现在更有价值。第二,股票已经下跌了很长一段路(就方舟喜欢的股票来说,下跌的路非常长),这意味着投资者已经对坏消息做好了准备。
这两个理由都需要仔细研究。
让我们来看看第一个。认为30年期国债收益率将会下跌的想法是有逻辑的。美联储现在大幅加息应该会让经济放缓,这意味着通胀会降低,因此以后大幅加息的必要性也会降低。
这是美联储政策制定者认为会发生的事情。他们自己的预测显示,他们预计现在就会加息,这样他们就可以在以后降息。他们的预测中值是,到明年年底,利率将从目前的0.25%升至2.8%,然后回落至2.4%的长期利率--总的来说,市场已经接受了这一想法。10年期国债收益率低于7年期国债收益率,而30年期国债收益率则远远低于美联储预测的2.4%。
但这是一种总体上令人高兴的状态:债券收益率下降,因为通胀不再是一个问题。债券收益率也可能因为经济衰退而下降。前者对股东来说是好事;经济衰退就不是那么大了。
历史记录好坏参半。美联储造成了大量的经济衰退。但在20世纪60年代中期、80年代中期和90年代中期,加息周期结束,没有出现衰退--经济软着陆。如果疫情没有爆发,美联储可能也会在2019年降息,实现软着陆。
债券市场预示经济衰退迫在眉睫的最佳信号是收益率曲线的形状,但它还没有发出警告。3个月期国债收益率仍远低于10年期国债收益率,而在经济衰退之前,国债收益率通常会高于较长期国债收益率。
诚然,有充分的理由担心经济衰退,通胀打击了家庭消费能力,制裁造成了金融压力,地缘政治增加了全球化的麻烦。
但也有理由保持乐观,疫情爆发后的储蓄能够抵消家庭支出能力受到的部分打击,欧洲各国政府即将开始迟来的后新冠肺炎时代的支出狂潮,银行实力雄厚,大量现金仍在流动。
你甚至可以争辩说,美联储并没有给经济降温那么多:消费者价格指数上涨了三倍多,是美联储上周加息25个基点的三倍多。如果像经济学家认为的那样,通胀后的利率对经济有影响,那么美联储今年实际上已经放松了货币政策(尽管我们不应在这方面太过矫揉造作;有关未来加息的讨论对经济也很重要)。
底线是:
无论是支持还是反对未来的滞胀衰退,都有很强的理由,而且也很难不同意。在我看来,这意味着未来市场会出现更剧烈的波动,因为数据显示出现这种或那种结果的可能性越来越大。
你可能会买入DIP的第二个原因是:DIP一直很大。周一,由科技巨头主导的纳斯达克和罗素1000成长股指数陷入熊市,较去年的峰值下跌了逾20%。
但我仍然怀疑周一的股市低点是否标志着新一轮牛市的开始。首先,那些因为股市下跌20%左右而选择购买科技股的人,很难对风险和回报的基本面前景做出经过深思熟虑的判断。
其次,最大的赢家是伍德钟爱的不盈利的科技股和米姆股票,比如$GameStop(GME.US)$从影院连锁店到金矿公司$AMC娱乐(AMC.US)$--难以形成稳固的市场基础。
第三,由于降低通胀的重要性,如果股市真的进一步下跌,美联储不太可能出手相救。由于缺乏美联储的支持,股市的风险比以往更高。
所以,DIP买家要当心了。30年来因为美联储将出手干预而买入的口头禅不再适用,所以你最好确保伍德这一次说对了。
写信给詹姆斯·麦金托什,电子邮件:james.mackintosh@wsj.com