3% Downdraft in Stocks Ahead, iCapital's Amoroso Says

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Bloomberg Aug 17, 2023 12:09 · 9618 Views

Anastasia Amoroso, iCapital chief investment strategist, expects about a 3% pullback in US stocks that will create buying opportunities. Speaking with Jonathan Ferro on "Bloomberg The Open," Amoroso explains where she is seeing those opportunities.

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Transcript

  • 00:00 Where would be a buy?
  • 00:01 Where specifically would you look to buy?
  • 00:05 Sure John.
  • 00:05 Well, the reason I'm looking for about a 3% downdraft from here still is because we now broke through some key moving average levels, the 50 day moving average and then also the short term CTA threshold.
  • 00:16 And if you look at what would be the next sort of reasonable stop for people to step in and potentially buy, it would be 100 day moving average.
  • 00:24 And as I mentioned that's about 3% lower from here.
  • 00:27 You know, I think that would be a pretty good value given that we've got the S&P at that point.
  • 00:32 We'll have corrected by 7 or 8 percentage points.
  • 00:35 But then I wouldn't just broadly look at the S and Pi, would look at some of the semiconductor stocks.
  • 00:39 I would look at some of the artificial intelligence stocks and some of them have corrected probably at that point by 15 or 18%.
  • 00:46 So you know given that so many investors
  • 00:49 probably have wanted to participate this year but maybe missed that first half rally, I think given a anywhere between 10 to 15% pull back on some of those idiosyncratic stories
  • 01:00 that would be a great entry point.
  • 01:01 What about the race story
  • 01:02 Anastasia I imagine get asked that question a lot of times.
  • 01:05 Can we live with 4%
  • 01:07 on a 10 year, 440
  • 01:08 on a 30 year?
  • 01:10 Yeah, I mean I actually think we can't because if you think about it John, you know what's driving the 10 years a little bit different than what's driving the two year.
  • 01:18 You know the two year for the most part it's all about what the Fed is going to do in terms of rate hikes or rate cuts.
  • 01:24 And if you think about the 10 year, it's of course the level of rates near term rates, but it's inflation expectations and it's also growth expectations.
  • 01:32 And the reason why the 10 year has been rising and the yield curve has kind of been re steepening is because we've actually got the third quarter GDP that's apparently on pace for 6%.
  • 01:43 We'll see if that actually sticks around.
  • 01:45 But either way, the
  • 01:46 reason why the 10 year rate is moving higher,
  • 01:49 part of the reason is because growth expectations are also picking up.
  • 01:53 And if that's the case, then that's a pretty good offset for stocks that yes, they have to grapple with higher level of interest rates, but if that means higher growth, higher top line growth and earnings growth
  • 02:05 that that offsets it.
  • 02:07 Anastasia, you mentioned 2 themes for next week.
  • 02:09 One was NVIDIA,
  • 02:10 the second event was Jackson Hole.
  • 02:11 You mentioned it again there.
  • 02:12 What would you expect to hear from Chairman Powell
  • 02:14 next week?
  • 02:16 Yeah, I don't really think that we're going to have, we're going to hear
  • 02:20 a big change in narrative.
  • 02:22 I mean, if you look at just the theme for next week, Jackson Hole, it's not sort of the what's happening in the economy right now, but what is happening structurally with the global economies.
  • 02:31 So I think they're likely to take a look at supply demand imbalances in labor markets for example, you know the fiscal stimulus around the world and what that structurally to inflation.
  • 02:42 But these are not going to be kind of near term policy decisions of what they may do with rates
  • 02:47 next month.
  • 02:48 I think the most important event
  • 02:51 you know for that will be the CPI inflation print that we get on September 13th.
  • 02:56 And I don't think really Fed Chair Powell is going to talk about that, but
  • 03:00 the FMC participants should be looking at the last three months worth of data.
  • 03:04 And if you look at the Super core
  • 03:06 inflation on both services and goods, it's annualizing just about 0, you know on a last three months basis.
  • 03:13 But again I don't expect that really to come up,
  • 03:16 you know Jackson Hole next week because I think we need to look for September.
  • 03:20 But really that leaves the other huge event for next week and that is NVIDIA.
  • 03:24 You know, if NVIDIA does deliver, I think it reinvigorates
  • 03:28 some of the tech stocks and if it doesn't,
  • 03:31 obviously that's a catalyst to watch.