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
或許凱西·伍德在價格暴跌之際繼續為她的方舟投資管理ETF買入無利可圖的投機性科技股是正確的:上週,方舟的主要基金錄得自2014年推出以來最好的四天連漲,躍升逾25%。
這種超乎尋常的收益並不是伍德的投資智慧所致,因為$方舟創新ETF(ARKK.US)$僅今年一年就下降了近三分之一。但這表明了兩個相互關聯的問題,這兩個問題對投資者至關重要:利率上升和是否買入下跌。
從表面上看,美聯儲迅速加息的計劃對股市來説是可怕的,對無利可圖的科技股更是糟糕,因為投機活動通常依靠廉價資金而蓬勃發展。
有兩個原因可能會讓你忍不住購買DIP。首先,隨着美聯儲收緊貨幣政策,期限最長的債券收益率下降,這意味着遙遠的利潤--只要證明它們不是虛構的--現在更有價值。第二,股票已經下跌了很長一段路(就方舟喜歡的股票來説,下跌的路非常長),這意味着投資者已經對壞消息做好了準備。
這兩個理由都需要仔細研究。
讓我們來看看第一個。認為30年期國債收益率將會下跌的想法是有邏輯的。美聯儲現在大幅加息應該會讓經濟放緩,這意味着通脹會降低,因此以後大幅加息的必要性也會降低。
這是美聯儲政策制定者認為會發生的事情。他們自己的預測顯示,他們預計現在就會加息,這樣他們就可以在以後降息。他們的預測中值是,到明年年底,利率將從目前的0.25%升至2.8%,然後回落至2.4%的長期利率--總的來説,市場已經接受了這一想法。10年期國債收益率低於7年期國債收益率,而30年期國債收益率則遠遠低於美聯儲預測的2.4%。
但這是一種總體上令人高興的狀態:債券收益率下降,因為通脹不再是一個問題。債券收益率也可能因為經濟衰退而下降。前者對股東來説是好事;經濟衰退就不是那麼大了。
歷史記錄好壞參半。美聯儲造成了大量的經濟衰退。但在20世紀60年代中期、80年代中期和90年代中期,加息週期結束,沒有出現衰退--經濟軟着陸。如果疫情沒有爆發,美聯儲可能也會在2019年降息,實現軟着陸。
債券市場預示經濟衰退迫在眉睫的最佳信號是收益率曲線的形狀,但它還沒有發出警告。3個月期國債收益率仍遠低於10年期國債收益率,而在經濟衰退之前,國債收益率通常會高於較長期國債收益率。
誠然,有充分的理由擔心經濟衰退,通脹打擊了家庭消費能力,制裁造成了金融壓力,地緣政治增加了全球化的麻煩。
但也有理由保持樂觀,疫情爆發後的儲蓄能夠抵消家庭支出能力受到的部分打擊,歐洲各國政府即將開始遲來的後新冠肺炎時代的支出狂潮,銀行實力雄厚,大量現金仍在流動。
你甚至可以爭辯説,美聯儲並沒有給經濟降温那麼多:消費者價格指數上漲了三倍多,是美聯儲上週加息25個基點的三倍多。如果像經濟學家認為的那樣,通脹後的利率對經濟有影響,那麼美聯儲今年實際上已經放鬆了貨幣政策(儘管我們不應在這方面太過矯揉造作;有關未來加息的討論對經濟也很重要)。
底線是:
無論是支持還是反對未來的滯脹衰退,都有很強的理由,而且也很難不同意。在我看來,這意味着未來市場會出現更劇烈的波動,因為數據顯示出現這種或那種結果的可能性越來越大。
你可能會買入DIP的第二個原因是:DIP一直很大。週一,由科技巨頭主導的納斯達克和羅素1000成長股指數陷入熊市,較去年的峯值下跌了逾20%。
但我仍然懷疑週一的股市低點是否標誌着新一輪牛市的開始。首先,那些因為股市下跌20%左右而選擇購買科技股的人,很難對風險和回報的基本面前景做出經過深思熟慮的判斷。
其次,最大的贏家是伍德鍾愛的不盈利的科技股和米姆股票,比如$GameStop(GME.US)$從影院連鎖店到金礦公司$AMC娛樂(AMC.US)$--難以形成穩固的市場基礎。
第三,由於降低通脹的重要性,如果股市真的進一步下跌,美聯儲不太可能出手相救。由於缺乏美聯儲的支持,股市的風險比以往更高。
所以,DIP買家要當心了。30年來因為美聯儲將出手幹預而買入的口頭禪不再適用,所以你最好確保伍德這一次説對了。
寫信給詹姆斯·麥金託什,電子郵件:james.mackintosh@wsj.com